How does financial stress affect your workplace?

In this guest blog the team at Red Star Education explain the impact financial stress can have in the workplace.

Did you know that financial stress on employees can have a massive impact on workplace productivity? A series of recent studies reveal that financial stress is the number one concern for UK workers, ahead of concerns such as health and the work/life balance. The studies also showed that seventy per cent of the UK’s workforce waste a fifth of their time at work worrying about their finances; this costs the economy around £120 billion per year. Fifty-five per cent of employees said that experiencing financial pressure affects their ability to perform effectively in the workplace, while more than half would value financial assistance from their employer.

Although financial stress can impact all generations, the situation is more serious among younger workers. The majority of the UK’s workforce will be made up of younger generations in the next decade, yet 16% of 18-24 year olds have already defaulted on debt repayments. A poor credit history can now be detrimental to future career aspirations. As a result, eight in ten of 18-24 year olds are now suffering adverse effects of financial worries.

These findings illustrate that financial wellbeing doesn’t only help individual workers; it supports better business performance too. An employee who is not consumed by worry regarding their personal finances will be more focused and productive at work. Additionally, it seems many employers are unaware of the impact financial stress can have on its workforce. When 100 employers in the UK were canvassed for their opinions, a stark disconnect was found between them and their staff. On several measures, including company concern over financial wellbeing and acceptability of managing finances at work, employers had a far healthier picture about the contentment of their workforce than was actually the case. For example, seventy-two per cent of employers thought they provided a good benefits package compared to just twenty-three per cent of employees. Just one in ten employees thought their company cared about their financial wellbeing, compared to the seven in ten employers who thought that employees felt positive about their financial situation.

Financial wellbeing doesn’t only help individual workers; it supports better business performance too. The role for the employer here is not necessarily to increase pay; it’s about how employees can manage that pay, especially across competing short and long-term priorities. If an employee is consumed by financial pressure they are not going be as content as they could be, and a content workforce is most definitely a more productive workforce.

What can be done to remedy this situation? Companies need to address the problem; employees who find themselves under financial strain need to be pointed in the right direction to get the appropriate education or advice they need. Red Star Education is unveiling a new financial education project which will be aimed at companies to give their employees a better understanding of personal finance. This would reduce the risk of losing further workplace productivity hours. The Financial Well-being in the Workplace course is a flexible programme; financial stress can affect individuals in a wide variety of ways, there is not a ‘one size fits all’ approach. Therefore, employees can choose the course topics that are most useful to them, and the course will be facilitated at times that are most convenient to the company.

The Psychological Effects of Financial Stress

Financial stress can affect your life in a multitude of ways throughout your day. Maybe you check your bank account five times in an afternoon, or maybe you avoid checking your account for as long as possible.

“Financial stress puts the body on high alert, anxious about either being overwhelmed by financial stuff or trying to deny the financial stuff,” clinical psychologist Dr. Ryan Howes says. “Either way, financial stress kind of runs your life.”

Dr. Howes and his team have looked at the health consequences of financial stress in the USA extensively over the past two years, including a study of more than 2,000 people who identified themselves as struggling with a degree of financial stress. He says he saw three areas impacted in just about every person he interviewed — thoughts, feelings and behaviours.

These three areas seem obvious. But financial stress can have an impact in a multitude of subconscious ways:


The negative thoughts surrounding your financial stress can spill over into other areas of your life, creating negative thought patterns about more than just your money. “It’s an anxiety issue,” Howes says. “People become preoccupied and worried with little pieces of their budget. ‘Can I afford this soda?’ ‘I have to tell my friends I can’t go to the movie with them because it means money.’ ‘Where am I going to be in 10 years?’ ‘Am I going to be a failure?’”

This negative thinking centres mostly on people’s futures and wondering whether they’ll ever be able to get out of debt. The thoughts themselves are unsettling, but perhaps even scarier is the idea that you could be passing these anxieties on to your children.

We pass our money habits down, not genetically, but by example. If we see our parents completely stressed out over money, we have a greater chance of being pretty stressed out over money ourselves. People are commonly unaware of the connection between their parents’ attitudes about money and their own. “One of the treatments of financial stress is to tell your financial story,” Howes explains. “We ask people, ‘Where did you learn your money habits?’ ‘Where did you learn messages about money?’ And they’re all totally shocked to find out, ‘Oh, wow, I thought I was doing something different, but I actually have the same beliefs as my parents.’”


“Emotionally speaking, we hear people feeling hopelessness, they feel a lot of fear, feeling at times angry with themselves,” Howes says. “They have to blame someone but oddly enough, people are not blaming the banks. A lot of times they are blaming themselves … ‘I’m the problem.’”

Money has become a very intimate topic for some people, and the shame they associate with their negative financial situations runs deep. “Almost every generation before us has made money kind of a god. It’s been an idol for us,” Howes explains. “It’s the key to happiness, the key to success, the key to well-being and worth.”


There are two categories of behaviours seen in people experiencing financial stress. The first is described as being personal. For example, you jump when the phone rings, you react physically to an email or letter from the bank or you compulsively check an account balance. The financially stressed people interviewed tended to fidget, avoid eye contact and even breathe differently when talking about their money situations.

The other category of behaviour is relational. You avoid the topic with others, and you avoid situations in which money might be required. Basically, you avoid any kind of scenario or conversation in which money or finances may come up.

This urge to avoid the subject of money is incredibly strong. Asked whether they would rather discuss with friends and family their financial problems or a sexual dysfunction, people said ‘I would rather talk about a sexual problem than a financial problem’. And this lack of communication has the potential to strain how you behave with your spouse, partner, friends or other family members.

Problems that can develop include a lack of trust and assigning blame, especially when two people have very different financial personalities, for example if one is more of a saver and the other is more of a spender.

But the strain isn’t always a result of a conflict. Sometimes what isn’t said can be just as alienating as what is said.

If money is a major stressor in someone’s life and they’re keeping it from their family, their friends, even their spouses, a huge canyon can start to develop between them. If people can’t talk about the most stressful part of their lives with the people around them the problem can be multiplied. This can result in isolation, which will only increase the issue.


Financial stress is serious but there is hope. It is possible for people to successfully manage their financial stress and even improve their attitudes toward money. What’s the key? Acknowledging your fears and facing your stress head on.

“Money is an issue that comes up with almost all of my clients at one time or another,” Howes says. “I didn’t realize until doing this study that financial stress in itself is like a stand-alone problem that’s worthy of every bit as much attention and focus as any other disorder people have. It’s not just a side dish, it’s a main course. People can overcome a lot of this distress with some fairly simple intervention — talking about it, being aware of it, learning to control and calm their body makes a major impact in people’s lives.”

He points out that people who managed to bring their financial stress up with friends discovered that many of their friends were experiencing similar stress and suddenly they didn’t feel so alone.

By starting the conversation about financial stress, the power can be taken away from money and given back to people so they can control their emotions, thoughts and behaviours surrounding money. Shining a light on this and showing that no one is alone can remove the shame from it, making it a subject people feel comfortable talking about. If people can have discussions about how they feel about money, huge strides will be made in fighting financial stress.

Next steps for collective impact

Explore The Financial Capability Strategy for adults of working age and these resources for employers to co-ordinate your efforts with others. 

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