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 your clients 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. This could trigger problems with physical health too. Prolonged stress can affect the immune system, increase the risk of developing type-2 diabetes, and cause hormone imbalance.
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 74% of people who experience a mental health problem struggle to keep up with bills and payments.
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.
There are many ways your clients can help support 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 Standard Life’s Retirement Voice 2022 report show there are large gaps in people’s financial confidence and knowledge. Just 59% say they feel confident making financial decisions, and only 51% are comfortable in their understanding of financial products.
This could be explained, in some part, by the unsuitability of financial education resources out there. 50% say they find the quantity of retirement planning information overwhelming, and 41% don’t know what to do with it – suggesting that clear and concise financial content is sorely needed.
Your clients can help by providing employees with bitesize financial education content that’s easy to digest, such as through Standard Life’s Money Mindset tool. Created in partnership with Moneyhub, Money Mindset 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. That way, they can increase their financial knowledge during moments of downtime, such as in a coffee break, rather than it be an overwhelming exercise that requires hours of time and focus.
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.
Your clients can help by creating a supportive work environment that gives employees a safe space to talk.
For instance, they could start by looking at their existing employee assistance programme (EAP). Does it offer support that would encourage employees to open up about their money concerns, such as counselling or digital wellbeing tools? If so, it’s important that your clients regularly promote this support through their internal communication channels, as it can act as a valuable reminder to anyone who finds themselves in a moment of financial worry.
Your clients could also consider setting up a mental health first aider (MHFA) programme to bolster their employee support package. MHFAs are trained to provide a non-judgmental listening-ear to those who need help, as well as signpost them to further support.
Signpost to debt advice services
The cost of living crisis is pushing people’s finances to its limits. Recent data from the ONS found that a fifth of adults are borrowing more money as a result of rising costs, compared with a year ago.
This financial pressure is taking its toll on people’s mental health too. According to the ONS, people who are in debt or finding it difficult to pay their bills report higher anxiety than those who are in a better financial situation.
Your clients 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. They can also point employees towards the government’s cost of living support hub, which allows them to check if they’re eligible for any financial support to help with rising costs.
For more insights and tools, visit our Financial Wellbeing hub and read our articles.