How money worries can impact your employees' mental health

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Worrying about money can worsen mental health. And poor mental health can make it harder to manage money. The good news? There are lots of ways employers can support their employees and help them break this cycle. 

The link between financial wellbeing and mental health is strong – and each can have a significant impact on the other.
 
Employees who feel worried about their financial situation are more likely to experience symptoms of poor mental health, such as increased stress, disturbed sleep, and trouble concentrating. And the longer this continues, the bigger the risk that it will develop into longer-term mental health issues. 

As a result of poor mental health, employees could find it harder to deal with money problems and make good financial decisions. For instance, employees who are struggling to concentrate – a common symptom of anxiety – could find it more difficult to understand financial guidance or manage their money. In fact, research by The Money and Pensions Service found that people who experience a mental health problem are 1.5x more likely to struggle with bills and credit commitments. 

And so, the cycle continues. Poor financial wellbeing increases the risk of poor mental health, and vice versa.

What does good financial wellbeing look like?

Good financial wellbeing isn’t about how much money people earn. It’s about them feeling in control of their finances, meeting short-term priorities like household bills, and having plans in place for the future – like saving into a pension plan.

Financial wellbeing also covers broader topics, such as financial education and capability. This means that people who feel financially well are more likely to have a good understanding of money and can confidently manage their incomings and outgoings.

Ways to support employees with their financial wellbeing and mental health

The employer benefits of financial wellbeing can be just as fruitful as for employees. Indeed, investing in a financial wellbeing strategy can help boost workplace performance and productivity, reduce stress and absenteeism, and improve retention and recruitment. 

As an employer, there are many ways you can help support your employees with both their financial wellbeing and mental health. Here are a few suggestions to get started:

Provide easy-to-digest financial education

Insights from our Retirement Voice 2023 report show there are large gaps in people’s financial confidence and knowledge. Just 61% say they feel confident making financial decisions, and only 54% are comfortable in their understanding of financial products.

This could be explained, in some part, by the unsuitability of financial education resources out there. In our report, half the country (49%) say they find the amount of pension information they receive overwhelming, and 41% don’t know what to do with it – suggesting that clear and concise financial content is sorely needed.

You can help by providing your employees with bitesize financial education content that’s easy to digest, such as through our Money Mindset tool. This provides Standard Life pension scheme members with a library of tools, tips, and videos that can be dipped in and out of whenever they have a few minutes to spare.

Create a supportive work environment

Unfortunately, many people still avoid talking about their money worries. Research by The Money and Pensions Service found that 91% of people who are struggling with their mental health avoid talking about money – mainly because they feel embarrassment, guilt, or shame. And by keeping quiet, this can often make problems much worse and harder to deal with in the long run.

As an employer, you can help by creating a supportive work environment that gives employees a safe space to talk.

A good place to start is to look at your existing employee assistance programme (EAP). Check that it offers support that could encourage employees to open up about their money concerns, such as counselling or digital wellbeing tools. 

Make sure that you regularly promote the support on offer through your internal communication channels too. This can act as a valuable reminder to anyone who finds themselves in a moment of financial worry. 

Signpost to debt advice services

The cost of living crisis is pushing people’s finances to its limits. Data from the ONS found that a fifth of adults are borrowing more money as a result of rising costs, compared to the previous year. 
    
This financial pressure is taking its toll on people’s wellbeing too. Our Retirement Voice report reveals that 1 in 4 (26%) people say looking after their money has caused them to lose sleep, while 23% believe it’s contributed towards their poor mental health.

You can help employees who may be struggling by signposting them to specialist support services that can help them tackle debt. For instance, MoneyHelper and The Money and Pensions Service are government initiatives that provide free, independent advice on a range of financial topics and issues. 

If they’re able to, setting aside money for emergencies could give employees added reassurance if they face unexpected bills or debt. Standard Life workplace pension scheme members can create an emergency cash pot in Money Mindset, where they can set savings goals and add in money whenever they can.

For more insights on financial wellbeing, including resources on how you can help support your employees, visit our Financial Wellbeing hub and read our articles.