May 1st 2013
By Deanna C. White
Feeling a little paunchy around the middle or particularly irritable when you pull into work in the morning? Don't blame it all on processed sugar or your two-hour commute.
A recent survey by the American Institute of Certified Public Accountants (AICPA) found that financial stress brought on by the whittling down of American paychecks is taking an emotional and physical toll on Americans.
In short, the survey found money worries are making many Americans impatient, unhealthy, and sleep deprived.
The telephone survey, conducted for the AICPA by Harris Interactive between March 14 and March 17, asked 1,011 US adults to rate their level of financial stress and catalog all the ways financial stress is affecting their lives.
According to the AICPA, of those who rate their financial stress "very" or "somewhat high," almost half, 47 percent, said they are sleeping less; 43 percent said they have less patience with friends or are seeing them less often; 31 percent are eating more junk food or gaining weight; and a fifth, 21 percent, are arguing more with their spouse or significant other.
One in six Americans, or 17 percent, say their health is taking a direct hit because of money stress, reporting they're getting sick more often.
Some Americans can trace their financial woes to the increase in payroll taxes, which took effect in January. Those tax increases effectively cut the take-home pay for most workers by 2 percent and heightened financial concerns for many Americans, "prompting more than two-thirds of those employed, 68 percent, to cut spending, reduce saving, or make other sacrifices."
The survey also found that nearly half of US adults, 44 percent, currently say they are under a "high level" of financial stress – with women almost twice as likely as men to say they are under a "very high" level of stress.
And they don't foresee that stress abating any time soon. The survey found only 28 percent of adults see a reduction in financial stress over the next six months.
"Mounting money pressures are making Americans cranky, tired and unhealthy," said Ernie Almonte, CPA, CGMA, chair of the AICPA's National CPA Financial Literacy Commission.
That stressful cocktail in turn leads to a bit of a financial Catch-22, with "ensuing physical and emotional stress potentially leading to higher long-term costs," Almonte said.
"Americans must find ways to cope with money stress even when financial challenges seem daunting," Almonte added.
In light of the survey results, AccountingWEB recently talked with Sharon Lechter, CPA, financial literacy expert and best-selling author, about what Americans can do to lessen their financial stress, and how CPAs and financial experts can help them alleviate their clients' worries.
Lechter is the primary author of the AICPA publication Save Wisely, Spend Happily, the CPA profession's first consumer book that offers expert advice from CPAs across the country on myriad topics.
Here's what Lechter had to say:
AccountingWEB: What is your initial response to the survey's findings (both as a CPA and a financial literacy expert) that money stress is effecting American's waistlines, friendships, and sleep?
Lechter: The findings really underscore the tremendous effects of financial stress. The simple fact is this: It costs to live. We have to pay for shelter, food, clothes, transportation, child care, health care, and the list goes on. When you have a financial setback, the challenge confronts you constantly and can seem overwhelming. It will absolutely take a toll on other parts of your life. That's why it's so important to have a firm understanding of your financial situation and a plan to move forward. What's the old saying? 'If you fail to plan, you plan to fail.' A budget and a plan can help mute the ill effects of financial stress.
AccountingWEB: Ernie Almonte said, "Americans must find ways to cope with money stress even when financial challenges seem daunting." What are some of the best "coping" strategies people can use to alleviate financial stress?
Lechter: People under financial stress often feel alone. We're conditioned to keep money concerns private, so when we're in trouble, we're reluctant to talk about it. But one of the best coping mechanisms is to have a conversation. It could be with a family member, a friend, or a financial professional. Chances are they've been there or seen it before. These conversations can uncover valuable perspective. In fact, that was part of the inspiration for Save Wisely, Spend Happily. CPAs have seen all manner of financial situations all across the country. Through the insights and anecdotes of 125 of them, our goal was to give consumers a place to turn – a place to find ideas, inspiration, and comfort in the experiences of others.
Another coping tip: Break down the challenge. It's easy to get overwhelmed by financial problems, to feel they're too big to tackle. If you need to cut expenses, go by category. Look at housing. Are there ways to trim your electric, water, or other utility bills? Is it time to consider moving into a smaller place? Then go to transportation. Can you carpool or take the bus? Can you combine trips or eliminate some to save gas? What about entertainment? Can you trim cell phone, television, or other bills? A systematic approach will make the process feel much more manageable.
AccountingWEB: Can CPAs use the unfortunate circumstance of today's financial uncertainty, and the stress it's causing people, to start what could be a very valuable discussion with their clients about long-term financial security and honestly assessing their financial situation? If so, how?
Lechter: Uncertainty and complexity are hallmarks of today's financial environment, and CPAs are skilled at managing both. My best advice is to have a conversation with your clients. What's your biggest financial concern right now? What do you see as your top financial goals over the next five years? Do you have a plan? Do you feel on track to achieve your goals? What gives you your financial confidence or, if the client is uneasy, what makes you feel unsure? These types of questions can help you probe deeper and offer insight on what it takes to achieve long-term financial security. It's also a good idea for CPAs to encourage their clients to have similar conversations with their spouse or adult children.
AccountingWEB: If most people believe financial uncertainty will continue for at least another six months, or most likely longer given the government gridlock causing much of the uncertainty, what strategies can CPAs offer their clients to lessen financial anxiety over the long haul?
Lechter: It's easy to get focused on the short term – market performance today, gas prices this week. One of the most important things CPAs can do is help clients focus on the long term. A clear destination and a plan for getting there can go a long way toward alleviating anxiety. It's important to also check in on the plan regularly and make appropriate adjustments. Just taking one small step in the right direction will give you satisfaction and confidence from which you will find the courage to take the next step. Save Wisely, Spend Happily shares many such small steps that have proven successful for others. Just by reading the book, you'll discover four or five actions you can take today to improve your financial situation immediately.
To learn more about how you can help your clients understand their finances, visit 360 Degrees of Financial Literacy – the AICPA's free, comprehensive financial education program. Visit the AICPA website for more information about Lechter's Save Wisely, Spend Happily.