New research highlights the growing connection between financial stress and mental wellbeing in the workplace. With employees increasingly affected by economic pressures, employers are responding with expanded financial support initiatives.

Money worries are having a detrimental impact on the workplace, according to latest research from WEALTH at work and the Reward & Employee Benefits Association (REBA). The study found that 40% of employees believe financial stress affects their work performance by causing increased stress levels, while one in ten (10%) report it has led to increased sick days.

These findings underscore the timely relevance of this issue during Mental Health Awareness Week, as financial and mental wellbeing continue to show strong interconnection.

The research reveals employers are well aware of the financial wellbeing risks their workforce faces. These include: Inflation (recognised by 76% of employers), childcare costs (73%), rental costs (64%), high energy prices (58%), high mortgage interest rates (58%), eldercare and other carer costs (46%).

In addition, employers are concerned about insufficient retirement savings (71%) and a lack of financial literacy (62%) among their workforce. The impact of these pressures is significant enough that 53% of employers say the increased cost of living will drive changes to their future financial wellbeing support strategies.

Expanding Financial Wellbeing Support

To address these concerns, almost half of employers (49%) plan to make changes to their financial wellbeing offerings, with over a third (35%) committing to increase their financial wellbeing spend.

The focus has clearly shifted toward providing employees with better knowledge and tools for financial management. Specifically, employers are offering or planning to offer: Pre-retirement planning support (60%), retirement-specific advice (54%), financial education from independent providers (47%), general financial advice (47%), one-to-one financial coaching (43%).

The research also indicates growing employer support for workplace savings products. Currently, about one in seven employers (14%) offer savings via tax-free wrappers such as Workplace ISAs. This figure is set to more than double to 30% in the future.

This development aligns well with employee preferences, as the research found that 42% of workers would save spare cash for emergencies in vehicles like ISAs.

Jonathan Watts-Lay, Director at WEALTH at work, comments on the findings: "Money worries can have a detrimental impact on people’s home and work life. So, it’s good to see that employers are stepping up to provide employees with the tools and knowledge to better manage their finances."

He notes that leading companies are now providing financial education and guidance from financial coaches to help address gaps in financial literacy. "It’s important to provide a range of learning methods. As well as in-person financial education, knowledge can also be supported through the creation of informative and stimulating content including webcasts, animations and interactive financial wellbeing platforms including Money&Me."

Watts-Lay also emphasizes the importance of accessible savings options: "Offering savings products such as a Workplace ISA are also important to help employees build financial resilience. This could be whether they are saving for the future or to create a fund for an emergency such as the car breaking down."

While offering financial benefits is important, ensuring employees understand and engage with these offerings is equally crucial.

"To boost engagement, it is important to ensure that employees are aware of all the financial wellbeing benefits on offer, how to access them and how they can use them to their advantage," Watts-Lay explains. "This is why financial education in the workplace is so important as it can not only help develop understanding and encourage engagement with the benefits on offer, but it’s also a catalyst for behavioural change and action."

As organisations observe Mental Health Awareness Week, this research provides timely evidence for the importance of addressing financial wellbeing as a core component of overall mental health strategy. By recognising the connection between financial stress and mental health, and taking concrete steps to provide support, employers can make meaningful differences in both employee wellbeing and organisational performance.