23 September 2022
How much does worrying about money damage mental health?
New research by our partner Wagestream, in its The State of Financial Wellbeing: The Cost of Living Crisis Report 2022, has found that over a quarter (28%) of UK employees now worry daily about money. This article will explore how poor financial wellbeing negatively impacts mental health.
According to the report, nearly all UK employees (96%) have seen their living costs rise and, as a result, 70% are worrying more about money. This can have many knock-on effects on both a personal and professional level, including the deterioration of mental health, which was a major concern for over three-quarters (76%) of employees surveyed.
The impact of money worry on mental health is substantial
According to the report, over half (52%) predicted earlier this year that financial concerns would be their greatest worry - a prediction that has no doubt become true for many given the unprecedented rise in energy bills, living costs and inflation.
One in five (19%) people who had asked their employer for support during the first quarter of the year asked specifically for help with mental health.
Workplace academics and employers alike understand that stress and anxiety are major contributors to poor mental health, long-term sickness absence and low productivity. In these times of great economic pressure, the fundamental link between financial wellbeing and stress are threatening organisational effectiveness across a variety of sectors.
Stress, sleep and low confidence: how poor financial wellbeing manifests itself
The report found that almost half (44%) of UK workers who admitted to worrying about money in recent months say they’ve experienced stress. A further 35% had trouble sleeping and another 20% have lost some of their self-confidence.
Unexpected expenses, currently exacerbated by higher prices fuelled by the cost-of-living crisis, have been proven to cause stress levels to dangerously spike. This can lead to long-term problems, with researchers at the University of Georgia finding that suffering serious financial poverty combined with stress can result in physical health problems many decades later.
The spiralling effect of mental health decline
If employers don’t put measures in place to help their workers manage and address toxic stress, poor sleep and low confidence levels, individuals will struggle in the workplace. Relationships within teams or between reporting lines will weaken because people with poor financial wellbeing may be more likely to have a ‘scarcity mindset’, that leaves little headspace for oxytocin (the bonding hormone) and pro-social activities that strengthen bonds. When our relationships worsen in a particular domain, we’re less able to function healthily in the workplace environment.
Worrying about money is an enormous distraction and can negatively impact an individual’s productivity and ability to make good decisions at work. Anything that undermines both your actual performance and perception of performance is likely to affect mental wellbeing.
And, given 76% of employees negatively affected by the cost-of-living crisis said they hadn’t told their employer, their reduced focus and productivity might not receive the empathetic response it so deserves - leading to negative consequences such as increased managerial oversight, which aggravates mental health conditions further. It’s a slippery slope.
Worried about financial wellbeing at your organisation?
Mark Jenkins, CFO at MHR says ‘During the current cost of living crisis, we’ve seen financial wellbeing jump up the priority list for employers and employees alike…To be resilient in the face of an impending recession, retention is key and financial wellbeing and support is a huge part of that.’
MHR partners with Wagestream to make it easy for iTrent customers to switch on its award-winning financial wellbeing app. The app gives frontline workers access to flexible financial tools and services built around their pay - with no change to payroll.
For more information about the key issues affecting your employees during the cost-of-living crisis and the critical need to provide support, read the full State of Financial Wellbeing report here.