Financial Distress
The economic recession has drawn considerable attention to the connection between mental health and financial circumstances. Nearly two-thirds of Americans report having serious financial problems, and workers with financial distress report poorer overall health.1
There are typically four primary causes that lead to financial trouble: life events (accidents and illness, etc.), financial literacy, psychological factors (alcohol, drugs and gambling, etc.) and income stagnation.
The connection between mental health and financial health is especially pronounced among those who have had an involuntary change in their employment status, such as pay cuts or reduced hours. A national survey found that those with an involuntary change in their employment status were twice as likely to report symptoms consistent with severe mental illness, even though they are employed full time.2
Tips for Employers
The good news is that research is beginning to link financial education and counseling to improved employee health, work performance, and attendance. And employees, more than ever, are looking to their employers to provide guidance.3 A recent study indicated that employees are increasingly interested in professional advice regarding critical decisions about their benefits, their retirement savings, and their overall financial situations.
Offer and promote financial education programs. Emphasize the prevention of financial problems through increasing money-management knowledge and skills in all employees. Financial education programs are often free or extremely low cost. Provide education in various formats, including lunch and learns, brochures, company newsletters, employee intranet portals and other employee communication vehicles.
Promote use of employee assistance and health programs. Research shows that people often neglect caring for themselves during times of stress. Encourage supervisors and managers to remind employees about the availability of EAP and health programs.
Use open enrollment as opportunity to educate. Help employees choose the best plan options for them and explain the financial benefits of programs such as pharmacy mail order, flexible savings accounts and discounts programs.
Educate throughout the year. Take advantage of opportunities such as the holidays (keeping gift giving in check) and tax season (taking steps to minimize tax bill or save refunds) to push financial education messages. Learn more from other employers. Check out the case examples of IBM, Pepsi Bottling Group, The Home Depot and USAA from the Partnership’s Research Works issue brief: Employee Personal Financial Distress and How Employers Can Help.
References
1 Kaiser Family Foundation. (2008). Economic Problems Facing Families: Survey Brief from The Kaiser Health Tracking Survey - Election 2008.
2 Mental Health America. (2009). Economic Downturn Taking Toll on Americans' Mental Health (press release).
3 MetLife. (2008). Sixth Annual Study of Employed Benefits Trends: Findings from the National Survey of Employers and Employees.
Resources
Examines employee personal finance and what employers can do to help. Research indicates that the financial crisis is taking a toll on people's mental health, not just their pocketbooks.
This tip sheet from the American Psychiatric Association provides information on how to identify and respond in times of extreme distress.
This guide from the U.S. Substance Abuse and Mental Health Services Administration provides practical advice on how to deal with the effects financial difficulties can have on physical and mental health.