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Understanding the Link Between Financial Wellness and Mental Health

Over the last five years, long-term stress and chronic illness rose to dangerous levels in adults ages 35–44—from 48% in 2019 to 58% in 2023. That same age group saw a dramatic increase in mental health diagnoses too—from 31% in 2019 to 45% in 2023. But the highest rate of reported mental illnesses belongs to adults ages 18–34—a scary 50%.1

Adults ages 18–44 make up over 89 million employees (about half of the total workforce in the U.S.).2,3 That’s a heck of a lot of people in your business who could be dealing with long-term stress, chronic illnesses and mental health diagnoses.

The numbers clearly show that employee mental health has taken a hit over the last several years. But what’s the problem behind those numbers? One word: Money. Over 80% of 18–34-year-olds and 77% of 35–44-year-olds list money as a top stressor.4 Financial health and mental health are closely connected. The sooner employees are financially well, the better their chances are for improving their mental health.

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The Connection Between Financial Wellness and Mental Health

The 2022 SmartDollar Employee Benefits Study found some alarming statistics that connect employee financial wellness to employee mental health:

  • 47% of employees said they lose sleep because of their personal finances.
  • 55% of employees worry about their personal finances daily.
  • 36% of employees have missed work due to a financial problem.
  • 45% of employees have been distracted by financial problems while at work.
  • 24% of employees are either struggling with their money or in a crisis.

Do you notice a trend? Lost sleep. Worry. Missed work. Distraction. Struggle. Crisis.

These kinds of issues don’t stay at home. Employees can’t help but bring them to work. And tired, worried or distracted employees aren’t be as productive and engaged as they could be if they weren’t worried about money. Poor mental health is a disaster for your business. The stress employees feel shows up in a lot of different ways, from absenteeism, burnout and anger to low motivation and physical illness.

Stress and anxiety charge up the fight or flight responses we feel when our body senses danger. So, when employees feel worried about their financial problems, their stress responses are in hyperdrive. They may not know how to fight their financial problems, but they can’t run away from them either. So, here they are. Stuck.

The Financial Health Network identifies three levels of financial wellness: financially healthy, financially coping and financially vulnerable. They found that 75% of financially healthy people say their mental well-being is “excellent” or “very good,” but only 44% of financially coping and 21% of financially vulnerable people could say the same.5 Here’s the thing though: Income doesn’t make someone financially healthy. People making six figures can fall into the financially coping and vulnerable categories if all the money coming in goes right back out in the form of monthly debt payments. It’s not how much people make, but how they manage the income they have that makes the difference.


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In fact, a recent study share in the National Library of Medicine shows a strong relationship between debt and mental disorders, depression, suicide, problem drinking, drug dependence, neurotic disorders and psychotic disorders.6 Unfortunately, the struggle goes deeper for some. Adults with a debt burden are three times more likely to attempt suicide than adults without a debt burden.7

All this adds up to one important takeaway: Your employees’ financial wellness, or lack thereof, plays a major role in your employees’ mental health.

Financial Wellness Can Improve Employee Mental Health

The 2022 SmartDollar Employee Benefits Study shows that 56% of employees feel like they can’t get ahead with their finances. And 60% feel behind on retirement. But here’s the rub: 33% of people in America have no savings at all. It's safe to assume some of those people are your employees.

They have no savings, no retirement and no peace.

Financial wellness and mental health have a clear connection. As financial wellness improves, so does mental health. And if an employee isn’t financial well, their mental health may suffer as a result.

Luckily, employers aren’t left out in the cold when learning how to help their employees improve their financial situation. They’re in a great position to help their employees resolve their money issues—and their money stress. The best part? Your employees are looking for help! Over 70% of employees wish their employer offered more resources to help them manage their finances. So, what can you do? Offer them a financial wellness benefit.

A financial wellness benefit is any program that helps employees with money-related issues. After implementing SmartDollar, a financial wellness benefit, employees reported some great improvements according to The 2022 SmartDollar Employee Benefits Study:

  • 60% of employees say they’re better off compared to last year than the 30% who don’t have access to a financial wellness benefit.
  • 27% of employees report less stress about their personal finances.
  • 29% of employees are saving for their retirement.
  • 25% of employees are building up their emergency fund.
  • 24% of employees are learning how much they need for retirement.

SmartDollar is a financial wellness benefit that teaches employees how to stick to a budget, get out of debt, save for the future, and retire with confidence. It’s the best resource to help your employees learn how to manage their finances and take action with tools like EveryDollar and Financial Peace University.

Employee Mental Health Affects Your Business

Employees who put one foot in front of the other with their finances and tackle their money goals are some of the strongest employees you can have.

We’ve seen proof that financial issues have a negative effect on employee mental health, causing them to be stressed and anxious all day long. But when they turn the ship around, the business benefits too.

Here’s what we’ve noticed when looking at how employee mental health affects your business:

how employee mental health affects your business

What Can Employers Do?

Money, work and mental health all exist together, and the balance requires constant attention, evaluation and support. Employers like you are constantly learning about new ways to help employees improve their mental health. A financial wellness benefit could be the answer you’re looking for. Learn how financial wellness can reduce employees’ financial stress and improves your business.

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Ramsey Solutions

About the author


Ramsey Solutions has been committed to helping people regain control of their money, build wealth, grow their leadership skills, and enhance their lives through personal development since 1992. Millions of people have used our financial advice through 22 books (including 12 national bestsellers) published by Ramsey Press, as well as two syndicated radio shows and 10 podcasts, which have over 17 million weekly listeners. Learn More.

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