Elevating Employee Wellness: The Impact of Financial Wellbeing on Mental Health  

Employees are mentally exhausted and stressed about their finances. Luckily, there’s hope for combatting the rising number of mental health issues in the workplace when employers offer financial wellness benefits. 

Record high inflation. Rising interest rates. Lack of job security. If you’ve spent any time watching the news lately, you’ve likely heard these economic factors talked about daily.  

With 6 in 10 Americans reporting themselves as living paycheck to paycheck at the end of 2022—according to the data released from our 2023 Benefits Insights Report—it’s not surprising that many employees are feeling stressed financially.  

Just how stressed are employees feeling about their finances? According to a recent Lyra report, 48% of employees cited financial stress as the top factor impacting their mental health, well surpassing COVID-19.  

While the correlation between financial wellbeing and mental health has been well documented over the years, with negative stigmas loosening surrounding mental health in the workplace, many employees are now looking to their employers to help tackle both issues simultaneously.  

Even though more conversations are taking place surrounding the importance of seeking help for mental health issues, 43% of employees surveyed from our 2023 State of Workplace Mental Health Report said that they still didn’t feel that their employer talked enough about the importance of mental health.  

From the data, it’s clear that HR leaders still have a long way to go when it comes to combatting stigmas surrounding mental health, but the good news is that 75% of employees think that more benefits choices would greatly reduce their stress while improving their financial wellness. 

Which employee populations are struggling the most with their mental health relating to their finances? 

Although the data from our 2023 Benefits Insights Report revealed that both men and women reported experiencing health or mental issues because of financial stress, 36% of women reported having a mental health issue compared to 28% of men.  

When we look at the additional findings from the report, it’s evident that women are far less prepared and more stressed out about finances than their male counterparts.  

• When asked about how they would pay for a large, unexpected expense: 

• 57% of women said they would pay with cash savings compared to 65% of men.  
• 19% of women said they would go into debt to pay the expense compared to 18% of men. 

• When asked how they would feel facing a large, unexpected expense: 

• 52% of women reported that they would feel panicked compared to only 39% of men.  

With numbers like these, how can HR leaders and employers assist in helping employees improve their financial wellbeing and subsequentially their mental health? One of the best places to start is by offering benefits that tie directly to financial wellness.  

What Benefits Can Employers Offer to Assist Employees on Their Financial Wellness Journey? 

As we saw with the Great Resignation, employees are no longer willing to remain loyal to employers that are not meeting their needs both in terms of salary compensation and benefits packages. With benefits now ranking as number two right below pay as one of the top reasons why an employee would stay or leave a company; it’s time for HR leaders to step up if they want to attract and retain top talent.  

In addition to reducing employee stress, absenteeism, and improving employee productivity, offering financial wellness benefits also is a great way for employers to show empathy during mental health crisis. With employee empathy perceptions at an all-time low, there’s no better time for employers to start acting now.  

So, what are the top financial wellness benefits that HR leaders can offer to assist employees? Look at the following to incorporate into your benefits strategy.  

1. Employer-sponsored retirement plan  

One of the best ways that employers can contribute to financial wellbeing is by offering a retirement plan as part of their benefits package. To go the extra mile, employers can offer to match employee contributions to increase the impact of compounding interest.  

2. Student loan assistance  

Another way that employers can assist in improving their employee financial standings is by providing assistance for student loans. As many employees are still burdened with the task of paying off their student loans, matching payments can help relieve the stress of debt. 46% of Americans with debt also being diagnosed with a mental health issue, so this benefit can have a big impact on alleviating the burden of debt. 

3. EAP programs with financial wellness services  

Employee assistance programs (EAPs) have been known to help employees resolve a variety of mental health issues that can affect them in both their home and work lives. In addition to offering traditional EAP programs, many employers are also incorporating financial wellness services into this benefit as well. Some of the services that could be offered with this type of program include household budgeting, debt management, and investing advice for instance.  

While there’s no one size fits all approach to financial wellness benefits, employers need to be taking steps to combat mental health stress related to finances and incorporating them into their benefits strategies moving forward.  

Want to dive into more of the data from this year’s 2023 Benefits Insights Report? Learn more here.