The Impact of Financial Circumstances on Mental Health

Financial and Mental Well-being are core components to a holistic well-being strategy. However there is also a great deal of evidence showing a correlation between the two. 

January 09, 2020

Financial and Mental Well-being are core components to a holistic well-being strategy. However there is also a great deal of evidence showing a correlation between the two. Suggesting they are not only two pillars of an overall strategy but also one may beget the other.

According to a Willis Tower Watson Study

  • Across global employees experiencing financial insecurity impacting mental health
  • 27% reported severe stress, anxiety or depression within the last two years, and, in many countries, employees are increasingly concerned about their finances, both immediate and long term
  • Substantial number of employees live paycheck to paycheck - 30% in the Eurozone countries. Many saying they cannot come up with €2,000 in an emergency.
  • Those with financial troubles are 2x likely to be in poor health as those who declare themselves financially unworried

Social Determinants of Mental Health

Social determinants including economic and financial hardships show an increased risk for mental health.

  • Studies in several countries (including South Africa, India, ) have shown an improvement in mental health (including reduction in depressive symptoms) after implementation of financial solutions such as individual loans, microfinance interventions, loan repayment flexibility
  • An EU study found that a 1% increase in unemployment was associated with a .79% increase in suicide. Job insecurity is associated with sub-optimal mental health
  • During the 2008-2010 recession there were more than 1,000 additional suicides in the UK than would have otherwise been expected with trend alone
  • Spain had a direct correlation with unemployment and an increased suicide rate during the economic downturn

Correlating Data by Country

  • Britain. Study found greater financial difficulties predicted greater depression, stress, anxiety, & alcohol dependence over time. Growing awareness of relationship between debt and mental health. 90% of UK young employees say mental health adversely effected by cost of living.
  • Africa. Improvements in mental health seen after deployment of government programs to address social determinants of poverty.
  • Australia. Financial issues are the top cause of stress. 1 in 3 Australians feels financially stressed.
  • Japan. 45% of Japanese expect to have to work over age 70.
  • Europe. 30% of Eurozone live paycheck to paycheck..

As a Contagion

  • Financial impact on mental health can be contagious impacting children in the household too
  • Parental stress can lead children to behavioral problems, difficulty in handling stress themselves, and increase the risk of mental illness

Employee Mindset on Financial Matters

The global landscape is diverse and needs differ at the local level. However when it comes to financial well-being, we see common challenges with the majority of the global workforce feeling uncertain or concerned. In addition to this, most employees are not only receptive, but also desire, access to financial tools and guidance from their employer.

According to Mercer:1

  • 35% of global employees feel financial secure today
  • 30% are confident they will be able to afford to live as long as they live
  • 33% have made no calculation of retirement income
  • 85% are interested in online financial tools to help manage their finances
  • 79% trust employer to give sound advise on planning, saving and investing.

Examples of Employer Solutions

Many employers offer an array of solutions to help employees reduce finance-related stress that go beyond traditional retirement planning. They include:

  • EAP programs that have financial offerings such as referrals
  • Financial seminars/lunch-n-learns
  • One-on-one sessions with financial advisers or coaches
  • Financial health challenges
  • Student loan repayment benefits
  • Retirement Plans – Review existing pension/savings benefit plans

Additional Resources

More Topics

Articles & Guides icon_right_chevron_dark Culture and Strategy icon_right_chevron_dark Financial Well-being icon_right_chevron_dark Mental and Emotional Well-being icon_right_chevron_dark
  • 1 | McGowan R. Healthy, Wealthy and Work-Wise: The New Imperatives for Financial Security. Business Group on Health Global Forum presentation, March 1, 2018.
More in Global


  1. According to a Willis Tower Watson Study
  2. Social Determinants of Mental Health
  3. Correlating Data by Country
  4. As a Contagion
  5. Employee Mindset on Financial Matters
  6. Examples of Employer Solutions
  7. Additional Resources