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CREDIT COUNSELING CLIENTS REPORT HIGHER LEVELS OF PRODUCTIVITY AND LOWER FINANCIAL STRESS

- BLACKSBURG, VA Dec. 4, 2000 – Clients of credit counseling demonstrated improved levels of personal financial and work outcomes a year after participating in counseling. Clients of a non-profit credit-counseling agency were surveyed immediately following counseling and again one year later. Analyzing data collected at two points in time allowed for a comparison of a sample of employed individuals from 25 states between 1999 and 2000.

One year following credit counseling, the 163 employees surveyed had started a number of positive financial behaviors, such as reducing personal debts, cutting down on living expenses, and following a budget or spending plan. They also reported much lower frequencies of financial stressor events including:


• o overdue creditor notices
• o creditor telephone calls
• o late charges incurred
• o using cash advances to pay another bill
• o inability to pay insurance premium

At the beginning of credit counseling, 88 percent were dissatisfied with their financial situation and this dropped to 59 percent one year later. Another 22 percent were satisfied with their financial situation one year later (this rose from 4 percent).

The employees reported decreased concerns about personal finances and lower levels of stress from money problems after one year. Their overall level of financial stress basically moved from "severe" or "overwhelming" at the beginning of counseling to "moderate" or "low" one year later. They also indicated higher levels of financial wellness, and satisfaction about their current financial situation. Also, the employees reported better health status one year after commencing credit counseling.

Of critical importance is that counseled employees reported improved levels of job productivity in:


• o quantity of work accomplished
• o quality of performance
• o performance rating from boss

The employees also reported lower:


• o absenteeism
• o presenteeism (total work days lost and days cut down on activities)
• o instances of work time used for personal financial matters (down from 27 to 13 hours a month)

Presenteeism occurs when employees are on the job but not able to fully perform. This can impact productivity. The above job outcomes are a proxy for improved employer profitability.

Between the preassessment and one-year post-counseling study, this research suggests three positive results. First, employees reported decreased concerns about personal finances and lower levels of stress from money problems. Second, they recorded improved personal financial wellness. Third, the employees communicated that they had increases in work productivity and job outcomes that can contribute to higher employer profitability.

"This study demonstrates that credit counseling works," said Dr. E. Thomas Garman, Professor at Virginia Tech. "Outcomes of credit counseling are improvements in personal financial wellness and better job productivity."

"These findings should motivate employers to help their employees who are experiencing financial difficulties," said co-researcher, Dorothy C. Bagwell, assistant professor at Texas Tech University. If employees are worried about their finances, this stress may make it difficult for them to focus on their work and thus result in a loss of productivity. The impact on organizations for employees with financial problems may be seen in reduced output, lower sales, and poor service."

Two solutions to help employees with financial problems are offering referrals for credit counseling and offering comprehensive workplace financial education. These programs can teach employees to prevent and solve their financial problems and challenges. For more information about the study, please call (806-742-3050) to reach the lead researcher, Dorothy C. Bagwell (dbagwell@hs.ttu.edu) or 540-231-5973 to reach E. Thomas Garman (tgarman@vt.edu).