Combating Financial Stress for Better Mental Health

Combating Financial Stress for Better Mental Health

What is financial stress?

The World Health Organisation defines stress as, “a state of worry or mental tension caused by a difficult situation. Stress is a natural human response that prompts us to address challenges and threats in our lives.” Financial stress therefore is stress caused by or related to an individual’s finances. According to the Financial Health Institute, financial stress is “a condition that is the result of financial and/or economic events that create anxiety, worry, or a sense of scarcity, and is accompanied by a physiological stress response.” 

Everyone has experienced financial stress at some point in their lives, and it is often the number one, and most frequently experienced stress. Yet traditionally, the impact of financial stress has been ignored. The post-pandemic world is a world wrought by mental health struggles. Layoffs during the pandemic current layoffs in the post-pandemic world, and talks of entering into a global economic recession have also led to a steep rise in financial stress among the workforce as employees currently inhabit an uncertain world, and live in the anticipation anxiety of impending layoffs. Yet organisations have not adequately addressed the problem of financial stress, even while they might seek to improve the mental health of their employees by addressing other important areas. 

Impact of financial stress on mental health

Financial stress adversely impacts mental health. It can lead to low self-esteem, anticipation anxiety, conflicts with one’s family and loved ones, sleepless nights, exacerbate anxiety and depression issues, and force one to resort to unhealthy coping mechanisms such as excessive drinking, gambling, drug and substance abuse, and more.

Beating the Financial Quagmire

In the current scenario, organisations and employers must take the lead in the financial stress management of their employees. Here are some ways to promote financial wellness among employees:

Assessing the situation

The first step in reducing financial stress amongst employees is to first conduct a company-wide survey for employees to ascertain where the employees are spending the most, and figure out how to reduce such expenditure. Once the financial situation of each employee is ascertained, they must be provided financial advice that is unique to their situation. As a second option, the company might attempt to cover a certain part of the cost of such expenditure.

Financial education

Organisations must provide easy access to financial education to their employees. This may be done through organising regular awareness and training sessions with experts in financial planning through online webinars on financial education or one-on-one training with a financial guru, investment advice and more. This is especially useful for new hires or freshers who step into the world of finance for the first time when they join an organisation as its employee. 

Organisations must also inform every employee about the specific financial schemes and benefits that it offers, and how to avail them.

Access to financial planning services

Many organisations provide access to mental health resources to their employees. Access to financial planning services is no different. Financial planning services are professional services provided by experienced and qualified professionals to help businesses and individuals plan and manage their finances in the present and future years. These services include but are not limited to estate planning, tax planning, retirement planning, risk management and more. 

Tools for budgeting and managing debt

A simple and easy way to reduce the financial stress of employees would be for organisations to provide access to tools for budgeting and managing debt. These tools may or may not be digital. For example, Simplifi by Quicken is a financial planning tool designed to track an individual’s finances. It has a dashboard and can even record everyday expenses. The NerdWallet app is a free online tool that provides information and data to help users make better financial decisions. Along with that, one can also track their expenses on it. Another tool Rocket Money takes this a step further to cancel unused subscriptions or negotiate contracts on behalf of the user.

Cycle to work schemes or company transport

Many organisations can cut the expenses of the employees by introducing schemes such as ‘cycle to work.’ In this scheme, the organisation grants the employees cycles at heavily subsidised prices, which they can then use to commute to and from work. This is also a healthy option for the employees. Another option is company travel or pooling, where employees can commute using company vans or buses at discounted prices. 

Lunch at work

Another way to counter financial stress is for organisations to provide either free or discounted food at work. These significantly cut costs for an employee, who otherwise has to spend considerable amounts ordering their lunch.


Such measures from the end of employees are beneficial both for the employee and the organisation. They ensure employee support, reduce stress, increase employee satisfaction, and workplace wellbeing, and promote financial intelligence among employees. A happy and healthy employee, in turn, creates a healthy organisation by ensuring increased productivity metrics, reduced employee turnover rates, reduced absenteeism, and increased goodwill among both employees and customers.