Money and mental health: how closely tied are they, and should employers care?

Maintaining financial wellness is crucial for mental health, but the cost of living crisis is making that more difficult. We explain how employers can help, and why it's in their interests to do so.

Yugi the Giraffe - 30 May 2022

When we think about mental health, we often focus on personal issues such as childhood, family and relationships. But for many people today, it's money that lies at the heart of their mental health issues… and vice-versa.

According to research by the Money and Mental Health Policy Institute, almost half (46%) of people with unmanageable debts also have a mental health problem. Meanwhile 86% of people with mental health problems say their financial situation make their mental health problems worse. And that's not really surprising.

When people experience money worries, it can cause anxiety and depression. When people are anxious and depressed, this can affect their ability to earn, reduce their motivation to manage money, and prompt them to overspend as a way to lift their mood. So the two issues tend to reinforce each other, in a vicious circle that seems unending.

Worse still, people are generally unwilling to seek help from those closest around them. According to research by the Money Advice Service, 50% of people in debt are unwilling to talk to friends and family about it. So by default, employers are often best placed to step in.

Why employers should help

Obviously, any employer with a heart would wish to help their employees achieve financial wellness, for altruistic reasons alone. But there's also a strong business argument for doing so.

If employees suffer poor mental health due to money worries, it's going to affect their performance at work, reduce their productivity, and make them more prone to illness and absenteeism.

According to research carried out by YuLife and YouGov, 80% of workers believe that stress around financial wellbeing can negatively impact performance in the workplace. And those aged 25-34 are most likely to believe this to be the case.

Unfortunately, financial worries are soon going to be affecting more and more employees, due to the current cost-of-living crisis. Consequently, 57% of people expect their levels of concern around financial wellbeing to increase, and this rises to 62% among women and 65% among 25- to 34-year-olds.

The good news

Helping employees achieve good financial health sounds like a real headache. Surely, bosses have enough to worry about, just keeping the business afloat in troubled economic times?

But here's the good news. Perhaps surprisingly, it's not really about how much employees are paid. According to a recent survey by the Money and Pensions Service, 'Those with higher financial wellbeing are much more likely to be content with their lives than those earning top salaries'.

In other words, it's not the total amount of money you earn that's important. What's central to good financial wellness, and thus mental health, is how easy or difficult your finances are to manage. And the best news is, most businesses already have schemes in place to help with this.

The problem is, employees often don't know about them, don't understand them, or the benefits have not been communicated properly.

What employees need

So what exactly is it that employees need?

Well, in the YuLife/YouGov survey a plurality of workers chose income protection or critical illness cover as their favoured policy a workplace can offer, to help enhance their sense of financial wellbeing. And 63% of adults who live in households with children believe that life insurance is important to their sense of financial wellbeing.

As we just mentioned, most businesses offer this kind of support already. The problem is, engagement with these schemes is typically low or non-existent. And that's not surprising, because around one-quarter of workers (24%) feel that their workplace does not clearly explain the support it can offer to its employees to help with their financial wellbeing.

There's also the issue that workers are usually unwilling to share their financial health problems directly with employers. The same taboo against discussing financial issues with family and friends applies here, too.

Consequently, 66% of workers say they'd be uncomfortable telling an employer they feel financial stress, and just 21% would feel comfortable doing so.

So what's the answer?

The neutrality of apps

Increasingly, businesses are finding that the neutrality of apps can help bridge the gap between workers suffering financial worries and being unwilling to discuss them with other humans. Because let's face it, typing information into the neutral interface of an app is much less intimidating than staring a fellow person in the eye, and revealing the fine details of your financial health.

It's a task you can do at your own pace. It separates facts (the exact figures for your income and expenses) from emotions (guilt, fear, stress). And it allows you to see exactly what's going on in your financial life, clearly and simply.

Indeed, sometimes just seeing your financial situation in clear and understandable figures, rather than hiding your head in the sand and building it up in your mind to be worse than it is, can be incredibly liberating.

That's why we're providing all YuLife members with six months' free access to Moneyhub, a money management app that helps people build good financial wellness habits.

Moneyhub allows employees to group their accounts from different providers, including current accounts, savings, investments, pensions and more, in one central space. Then through clever AI, the app analyses transactions across all these accounts, and auto-categorises them so that it's easy to see what's going on. You can learn more about Moneyhub here.

And that's not all. YuLifers also get access to details of their group life insurance, group income protection, and group critical illness cover directly within the YuLife app. That's an app, by the way, that boasts industry-leading levels of engagement thanks to its clever use of game mechanics.

Thirdly, the YuLife app also features the Wellness hub, a central place where employees can access YuLife's 24/7 employee assistance program (EAP). Created in partnership with Workplace Options, the EAP supports employees with work, relationship and financial issues, and this professional help is provided free, in confidence, and 24 hours a day, seven days a week.

In short, providing employees with YuLife cover allows bosses to make a positive impact on employees' financial wellness. There's no need for embarrassment or difficult conversations. Through the YuLife app, employers simply give their staff the tools to solve their own financial health problems, in a way that's easy to use and entirely private.

And apart from the warm glow of doing the right thing, that means the business will benefit from a workforce with better mental health, lower absenteeism and higher productivity overall.

Yugi the Giraffe

Yugi is our YuLife mascot. Like all giraffes they've got a big heart – in fact the biggest heart of all land animals.