Mental health & money: How financial professionals can help

October 11, 2023

mother and child sitting on couch

We can probably agree the phrase “Money can’t buy happiness.” isn’t entirely true, or at least, that it ignores the differences having enough money can make.

A person having financial troubles as well as mental health concerns might be caught in an unrelenting cycle: Lack of finances may cause anxiety, while that anxiety may lead to poor financial decisions, and around it goes.

While that might not always be the case, there’s data that draws a direct line between mental health and finances. How can financial professionals and plan sponsors address this relationship with employees and/or clients to help them retain, or regain,  control of their money and reduce their related mental health concerns?

What the research says

According to the American Psychological Association, 66% of U.S. adults say money is a significant source of stress.1 In the same survey, 57% of U.S. adults said having enough money to pay for things in the present is their main source of financial stress, while 47% were stressed about having enough money saved for the future.1

While that study didn’t differentiate generationally, another study looked closer at millennials and Generation Z, finding that they’re feeling stressed because of finances, too. As Deloitte reported in their Global 2022 Gen Z & Millennial Survey, the long-term financial future as well as day-to-day finances were the top two contributors to stress among those generations.2

The relationship between mental health and finances couldn’t be clearer. If any of your clients or employees are experiencing stress over financial-related matters, there are ways you can help.

Approaches you can take

Financial professionals can’t raise salaries or eliminate debt to reduce financial anxieties, nor can they provide licensed mental health counseling. But, as a financial professional or plan sponsor, you can still offer assistance through other means.

Teach participants how to optimize retirement plan contributions

Are your plan participants participating in an employer-sponsored retirement plan, such as a 401(k)? If they are, is the amount they’re contributing with each paycheck enough?

What constitutes “enough” may differ individually, but the dollar amount should be such that when projected into their retirement age, is enough to sustain their retirement savings goal while they still have enough in their paycheck to take care of current responsibilities. Future costs could include daily living as well as unexpected expenses, such as medical emergencies or long-term care.

Some employers match contributions to 401(k) plans up to a point. Plan participants would be wise to earn as much of this match as they can, while they can.

Discuss with your participants what they dream for their future and help them figure out how to maximize their retirement benefits to help ease their minds of what lies ahead.

Offer financial wellness programs

Financial literacy is vital for everyone, but that’s especially true for anyone who may be struggling. Maybe they never received the proper education or advice on how to best navigate the complicated financial world, and a handy guide or program could inform them.

Including financial wellness programs within employee benefits packages equips them with the help they need to better manage their finances and, hopefully, financial-related mental health issues. Financial wellness programs typically provide stress assessments that provide a score to help monitor stress levels with helpful educational resources.

Assist with budgeting

It’s possible your clients experiencing financial distress may be spending more than is necessary or even more than they really have. Unchecked spending — especially via credit card, when no cash is immediately exchanging hands — might paint a different financial picture than what’s really going on. Simple budget exercises may be just what clients need. 

Do they have access to Excel or Google Sheets? Those tools or any other reliable spreadsheet software or financial wellness program budget worksheets can be used to track expenses in almost unlimitled ways. 

The simple act of keeping track of all expenses on a regular basis could help clients gain a better handle on their money — which in turn may lower their financial stress.

Be empathetic

No one wants to be lectured by a stuffy, humorless, emotionless and pretentious expert who takes a scolding tone about finances. 

Throughout the entire process, be empathetic and understanding. People come from different backgrounds, have different experiences and different levels of education. Almost any unfavorable combination of life events can result in problems with mental health and finances. 

Take this opportunity to truly make a positive difference in someone’s life.

1American Psychological Association, Stress in America 2022, October 2022.
2Deloitte, The Deloitte Global 2022 Gen Z & Millennial Survey, 2022.