The Role Financial Stress Plays on Mental Health

Some things just go hand in hand like your diet and energy, or sleep and focus; one supports the other. When one falters, the other often does too. The same can be said for financial wellness and mental health. They’re deeply connected, each impacting the other in ways we may not always realize. Financial stress isn’t just about money—it can quietly erode emotional wellbeing, focus, and resilience. It’s time we talked about that connection—openly, honestly, and without stigma. Let’s do our part to ease the stigma and have some open and productive conversations around mental health and the effect financial stress can ultimately have on it.  

It may be surprising, but it is likely that we all know someone who is impacted by a mental health disorder. In June 2022, the World Health Organization (WHO) released a report detailing that 1 in every 8 people around the world are living with a mental health disorder. That amounts to a staggering 970 million people. Many of those people do not have access to effective care, meaning they are living day-to-day, doing the best they can to manage their mental health, with limited or no support. 

Mental Health & Financial Stress are Deeply Connected 

So, what’s the connection? In February 2024, TIAA and High Lantern Group released a report showing 42% of American adults cite money as having a negative impact on their mental health. In simpler terms, 4 out of 10 people in the U.S. say money has an active impact on their mental health. That same TIAA report showed that financial stress led to a 34% increase in absenteeism and tardiness, with financially stressed employees being five times more likely to be distracted by their finances while at work. The impact of employee financial stress can be felt beyond the employee, too. Many companies experience a loss of productivity as a result of absenteeism, tardiness, and distraction related to financial stress. 

It’s important to know that the data of those citing money as having a negative impact on their mental health do not fall into any specific demographic. Americans are feeling the pressure far and wide. Because of this, the topic of financial stress and the impact it has on overall wellbeing is becoming more and more prevalent.  The American Psychological Association (APA) has issued a warning that our country has reached a “mental health crisis” due to the astounding levels of financial stress in our country. Further proof that financial stress plays a large role in mental health, the Financial Health Network uncovered findings from their own survey supporting the same percentage of adults affected with the high or moderate levels of stress from their finances at 40%. 

Other key findings from Financial Health Network’s survey included: 

• Individuals with the lowest incomes in any given area were 1.5 – 3 times more likely to report one or more mental health issues 

• Debt as a result of something outside one’s control (such as medical debt) has been linked with mental health issues 

• 29% of Americans are reporting having “unmanageable” levels of debt 

• 42% of people self-reporting as having “fair or poor overall health” also reported being financially vulnerable 

Symptoms of Strained Mental Health May Look Familiar 

Do you stop and consider how your mental health impacts your financial well-being? It may seem obvious in hindsight, yet the link often goes unnoticed. The TIAA found that poor mental health can lead to impaired cognitive function. That can reduce an individual’s ability to carefully analyze risks when having to make financial decisions.  

The outcome from this is often a worrying cycle: impulsive spending rises, little-to-no financial planning, and ultimately, increased vulnerability to stress caused by the consequences of those short-term financial decisions. TIAA highlighted the severity of this pattern. Of the individuals experiencing mental health issues, 93% reported feeling as if they spent more than usual, 92% found it “hard” or “difficult” to make financial decisions, and 56% took out a loan they otherwise would not have.  

This cycle can feel unyielding and abusive, but it is not inevitable. Employers who provide the right support network can empower their employees to finally break this cycle and regain control over their mental and financial health. 

How Can Employers Help with Managing Financial Stress and Mental Health? 

There are several steps an employer can take to help their employees in difficult times. Employers should look to create a robust framework of support for their employees: one that can address both their mental and financial well-being. When considering medical benefits, evaluate options that prioritize mental health benefits. Simultaneously, consider a purchasing assistance program, like the one offered by BenefitsMe, that can offer employees a way to achieve financial health and wellbeing. Employers offering financial wellness benefits to their employees typically see unplanned absences fall by 24%. Investing in your employees will produce fantastic results for your business, giving you that ever-sought-after win-win. 

Mental health and financial stress are deeply intertwined. Connect with BenefitsMe today and ask how we can help you offer better financial options to your workforce!