This article highlight current financial challenges for employees that affects their financial wellness. These are credit card debt, student loan debt, high cost of living and saving for retirement. The article goes into further detail for each of these financial challenges.
The personal finance sphere has been developing into a diverse complexity for employees as there has been a lack of financial education to support their various responsibilities. This outcome has resulted in them not developing their financial health and experiencing a lack of financial wellness in their everyday life, leading to challenges such as:
- Credit card debt;
- Student loan debt;
- High cost of living;
- Saving for retirement.
Credit Card Debt Crisis
Credit card debt has developed over the years as one of the most stressful financial challenges for North Americans.
Credit cards provide the comfort of buying now paying later; however, interest rates have developed to be overwhelming. They are resulting in being impossible for individuals to pay off their debt.
According to Cleverstudy, 46% of American credit card holders carry credit card debt, month over month. Their survey also discovered that most Americans doubt they will be able to pay off their credit cards within a year.
Americans credit card debt summary:
- 28% of credit card users have missed a monthly payment.
- 38% of Americans with credit card debt say it has prevented them from making a significant life purchase.
- 72% of credit card holders carry at least $1, 000 in debt.
Credit card debt is a financial dimension that also develops a foundation for extending other financial challenges within the personal finance sphere for all employees. Furthermore, affecting different aspects of an individuals’ financial wellness.
Student Loan Debt Is On The Rise!
Student Debt over recent years has been developing into a significant financial crisis, especially for the generation of millennials. According to Debt Relief experts, roughly 22 000 ex-students filed to insolvencies in 2018 with dealing with their student debt.
The majority of current students and post-graduates have their post-secondary education financed by student loans either through government-guaranteed loans and private loans.
According to Canada Student Loans, it takes individuals roughly 9 – 15 years to pay off their student loans in full. However, others declare insolvency. Over recent years, graduates have been developing towards declaring insolvency much sooner than before.
According to Debt Relief experts, the average age of an insolvent student debtor in 2018 was 34.6 compared to 35.7 in 2011 after peaking at 36.1 years in 2012, repaying student debt after graduation requires promising cash flow. However, most graduates earn below-average income.
The outcome results in individuals battling with repaying student are unable to save for other long terms plans and keep up with student loan payments. This effect results in delaying other financial obligations and creating further financial challenges that affect their financial health and financial wellness.
High Cost of Living Is Not Making Finances Any Easier
The standard of living within Western society has been rising with multiple responsibilities have increased over the years. These are household expenses, taxes, education and insurances that have been growing over the years, developing the cost of living to be expensive and financially challenging for various individuals.
The high cost of living has been referred to as the most challenging personal finance issue, according to the Financial Burdens Survey. North Americans over recent years have started to develop a view of the cost of living as their top financial issue above other financial burdens. 24 % named this as their number one financial challenge.
The rising cost of living has been developing as a critical financial concern for young people in the UK. According to Natwest , 47% of young adults cited the rising cost of living developing into a significant financial challenge and concern.
The cost of living is continuing to be a financial challenge in various ways and affecting other financial obligations for individuals.
Is Saving for Retirement A Financial challenge?
Saving in general sounds like an expectation that everyone should be engaging when it concerns their finances for future personal objectives. One of these objectives refers to saving for the forthcoming period of retirement.
Retirement saving sounds like it should be quite simple with the expectation that everyone makes an adequate salary. However, the reality is retirement saving is a growing challenge for a vast amount of employees.
Canadians over the past years have not been saving as they used to. In the third quarter of 2018, the household saving rate in Canada dropped dramatically to 0.8% from 3.4% in the previous quarter.
From the 2017 World Economic Forum white suggested a saving rate between 10% – 15% maybe be required to live safely to an average age of 100.
Saving is developing into a financial challenge for various employees due to experiencing other financial challenges: credit card debt, student loan debt, and the high cost of living.
Does the Future Look Bright?
These four financial challenges intertwine with another and have created a sense of stress whenever the thought of personal finances comes to mind.
Over recent years financial wellness programs are starting to develop in assisting with the management of the following financial challenges that employees face. The tunnel of hope is constantly developing towards solutions concerning the management of personal finances.