How mental and financial wellbeing can support each other

In today’s workplace, the link between financial and mental wellbeing has never been more apparent

Two out of three employees’ mental health is affected by money worries and is the most common cause of stress, according to research by Cushon.

As a result, three out of five employees say their work performance is affected. The cost to businesses, according to research by Deloitte, is thought to be around £56bn a year in the UK.

Financial wellbeing is complex

To support our employees, we need to understand what they’re going through. However, the link between financial and mental wellbeing is complex – emotional, subjective and shrouded in misconception.

According to Mind, the mental health charity, even opening an envelope from a bank can trigger anxiety and panic. When it comes to personal finances, emotions vary wildly:

Guilt for spending money instead of saving it for later
Shame around needing to ask for support or benefits
Fear of looking at a bank balance or speaking to a professional
Stress from responsibilities and confusing financial systems
Being overwhelmed by long-term struggles without any help

To set employees on the path to financial wellbeing, we need to focus on their financial resilience.

Financial resilience is the ability to respond to financial challenges without crumbling under the stress. It’s the essential ingredient that helps people overcome their anxiety, even when the odds (or the economy) seem stacked against them. Without resilience, all that guilt, shame, fear and anxiety can become detachment: ‘I can’t handle this, so I won’t’.

To become financially resilient, employees need to feel confident in their ability to make ends meet today. And they need to feel in control of their commitments and goals for the future.

The problem is that many people don’t know what resilience looks like. Even when all the bills are paid, clouds of uncertainty still pervade.

How to start supporting employees’ financial wellbeing

Aside from providing product-based solutions such as workplace ISAs, debt consolidation facilities and salary sacrifice (which saves employees national insurance contributions and puts more money in their pocket), here are some small steps:

Run an education session on financial basics to help everyone build their confidence. Keep it relevant, practical and unbiased.
Survey employees to find out their difficulties. Then run follow-up sessions that focus on those topics.
Provide tools that help people make informed decisions. See what your pension or other benefit providers offer in terms of education and help people make the most of employee benefits.
Make information available at all times. Record any webinars, write-up fact sheets and how-to content, and – most importantly – store it online for easy access.

Build long-term resilience

Financial resilience isn’t just about present challenges – it’s also about helping employees feel comfortable with their future commitments and goals, such as feeling prepared for retirement.

Some employees (especially younger employees) are not engaged with pensions. When retirement is decades away, it makes sense that current priorities get in the way of planning. But perhaps more concerning than the lack of engagement is that it eventually leads to detachment.

People often detach when they’re overwhelmed and feel unable to face a situation. Unfortunately, this is the case with pensions, where people are losing touch with their pots to the tune of £27bn.

Aside from lost pots, the concern about pension ‘detachment’ is that in times of financial stress, employees could start to consider reducing their pension contributions or, worse still, opt out altogether. While it can feel that some pressure is taken off today, it’s just storing up a future crisis.

We need to help employees with their current financial issues, so that their financial futures are also secure.

Where to look

Watch this year’s REBA Wellbeing Conference, given by Cushion’s Sarah Steel: ‘Enhancing the employee experience through financial empowerment’.

There are annual national events such as the International Week of Happiness at Work and the Pay Your Pension Some Attention campaign. With the increased awareness that these bring, it’s a good idea to set aside some time to consider the steps to take.

The knock-on effects of improved financial wellbeing are hugely beneficial to both employees and employers. So start with the basics, build resilience, and ease your way back to a happy and productive workforce.