Money on the mind: The undeniable overlap of employee mental health and financial stress

Throughout the 2020s, mental health has been in the limelight of workplace wellness advocates. Spurred on by the glaring challenges of COVID and the eroding taboos of discussing mental health at work, more and more employees are raising their hands to flag mental health challenges. Thoughtful employers are looking for ways to respond. Creative solutions abound, and businesses have explored wellness days off, meditation apps, mental health counseling, and much more as part of their benefits arsenal.

While all these solutions have merit—taken alone, they fail to address the NUMBER ONE source of employee stress in major study after major study.

You guessed it… money.

Almost all of us at one time or another have been sitting at our desk, station, register, or assembly line with the overwhelming feeling that screams, "Money stress is killing me." I’d guess that for many readers, just the mere mention of paying for our monthly credit bill, the broken car, the college payments, the debt, the Christmas presents, or even our next meal kicks your limbic system (stress response) into gear.  Money and mental health are closely tied, and the effects of financial stress can be as potent as any other form of chronic stress. It can leave us feeling anxious, depressed, and even full-blown mental exhaustion.

Unraveling the financial stress web

This blend of anxiety, pressure, and uncertainty tied to finances isn’t just your personal experience or hearsay—it’s well-researched. And let us be the first to say—you and your employees are not alone.  A 2022 study (published in 2023) from scholars Soomin Ryu and Lu Fan from the Universities of Maryland and Georgia, respectively, showed the deep-seated connection between financial worries and psychological stress among U.S. adults. And interestingly, but perhaps not surprisingly, the strain affects people across income levels, age brackets, and professions differently.

To not bury the lede… 

“Across all models, a higher degree of financial worries was significantly associated with higher psychological distress… Without any control variables, a 1-point increase of financial worries scale was associated with an increase in psychological distress scale by 0.315. This positive pattern was maintained in Models 2, which further adjusted for demographic (i.e., age, gender, race, marital status, the number of children in the household, and region of residence) and socio-economic characteristics (i.e., education, employment status, household income, and home ownership) that could be on the pathway.”

In short? Money stress means mental distress.

You can dive into the study if you want the nitty gritty financial stress statistics and you’re still asking “How does financial stress affect your health if you’re [fill-in-the-blank-demographic]. " But let’s skip to the end and unpack a few of Ryu and Fan’s high-level takeaways about the ties between financial stress and mental health. These takeaways aren’t specific to HR, but don’t worry—we’ll get there.

1. Financial practitioners need to understand how financial stress affects your mental health and adopt an integrated approach with mental health in mind. To quote directly, “Helping clients to better manage their finances and reduce financial worries and stress can potentially buffer psychological distress.”
2. It’s essential for mental health practitioners to have a deep understanding and awareness “of financial worries as a possible contributing factor to mental distress.”
3. Finally, they recommend public policy interventions to decrease financial distress through “financial education programs and counseling services.”

Notably absent from this list were HR leaders :) So how could these insights inform an HR leader’s approach to combating psychological stress at work?

Implications for HR

Now, amidst this daunting landscape of financially induced stress, there's a beacon of hope. Enter your friendly neighborhood HR leader. 

HR leaders play a pivotal role in fostering a supportive mental environment for employees—because they’re the ones driving a benefits strategy that encompasses mental and financial health. More and more HR leaders are listening to employees and recognizing the need to support their people holistically—going beyond 401k contributions and healthcare to target true employee wellness. 
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So what are the cross-disciplinary applications from Ryu and Fan’s research?

1. Recognize that financial stress affects your mental health. If you want to help employees have better mental health and total wellness, addressing finances must be part of the remedy.
2. Use an integrated approach. Money and mental health aren’t separate in our brains, so we can’t treat them like church and state in our benefits strategy. When choosing a financial wellness vendor, don’t just evaluate financial planning prowess. Look for an empathic approach from humans who, while not mental health professionals, at least recognize the mental health implications of money stress and are trained to guide employees to the resources they need.
3. Implement a financial wellness program. I’ll admit, at face value, that sounds like a very self-serving takeaway. But if Ryu and Fan are recommending that governments provide financial education and counseling at a national scale—it’s a solid bet that your employees stand to benefit from it as well. 

Mental health benefits are climbing the charts of benefits employees (especially younger employers) say they want. Mental health is an essential piece of total wellness—but don’t forget the role of money in mental health. Hitting the roots of employee concerns about being stressed about money all the time is essential—and a great wellness strategy can provide the resources employees need to stop worrying about money and start living healthier financial and mental lives.

So, deep breath in, exhale out. Then let’s go advocate for workplaces that foster holistic mental and financial health, so employees can live happier, healthier, less stressed lives both at work, and at home.