In 2025, around one in four UK adults reported they would struggle to cover an unexpected expense of £850, highlighting how little financial buffer many people have

CREDIT: This is an edited version of an article that originally appeared in SME Today

From a clinical perspective, persistent money worries keep the brain’s threat system activated. Over time, this sustained stress response can contribute to anxiety, low mood, disrupted sleep and difficulty concentrating.

While financial strain is rarely the only factor affecting performance, it often contributes to cognitive overload, rumination, sleep disruption and emotional exhaustion. Many employees continue to show up and meet expectations but feel mentally preoccupied or depleted. This quiet strain can go unnoticed until it begins to show up more visibly in wellbeing, working relationships or performance.

Mental health and financial worry

The link between financial difficulty and mental health is well established. People who are behind on household bills or managing debt are more than twice as likely to report very poor mental health compared to those without financial difficulties.

In therapeutic settings, financial stress is rarely just about money. It affects a person’s sense of safety, control and self-worth. When worry feels relentless or shame prevents someone from speaking openly, anxiety and depression can develop or existing symptoms can intensify.

This is why financial wellbeing should be understood as a form of mental health prevention, rather than a separate or secondary issue. Psychological support is vital, but it is most effective when individuals also feel practically supported and not alone in their concerns.

How employers can respond

Respond with empathy: Line managers are often the first to notice when someone is struggling, yet many worry about saying the wrong thing. Managers do not need to solve financial problems. What matters most is listening without judgement, responding with compassion and knowing where to signpost for further support.

Signpost support clearly: When stress levels are high, people are less likely to seek out help that feels complicated or hidden. Regularly remind employees about available resources, including Employee Assistance Programmes (EAPs), access to psychological therapies and independent money or debt advice services. In some organisations, this may also include rapid access to mental health support, enabling employees to receive timely intervention before difficulties escalate.

Offer flexibility where possible: Financial stress is frequently accompanied by poor sleep and emotional fatigue. Where roles allow, short-term flexibility around hours, workload or autonomy can help employees navigate difficult periods without becoming overwhelmed. These adjustments are not about lowering standards, but about sustaining performance and protecting long-term productivity.

The Link Between Money and Mental Health
One of the most important shifts employers can make is acknowledging how closely financial wellbeing and psychological health are connected. Addressing financial stress early, alongside access to evidence-based support such as CBT therapy, reduces the likelihood of more severe mental health challenges developing later.

Years of economic uncertainty have left many households with depleted savings and limited resilience. For some employees, financial pressure is not a temporary setback but an ongoing source of strain. Organisations cannot control the wider economic climate, but they can shape the environment in which their people experience it. Integrating financial wellbeing into broader mental health strategies ensures employers send a clear message: support is available and no one has to manage these pressures alone.