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The 3 Biggest Sources of Employee Financial Stress — And How You Can Help

It’s no secret that employees are stressed—but according to Gallup, stress levels have been skyrocketing to record highs with mixed intervention from employers.

And while the specific sources of stress vary between organizations, most workers collectively agree that their biggest source of anxiety is financially motivated.

As PwC’s 2023 Financial Wellness Survey highlights, 57% of the world's workforce cite financial worries as the top cause of stress, impacting how individuals concentrate on the job and engage with their work. Moreover, thanks to external factors like inflation and rising interest rates, these money worries can also escalate other health problems, including depression, lack of sleep, and even hypertension. 

But financial stress doesn't just end with poor employee health outcomes. When workers are consumed by thoughts of rising grocery costs, impending payments, and strict holiday budgeting, their resulting disengagement and decreased satisfaction can increase their likelihood of leaving—spelling a huge problem for retention rates.

While simply increasing pay isn't always the most feasible or effective solution, organizations have an abundance of resources at their disposal to take financial burdens off employees' shoulders and improve their day-to-day wellbeing. But before that can be accomplished, employers must have a clear understanding of what their employees are struggling with from a financial standpoint.

What are the Top Financial Stressors Impacting Employees Today?

Following nearly three years of economic turmoil stemming from the pandemic, 2022 actually saw a meaningful rise in pay for many workers, with U.S. companies increasing wages by 3.4% on average.

For some employers, these rising labor prices might seem like enough to improve financial stability. But between elevated levels of inflation, sky-high interest rates, and deepening household debt, U.S. workers might be doing worse than before.

To understand how to best support employees with their unique financial burdens, let’s take a closer look at some of the key financial issues impacting individuals across the country.


Inflation has been a persistent problem for the last few years, with rates peaking at 9.1% in June 2022—the largest 12-month increase in over 40 years.

Since then, the Federal Reserve has managed to bring down inflation to 3.7% as of September 2023, but this is still far above its 2% goal. And the end of the year is quickly approaching.

As a result, employees across all industries are feeling the incessant impacts of financial anxiety—and it’s even spreading up the income ladder. PwC also found that nearly half of employees earning $100,000 per year or more are just as equally stressed about their financial situation.

Between the rising cost of living and saving for the future, employees don’t have the same resources to invest in their mental health and financial wellness as they once did, affecting their ability to find meaning in their work.


Rising Interest Rates

After a series of aggressive interest rate hikes over the past year and a half, the Federal Reserve’s most recent update left rates unchanged, with a target range between 5.25% and 5.5%.

However, since inflation and federal interest rates are closely interlinked, more interest hikes could be coming as inflation rises in the short term. What's worse, these recent rising interest rates represent the largest increase since the 1980s, when the Federal Reserve was fighting the last record-high inflation period.

If (and when) interest rates increase again, employees will likely face a number of cascading financial side effects, from higher variable mortgage payments to increasing borrowing costs and prime rates. Most will likely have to postpone purchasing a home or paying off credit card debt, two setbacks that can heavily plummet morale in the workplace.

Deepening Debt

Speaking of credit card debt, U.S. card balances soared to over $1 trillion by the middle of 2023, according to the Federal Reserve Bank of New York. At the same time, total household debt exceeded $17 trillion, including roughly $1.8 trillion in student loans.

These numbers may seem incomprehensibly big, but they have a real human impact, specifically for millennial and Gen Z employees. On average, college students entering the workforce for the first time already owe as much as $30,000 in education debt—not to mention the money they currently or will owe in additional loans, credit cards, or rent/mortgages.

Already starting their careers off at a financial disadvantage doesn't just impact the mental and emotional wellbeing of younger members of the workforce. It could also force them to create unsustainable work habits that blur the lines between work and personal life, all in the name of completing projects on time and securing a stable paycheck to build equity.

Such habits toe a fine line between productivity and burnout, often causing employees to leave in search of more sustainable work environments.

When Financial Worries Become a Health Problem

While financial wellbeing is only one of the six pillars of holistic wellness, it has a wide-reaching impact across all dimensions, including:

  1. Physical: On a physical health level, financial stress has been proven to heavily impact sleep quality, headaches, high blood pressure, poor immune responses, and more. 
  2. Mental: Psychologically, the stress of money worries can create or exacerbate underlying mental health issues.
  3. Social: Financial strain can also lead to social issues, as employees might not have the budget to spend time with friends or family.
  4. Occupational: Not only does financial stress inevitably seep into the workplace, but employees may feel the pressure to work long hours to make ends meet.
  5. Purpose: When employees are working tirelessly to put food on the table, it can be difficult for them to find meaning in the work they do outside of pure survival.

How Financial Stress Impacts Your Bottom Line

Personal finance issues aren't always an employee's preferred topic of discussion, especially with employers. This can make money stress hard to identify or distinguish between other health or wellness issues.

However, the consequences for organizations are clear and measurable:

Low Engagement
Whether employees are having difficulty saving, struggling with an unexpected expense, or worrying about looming financial decisions, finances can bleed into work in subtle ways—forming cracks in overall company performance. As a result, financially stressed employees are nearly five times more likely to be distracted at work, leading to deeply ingrained engagement issues down the line.
Decreased Productivity
Distractions at work can quickly add up to lost time and productivity. In fact, 56% of employees with financial anxiety spend at least three hours per week dealing with or thinking about these issues during work hours. 
Reduced Job Satisfaction

In addition to decreased engagement and productivity, financial stress can also hurt job satisfaction. Without effective financial wellness support and resources, workers are often left to figure out financial solutions on their own, a nearly impossible task without sufficient resources and education in place.

High Turnover Rates
It’s evident that financial stress hasn’t ended since the peak of the pandemic’s economic downturn, and workers are still facing the brunt of it. Without effective support or pay increases, they could start looking for better opportunities elsewhere.
Poor Company Culture

Between employees leaving for higher pay and more dedicated wellbeing support, money worries can have a significant impact on company culture. Not only are employers at risk of losing top talent, but the chronic stress employees face around finances can bleed into work interactions. Without support, they’re more likely to stay quiet and search for a new job.

Increased Healthcare Costs
Finally, financial difficulties can lead to an increase in overall healthcare costs. When employees are consistently dealing with stress-related illnesses, it can cause premiums to increase. Additionally, workers are increasingly delaying retirement due to money issues. For employers, even a one-year delay could lead to increased workforce costs of $50,000 per individual.

What Role Do Employers Play in Facilitating Financial Wellbeing?

Financial wellness (or the lack thereof) can have significant impacts on both employees and employers. However, the long-standing myth that employers aren’t responsible for their workers’ financial wellbeing is quickly becoming folklore from the past. 

Lindsay Bryan-Podvin, licensed financial therapist and founder of Mind, Money, Balance, explains that while financial literacy is often thought of in terms of creating a budget with simple math problems—like subtracting a daily coffee purchase to save money—this style can quickly become limiting for individuals.

“Research shows that 80% of our financial decisions are driven by our emotions versus logic," Bryan-Podvin points out in our latest webinar, "Financial Wellness and Self-Care: What It Is and Why It Matters."

"It’s imperative that we factor in emotions when we engage with money—and in particular, when we want to cultivate financial wellness programs in our workplaces.”

But what does this look like in action? For employers looking to mitigate financial stress and support their employees’ holistic wellness, there are a few initial steps that can yield tremendous results.

1. Offer Privacy and Empathy

It's essential that employers do everything they can to foster a work environment that’s grounded in empathy and privacy.

Because personal finance is a sensitive and vulnerable topic for many, respecting boundaries in financial matters is paramount to build trust. At the same time, when employees voluntarily bring these topics up, it’s crucial to listen to their concerns with an open mind and empathy for their unique situations.

Over time, this cultivates an authentic culture of understanding and support, wherein employees are free to share their financial worries and leaders are encouraged to listen without judgment. Just the simple act of acknowledging struggles and offering support can significantly alleviate stress, fostering a more compassionate—and less stressful—work environment.

2. Provide Financial Wellness Support

While financial literacy is important, it has also become a charged buzzword for many organizations, bringing up feelings of shame, condescension, or even inadequacy.

Instead, Bryan-Podvin encourages the promotion of financial wellness instead—or, “the ability to understand financial concepts, but also to make sure you’re able to put meaning to them in a way that feels good for you.”

By helping employees understand their bigger financial picture and create a plan that aligns with their values, this approach ensures that emotions don’t run too high when employees engage with financial planning.

3. Help Employees Prepare for the Unexpected

Employers can also lend support to employees by helping them prepare for life’s unexpected expenses.

One effective strategy is to aid workers in establishing an emergency fund, but also going one step further by initiating employer-sponsored flexible spending accounts (FSAs) and health savings accounts (HSAs). 

Additionally, employers can help minimize financial stress by offering money management workshops. These courses can teach valuable lessons like budgeting, but it’s important that they aren't positioned as patronizing, accusatory, or shame-inducing.

One way Bryan-Podvin likes to ease these tensions is with simple language changes. For instance, “budgeting” can have negative connotations, but a “spending plan” lacks judgment and acknowledges that money earned has to be spent in certain areas.

4. Implement a Financial Wellness Program

These financial workshops are a great place to start, but true success will hinge on a company’s overarching wellness program.

Implementing a comprehensive financial wellness program, including educational resources, tools, and more, can significantly reduce money worries in the workplace—and these benefits extend to all aspects of wellbeing.

After all, as Bryan-Podvin elaborates, “When we have financial wellness, it affords us the ability to take care of other domains of our life, such as emotional, social, physical and mental health."

5. Reward Employee Participation

Finally, employers can go above and beyond by not only offering these financial wellness resources but incentivizing their use to boost employee participation.

Cash prizes, gift cards, and extra paid time off can all alleviate some financial burdens or provide opportunities for employees to bolster their savings. However, rewards don’t have to be monetary—it’s mostly important to recognize those who engage with the program and motivate others to take proactive steps toward financial wellness.

Empowering Financial Wellness and Self-Care in the Workplace

Curious how your organization can cultivate financial wellness across all levels of your workplace? Discover the dos and don’ts of financial literacy programs and effective methods for minimizing financial stress in our latest webinar with Lindsay Bryan-Podvin.

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