How Financial Stress Affects Mental Health at Work: Practical Strategies for Coping
Photo by Simran Sood on Unsplash
I realize this is not a new sentiment, at all, but it’s so incredibly true right now: times are tough. You don’t need me to tell you this, but the list for ‘why’ is LONG. Layoffs are happening in too many industries, the phrase ‘job security’ now feels like an oxymoron, and the cost of living is continuing to rise (and is frankly insulting at this point). Add in the impact of tariffs and political tensions, and it's no wonder that employee morale and mental health in the workplace are suffering (in addition to all the other reasons it already is), making it even harder for employees to stay focused, productive, and engaged.
When people are thinking about how they’re going to pay their bills and stay afloat, their list of deliverables is not exactly the first thing on their minds.
Financial stress is impacting workforces everywhere. According to a recent Forbes Finance Council post, “Financial stress is a major concern for millions. A recent study found that nearly 88% of Americans experience some level of financial anxiety, and for 65%, money is their top source of stress. Even more concerning, 41% reported that financial worries have taken a serious toll on their mental health”.¹
It’s crucial to understand how it affects employee and leader mental health, and, whenever possible, how to create space for that conversation as a form of helping people (hopefully) manage it effectively.
So, how can we navigate these tough times while safeguarding our mental health at work? By understanding the impact of financial stress on mental health in the workplace, practical strategies for managing workplace stress, and why defining your Mental Wellbeing Non-Negotiables™️ is essential.
The Impact of Financial Stress Stretches Beyond Money to Our Mental Health in the Workplace
When we talk about financial stress, it’s not only about the fear of missing a paycheck or struggling to cover bills. The negative impact of financial stress on mental health in the workplace often has more detrimental effects than we realize. Financial worries can lead to:
Decreased Productivity: Worrying about layoffs or whether you’ll be able to make ends meet takes up valuable mental energy. This psychological distress can lead to more mistakes, lower output, and less motivation than usual at work. The impact of financial stress on workplace productivity is significant, leading to an overall potential lack of focus.
Increased Absenteeism: Financial stress often causes emotional exhaustion, which can then manifest as physical symptoms. Employees dealing with financial anxiety may take more sick days due to their mental health struggles, physical pain, or honestly just the sheer need to cope with the emotional toll of financial stress.
Burnout: The constant strain of financial instability can create feelings of being trapped and feelings of helplessness. Add to that the uncertainty about the economy or future earnings, and burnout can also have negative effects on your physical health like fatigue and tension headaches.²
Deteriorating Mental Health: Anxiety, depression, and a sense of hopelessness are common effects of chronic financial stress (just to name a few). When you're constantly in survival mode, financial stress can exacerbate these mental health challenges, leaving you less able to cope effectively. Not to mention the hit that our sense of identity can take (i.e. I am so ‘insert not nice thing to say about yourself’).
The impact of financial stress on mental health in the workplace can’t be ignored.
So, what can we do about it?
How do we manage the strain of financial uncertainty without letting it affect our performance at work?
Let’s dive into some practical solutions for that.
Using Practical Strategies to Manage Stress at Work in Times of Financial Strain
When financial stress is overwhelming, it’s helpful to focus on the realistic and achievable steps you can take to manage the uncertainty of financial stability while protecting your mental health. Here are some strategies that can help:
1. Stephen Covey’s Circles of Control and Influence: Focus Where It Counts
Stephen Covey’s The 7 Habits of Highly Effective People introduced the concept of Circles of Control and Influence.³ This idea is incredibly useful when you’re dealing with financial stress and its effects on your mental health at work. Here’s how it works:
Circle of Control: These are the things you have direct control over. For example, while you can’t control your company’s decision to move forward with layoffs, you can control how you prioritize your tasks at work. Maybe you're feeling overwhelmed—so you decide to break your to-do list into smaller, more manageable pieces to feel less stressed. You can also control your health choices, like deciding to take a walk during lunch to recharge your mind, or even deciding to save even just a small portion of your paycheck each month to create a financial cushion for the future.
Circle of Influence: These are things you can influence, but not directly control. For instance, if your work environment is feeling tense or unmanageable, you can influence that by having a candid conversation with your manager about your financial stress, so they know what’s going on for you in the background in case you’re acting differently at work. If the distress of financial stress is really impacting you, and you start struggling with a project, you might ask for extra collegial support or timeline flexibility (if it’s possible). If you’re a manager and you're worried about your team’s stress levels—starting a weekly check-in to see how everyone is doing might not fix everything, but it could create a more supportive atmosphere, helping everyone feel heard and valued.
Circle of Concern: These are things completely out of your control, no matter how much you stress about them. Maybe you're concerned about the economy tanking or inflation driving up your grocery bill. You can’t control any of that, so it’s healthiest not to let it dominate your mental space (I know, easier said than done). Instead, focus on what you can do to positively impact your bank account —like cooking more at home, making a weekly budget, or considering other ways to save money without stressing over the news.
When financial stress hits, focusing on what’s in your Circle of Control and Influence helps reduce feelings of powerlessness, and is critical for managing (and protecting) your mental health.
2. Controlling the Controllables: It’s All About Creating Practical Action Plans (that don’t overwhelm you)
Since taking action is one of the best ways to fight back against the feeling of helplessness that financial stress can create, let’s dive deeper into how you can regain a sense of stability by breaking down big tasks into smaller, achievable goals:
Financial Planning: Take charge of your personal finances. Track your spending, set a budget, eliminate unnecessary expenses (where possible), and consider side gigs or other income sources (I know, it’s horrendous that we even need to consider that sometimes, and yet, here we are). Taking control of your financial health can ease some of the mental burden.
Seek Advice: Financial stress can feel isolating, but sharing your concerns with a trusted friend or family member can provide emotional relief. They might offer perspective or practical advice that you hadn't considered. And if you don’t have someone to turn to, seeking guidance from a financial advisor or a counselor who specializes in financial stress might help (yes this is real, and they are certified through the Financial Therapy Association). They can help you with strategies to improve your financial situation or just offer support for your mental health.
Easing Job Security Fears: If it feels useful and/or appropriate for your situation, start by updating your resume, exploring job opportunities, or networking with others. Set weekly goals for submitting job applications or updating your LinkedIn profile. If it feels safe to do so, practice applying and interviewing too.
Address Mental Health Concerns: Break down stress management into achievable (and non-negotiable) goals. Maybe it’s taking a five-minute break at work or going for a short walk during lunch. Small wins add up!
As tough as it may seem, try to focus on taking action rather than spiraling into worry. Setting realistic goals and acknowledging small ‘victories’ can help you navigate financial stress a little easier while trying to remain resilient.
3. Mental Wellbeing Non-Negotiables™: Show Up for Yourself First
Here's the tough truth: you can't pour from an empty cup. If you neglect your own mental health in the name of productivity, you’re headed for burnout. That’s where Mental Wellbeing Non-Negotiables™️ come in.
The core concept of this Melissa Doman LLC model is about being accountable to and showing up for yourself first (without apology), in the ways you actually need and enjoy, before (and so) you can show up for others.
To create real change in how you manage your mental health, these non-negotiables must be defined, practiced, and maintained by every person - employee and leader - regardless of title or tenure. Here’s how to create your own Mental Wellbeing Non-Negotiables™️:
Acknowledge Your Mental Health: Putting yourself first isn’t selfish—it’s necessary. You can’t be your best at work or for others if you’re not taking care of yourself.
Choose What Works for You: Find self-care activities that you enjoy. Whether you want to do coloring books with your kids on Sundays, dance around in the living room to Abba wearing a unicorn costume, or go prancing in a field twice a week with your dog - do what works for you - what feels good - so you’ll actually do it.
Create a Simple Routine with a Realistic Schedule: Your routine doesn’t need to be elaborate but it should be in your calendar, on your to-do list, or wherever you keep track of your day. Even ten minutes of downtime during the workday can make a huge difference.
Be Consistent: Consistency is key. But don’t stress if you miss a day. Life happens. Learn how to adapt, take a mental health inventory, and get back on track.
Share Your Non-Negotiables: Encourage others to share their mental health practices, especially in the workplace. When you foster a culture of prioritizing mental health, it benefits everyone.
Tips for Employers: How to Support Your Stressed Employees
As an employer, it’s essential to support your team in managing the impact of financial stress on their mental health at work. Here’s are a few ways how:
1. Create a Culture of Empathy
Create a safe, non-judgmental space: Start by fostering an environment where employees (and leaders!) feel comfortable discussing their financial concerns without fear of stigma. Encourage openness around mental health as well, so employees understand it’s okay to talk about the financially-driven stress they’re under. Consider having informal check-ins with employees, either through one-on-one meetings or anonymous surveys, to get a sense of what they’re going through. I realize that this one can be tough, and can sometimes open the proverbial can of worms around compensation, size of salaries, etc. - but that’s not a reason to escape a company’s duty of care to acknowledge the larger systemic financial stressors that your workforce may be under.
Be understanding of personal situations: Financial stress often comes with a lot of uncertainty, and employees may need some space or flexibility to manage their personal lives. If an employee needs time off or to adjust their workload, approach these requests with empathy. For instance, someone dealing with mounting debt might need more time for appointments with financial advisors or may need a few days off to mentally recharge. People need to refuel even more often when they’re expelling additional energy managing feelings of financial stress. Would you rather they refuel or break down?
2. Invest In and Offer Resources to Help
Offer access to Employee Assistance Programs (EAPs): If you don’t already provide EAPs, consider implementing them. These programs offer confidential support and counseling services that can help employees with both financial and mental health issues. Be sure to remind your team of these resources and how they can use them.
Provide financial wellness support and financial planning services: Offer workshops or seminars on personal finance management, debt relief strategies, or budgeting. Bringing in an expert to give practical advice on handling financial stress can empower employees and ease their concerns. Consider including financial advisory services as part of your benefits package. Something as simple as providing exclusive access to a trusted online tool for budgeting can be a great help.
3. Promote Work-Life Integration and Flexibility
Support flexible working hours or remote work: Employees juggling financial stress may also be managing difficult personal situations, like caregiving, second jobs, or long commutes. Allowing flexible work hours or remote work can help ease these burdens. It also helps employees balance their personal responsibilities and reduce stress around transportation or caregiving costs. I know this is a hot-button topic because of RTO, but it doesn’t make it less true or important.⁴
Encourage time off for rest and rejuvenation: Employees experiencing financial stress might push themselves harder at work, trying to earn more or stay ahead of deadlines. Remind them that taking time off for rest is essential to their mental health and well-being. This can help prevent burnout and improve long-term productivity.
4. Provide Mental Health Support That Includes Financial Stress
Incorporate financial stress into mental health discussions: When promoting mental health resources, ensure that financial stress is acknowledged as a valid and significant challenge. Tailor your employee assistance resources to include financial counseling, or even look into offering on-demand financial stress management content that can be accessed at any time.
Create a benefits package that addresses financial well-being: Beyond just health insurance, consider offering benefits like student loan repayment assistance, retirement planning, or even partnerships with local credit unions or financial advisors. Small benefits like these can make a big difference in reducing financial anxiety among employees. (P.S. financial wellbeing and/or counseling is often a feature of EAP programs!)
5. Lead by Example
Model healthy behaviors: As a leader, be transparent about your own efforts to manage work-life integration and financial well-being. Show employees that it’s okay (and important) to take care of yourself, prioritize mental health, and seek support when needed. Your actions can set the tone for the rest of the organization. Humanize yourself as a leader and show that you’re not immune to the same concerns as stressors that impact the teams you lead.
Be approachable: Make sure employees know they can come to you without fear of judgment. Whether it’s about work struggles or personal stress, being a boss who listens will help you gain their trust and build stronger connections with your team.
Continuing to Take Action for Our Mental Health in Financially Uncertain Times
In a world where financial pressures are intensifying, the impact on mental health and work performance cannot be overstated. I know financial stress may feel overwhelming at times (I do, really).
Try to remember that the strategies and practices you put in place can make a meaningful difference. By taking a proactive approach to managing stress, focusing on the controllables, and prioritizing mental health with your Mental Wellbeing Non-Negotiables™️, you can foster resilience in yourself and your team.
This isn’t about pretending everything is fine or putting on a mask of productivity. Please DON’T do that. It’s about acknowledging the reality of our challenges, leaning into what we can control, and seeking out the support that helps us keep moving forward—together. When we give ourselves the permission to manage stress in a healthy way, especially during times of financial strain and uncertainty, we empower not just our personal growth but also contribute to a more supportive work environment.
Remember, you need to take care of your mental health, and we need to try to look out for each other, while we’re all looking out for our wallets. With that, hopefully as individuals, and together, we can make it through this next chapter of tough and uncertain times.
READY TO TAKE THE NEXT STEP?
If you’re prepared to tackle the effects of financial stress and safeguard your mental health at work, let’s get started. Mel will walk you through her in-person and virtual customized programs and services, based on your company's needs. We know mental health conversations are difficult, but asking for help doesn’t have to be.
Sources:
¹Council Post: How Financial Decisions Impact Mental Well-Being | Forbes
²Burnout: 5 Signs and What to Do About It | Cleveland Clinic
³The 7 Habits of Highly Effective People® | FranklinCovey
⁴What’s happening with the return to office movement? | PowerToFly
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