Financial stress is weighing on employees, but it alsoweighs on the companies they work for.

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And small businesses are no exception, feeling the pain whenemployees struggle to stay solvent.

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Related: Employers embracing financial wellnessprograms, survey shows

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According to a report by SmartDollar and parent company Ramsey Solutions,employees who insist on living paycheck to paycheck are draggingdown small businesses—via absenteeism, financial crises, and theperceived need by employers to help these stressed employees byallowing such measures as “advances on salaries or one-timegifts.”

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In the report, Brian Hamilton, Ramsey Solutions vice presidentof SmartDollar, said, “[T]he effect is that employees are foreverputting off the need to take better care of their own finances andbreak the cycle of debt and emergency living. Too often workerswind up living one event away from a true financial catastrophe.And that’s risky both for employees and the small businesses wherethey work.”

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Related: 10 ways employee financial wellness isgetting worse

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Financial stress isn’t just a matter for employees at the bottomof the pay scale, the report said. While 68 percent of employeesworking at small businesses (those with fewer than 200 employees)are living paycheck to paycheck, 50 percent of small-businessemployees earning $100,000 or more are in the same boat as theirlesser-paid colleagues.

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Constantly running out of money keeps small-business employeesfrom having a hopeful outlook on debt; their peers who don’t livepaycheck to paycheck are more optimistic. Three out of fivesmall-business workers who live paycheck to paycheck also saidpaying off all of their consumer debt was their most importantfinancial goal, but only 29 percent are confident that they can doso within the next two years.

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Among those who don’t live paycheck to paycheck, 72 percent feelconfident or very confident they’ll be debt free in the same timeperiod.

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Employees dancing around financial ruin spend time and energydoing so, and the stress takes a toll on their mental and physicalwellness; they often feel sick and tired.

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Fifty-six percent of small-business employees living paycheck topaycheck report high or overwhelming stress. Financial woes carryover to the business, too, not just bringing higher levels ofpayroll advances and garnishments but also more distractions atwork and higher absenteeism.

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Instead of providing “enabling” measures like salary advances,or standing by as employees in the throes of financial crisisincrease absenteeism and decrease productivity, employers should beproviding financially stressed employees with “access to theinformation and inspiration that can effect true behavior change,”Hamilton said, adding, “Too many workers have never known anylifestyle other than going from paycheck to paycheck, and theydesperately need a plan to move forward.”

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