We've known it for years: American workers are not putting away enough money for their retirement. Now, there's an even more ominous trend: In addition to not saving for tomorrow, a growing number of workers are also not spending wisely for today.

Consider this: Twenty-seven percent of those responding to a recent survey conducted by the Los Angeles Times characterized their personal finances as shaky. A full 40 percent reported difficulty paying installment loans, car payments or insurance premiums. The survey further found that 57 percent of households with incomes below $20,000 had debt problems.

Employees are, in a word, struggling. "In focus groups we have conducted, employees report the two major stressor in their lives relate to time management and money management," says Karen Olson, director of marketing for Xylo, Inc., a Bellevue, Wash.-based firm providing Web-based workplace programs to help employees manage time and money. "It's hard to say exactly what percentage of people experience financial struggles on a regular basis," says Lois Vitt, founding director of the Institute for Socio-Financial Studies in Middleburg, Va. "But almost everyone has financial problems at one time or another."

So, what's the problem? Why are so many of us depleting our savings accounts and living beyond our means? "We have shifted from a nation of savers to a nation of debtors," says Irene Leech, Ph.D., an associate professor specializing in consumer education at Virginia Polytechnic Institute and State University in Blacksburg, Va.. "Instead of setting aside extra money for savings, we are buying more and more on credit, so we end up with debt instead of savings. Years ago, credit was something you used in an emergency. Today, for millions of people, it is a habit."

Some social critics blame schools, financial institutions and even employers for failing to educate the public on the importance of savings. Others blame modern society, which places a premium on materialism and creature comforts. Still others contend the "get rich quick" mentality of the recent economic expansion has taught us to believe a monetary windfall waits just around the corner. Regardless of the culprit--chances are, all of these factors and more have played a part in the problem--it's an issue employers have to face: Personal finances are distracting their workers.

"An employee who made $60,000 a year as head of management information systems for a large organization came to me one day with three pages of numbers on a legal pad," recalls Bill Pomeroy, CFP, president of the EDSA Group, a financial education training organization in Baton Rouge, La. "He had taken out a loan against his 401(k), gotten a home-equity loan, maxed out his credit cards and had a $2,000 signature loan at the bank." Now, he needed another $1,800 to fix his vehicle's air conditioning system. "He then told me he had spent the last three days at work putting all these numbers together," continues Pomeroy. "He was more concerned about his finances than he was about his job."

Indeed, a survey conducted by the Consumer Credit Counseling Service (CCCS), a non-profit organization offering financial management services and funded in large part by contributions from credit card companies, found that employees experiencing financial stress wasted 13 percent of the workday dealing with money matters on the job.

E. Thomas Garman, a former university professor and now distinguished scholar at the Orlando, Fla.-based InCharge Institute of America, one of the country's largest non-profit providers of credit counseling, has researched consumer finance problems for more than 30 years. "About two-thirds of people with financial problems don't allow these problems to negatively affect their work," Garman says. In fact, such problems may cause many of these people to work even harder, put in overtime, vie for promotions and so on to extricate themselves from dire financial straits.

"However, the one-third who do bring their problems to work can wreak real havoc," says Garman. His research has found that such problems can lower productivity, compromise physical health, increase absenteeism and even cause accidents.

Causes of Financial Struggles

Why do people get into financial jams? While there are dozens of reasons, they generally fall into three categories.

Life emergencies. Examples include illnesses resulting in large medical bills (a growing problem as employees face higher insurance copays and deductibles), the loss of employment by one or both spouses, natural disasters, lawsuits and the "biggie"--divorce. "About half of the money problems employees have stem from divorce," says Pomeroy. "One employer asked us to talk with all of their employees who were not participating in the 401(k) plan to find out why. All of them explained that they were struggling with debt. Half of these people said that the reason for the debt was divorce."

Poor money management. "People have not been taught how to manage their money appropriately," says Leech. Too many people either don't know how--or lack the discipline--to create and follow a financial plan or household budget. In the recently released "2001 Parents, Youth and Money Survey," sponsored by the American Education Savings Council and the Employee Benefit Research Institute, about 20 percent said they rarely or never created budgets for themselves. And, almost 20 percent of respondents admitted that they have little socked away in a retirement or savings account. [Could these results be skewed by the fact that kids are responding to the survey? or was it just surveying parents?]

Living beyond our means. Americans have developed a "consumer mentality," leading us to think of certain luxuries as necessities. To wit: your cell phone, your Internet account, your home fax/modem line, your cable or satellite TV service, your health club membership and so on. "For a lot of people, each time they get a new job or a promotion, instead of saving or investing the extra income, they spend more," says Debby Vinyard, CFP, owner of Vinyard Financial Planning of Marion, Ill. "People tend to want to 'keep up with Joneses.'"

The over-abundance of credit adds to the problem. Take a look in today's mail: How many offers did you receive to sign up for new a credit card? Each represents an invitation to spend money you don't necessarily have. "Most people who 'shop and charge' do so because they really don't think through the consequences or plan properly. Then, they end up with more debt than they can handle," says Vitt.

Overspending can even be the result of psychological imbalances. Although you often see t-shirts and bumper stickers making light of the tendency to "shop 'til you drop," the inability to control the spending urge can be a sign of addiction. "We worked with a single woman in her 20s who was earning $40,000 a year," says Kristine Brennan, executive director of Lincoln, Neb.-based Continuum Employee Assistance, one of many employee assistance programs (EAPs) around the country adding financial planning to the services it offers clients. "She was addicted to shopping and spending, particularly clothing. It was an immediate gratification for her. She knew that she needed to cut back on her spending, but she wasn't able to do it on her own. With counseling, we were able to help her find other more healthy ways to meet her emotional needs."

Not Just a Matter of Money

Still, ask the typical person what will help resolve his financial turmoil, and you will almost always get the same answer: "More money." Does that mean employers are underpaying their workers, forcing them into a life of debt and default? Hardly.

"When we work with a client having financial problems, we begin with the premise that the problems are the result of emotional struggles," says Jonathan Hefner, financial team manager for Ceridian LifeWorks in Eagan, Minn., another EAP offering financial counseling services. "We find that, in many cases, the problems are linked to experiences and beliefs from the past. People come out of their families with beliefs about what money is or should be, then live out these beliefs, either consciously or subconsciously, as they become adults. These beliefs ultimately dictate whether they will be successful or not in their personal finances."

"If you spent a day sitting in a bankruptcy court, you will be amazed at the number of supposedly successful, average-looking people who are there to file," says Vinyard. It all boils down to effective money management--a trait all too rare in today's society. "It's not how much you earn; it's how much you keep," she says. "One of my very first clients was an 85-year-old man who worked his entire life as a schoolteacher...When he died a few years ago, he had over $800,000 in securities and cash." Conversely, Vinyard has seen professionals with six-figure incomes who have no savings and live paycheck to paycheck.

What Employers Can Do

So if simply paying higher salaries won't fix the problem, what can employers do to help their workers resolve their financial struggles? Experts suggest there are three key services companies can offer to their workforce.

Financial education. "A lot of employers provide retirement education seminars, which are good," says Garman. "But you need to provide financial education to employees of all ages and on topics, not just retirement finances." In its "Financial Planning Resources in the Workplace" survey, Xylo, Inc., found that while a third of employees said they wanted seminars on tax planning and personal financial management, fewer than one-fifth of employers offered them. "I think these are underserved because the demand for these basic services has been more recent," says Olson. "It takes employers time to catch up with the demand."

"People who have never had financial education frequently get into problems," explains Todd Taskey, CFP, president of Solutions Planning Group, Inc., in Bethesda, Md. "The problems become more serious over time, because, by mid-life, people feel dumb for not knowing this basic information. They are afraid to ask questions."

Xylo offers its clients financial information and tools online so employees can maintain their privacy, says Olson. "We also offer 'lunch and learn' seminars, which allow employees to ask questions directly to experts. We find that it tends to be the younger employees who show up to these and are not embarrassed about asking questions."

Indeed, many employees may feel uncomfortable attending an on-site financial planning workshop. The EDSA Group offers financial workplace seminars on basic money management, covering topics like budgeting, debt consolidation and so on. Compared to EDSA's courses on retirement, 401(k)s and investing, "this is the most difficult seminar to fill," says Pomeroy. "It is very hard to get people to attend, because they are worried that their coworkers will find out they're having money problems."

That's why Pomeroy and others suggest that it may be a good idea to conduct such seminars at an off-site location, so only the employees enrolled know who is attending. Other advice for creating an effective financial education program: