Financial stress and mental health go hand-in-hand. As financial pressure seems to be greater and greater in today's economy, it's essential to explore the relationship between these two factors and understand their consequences on mental well-being. In this blog, I discuss what financial stress is, how money affects mental health, the symptoms of mental health, and how it’s affecting my generation, Gen Z (which btw if you aren’t familiar is anyone born between 1997-and 2012).
First, Let’s dive into financial stress and its connection to our mental health.
Understanding what financial stress is can be an essential first step towards addressing its impact on mental health. Financial stress refers to worry or anxiety stemming from one's financial situation.
Some common financial problems people face are:
- income stability
- managing debts
- High costs of living and inflation
- savings goals
- making ends meet
Financial difficulties can arise from various circumstances, such as job loss or unexpected expenses. When faced with such challenges, individuals often experience feelings of insecurity and helplessness.
The question of how does money affects mental health may seem intuitive but let's take a closer look. Studies have consistently shown that financial strain can lead to increased levels of anxiety, depression, substance abuse disorders, sleep disturbances, etc. These negative consequences reach beyond the person experiencing them; they can also affect relationships with family members or friends who may be impacted by their loved one's struggles.
Recognizing financial stress symptoms can enable people to seek appropriate support in a timely manner. These signs may manifest themselves emotionally (e.g., persistent sadness or mood swings), cognitively (e.g., difficulty concentrating or decision-making), behaviorally (e.g., avoiding social situations due to cost concerns), or physically (e.g., headaches or insomnia).
Research into the effects of financial stress has further shown its pervasive nature. For instance, one study found, from PwC, that financially stressed employees were more likely to report lower workplace productivity and engagement levels, illustrating the far-reaching consequences of this issue. Another study from the Money and Mental Health Policy Institute, identified a strong correlation between financial stress and an increased likelihood of developing mental health disorders, including major depressive disorder and generalized anxiety disorder.
Financial stress research from Bankrate, also highlights that Gen Z is particularly vulnerable to its detrimental effects on mental health. Studies have shown that Gen Z faces unique challenges compared to previous generations, such as:
- higher education costs
- mounting student loan debt
- increased housing prices
These are only a few examples of the financial challenges Gen Z is facing, but they contribute to heightened financial difficulties. As a result, they may be more likely to experience symptoms of anxiety, depression, or other mental health conditions stemming from these pressures.
In addition to the challenges faced by Gen Z in terms of their financial situation, it's crucial to acknowledge that this generation has grown up in an era marked by rapid technological advancements and shifting societal expectations. These factors have helped shape their attitudes towards money and financial stability. For instance, some members of Gen Z may prioritize experiences or personal growth over traditional markers of success like homeownership or stable careers. This shift in values may influence how they perceive and respond to financial stressors.
Given the well-documented relationship between financial stress and mental health – particularly among Gen Z – it is essential for individuals, communities, and employers alike to address this growing concern.
Here are ways employers can help:
1. Financial education workshops:
- Offer seminars or workshops on basic financial literacy topics such as budgeting, saving, investing, and debt management.
- Bring in financial experts to provide these sessions.
2. Access to financial counseling:
- Provide free or subsidized one-on-one financial counseling sessions.
- Offer resources for employees to connect with certified financial planners.
3. Student loan assistance:
- Offer programs that contribute to student loan repayments.
- Provide resources on loan refinancing or consolidation.
5. Flexible compensation:
- Allow for flexible pay schedules, such as weekly instead of bi-weekly.
- Offer financial bonuses, stock options, or profit-sharing as part of the compensation package.
7. Discount programs:
- Partner with local businesses to offer employee discounts.
- Provide discounted or subsidized services that can help reduce living costs, such as public transportation passes.
8. Health and wellness programs:
- Recognize that financial stress can impact mental health; offer wellness programs that address both physical and mental well-being.
- Provide access to mental health resources or counseling that can address stress, anxiety, and other related issues.
9. Open communication:
- Foster a workplace culture where employees feel comfortable discussing financial stress without judgment.
- Encourage managers to check in with their teams and provide support where needed.
10. Flexible work arrangements:
- Allow for remote work, which can help employees save on commuting costs.
- Offer flexible hours or compressed workweeks to help employees balance work with other life responsibilities.
11. Salary transparency:
- Ensure that pay scales are transparent and fair, reducing uncertainty and potential feelings of inequity.
- Regularly review and adjust salaries based on market rates and cost of living.
12. Resources and tools:
- Provide access to online tools or apps that help budget, save, or track expenses.
- Offer subscriptions to financial magazines, websites, or courses.
13. Tuition reimbursement
- Offer tuition reimbursement or scholarships for employees looking to further their education.
- Provide resources on scholarships, grants, and other ways to finance education.
By offering a combination of education, resources, and support, employers can help alleviate some of their employees' financial pressures.
Lastly, individuals should be encouraged to seek help – whether through professional counseling or support groups – if they find themselves struggling with their finances' impact on their mental well-being.
Understanding financial stress and mental health connections is crucial for fostering a healthier, more resilient workforce. By acknowledging the unique challenges faced by Gen Z and implementing targeted strategies to address these issues, we can work towards promoting lasting financial well-being and improved mental health outcomes.