Many adults feel unprepared to handle unexpected expenses, save enough for retirement or even make ends meet. They often take on credit card debt, get loans with high interest rates, withdraw funds from retirement accounts or cash out investments to close the gap, which puts them in a worse position. 

At the very least, they can’t contribute as much to their savings or retirement accounts as they would like. Money is a massive source of stress for people in this position. Management may not realize it, but these worries spill over into the workplace, impacting everything from retention to absenteeism. If they want to improve their bottom line, they must address this problem. 

Employees Will Stay Stressed About Finances

Monetary challenges impact all demographics, not just historically cash-strapped populations like college interns. According to PWC’s 2023 report on workers’ financial wellness, 60% of adults working full time feel stressed about their finances. Even among those earning six figures, nearly half are worried about money. 

No matter their job title or salary level, working adults are worried about money. Post-COVID economic changes are key driving factors. In addition to navigating inflation and tariffs, many have had to start making payments on loans that the government paused for years. 

The Biden administration’s “on-ramp” to repayment was a temporary grace period for student loan borrowers after post-pandemic payment pauses resumed. It ended on September 30, 2024, so delinquent payments are now being reported again. 

Initial indicators show delinquency rates on federal student loans rapidly increased in the first reporting window. Experts expect it will continue climbing. For instance, VantageScore estimated that around 9.2 million borrowers will be reported as delinquent by July 2025. Their credit scores will drop by 49 to 100 points as a result — damage that takes years to repair. 

The long-term impact is far-reaching. A lower credit score means higher interest rates on loans, which would worsen people’s financial situation. Even though market conditions constantly evolve, this is shaping up to become a long-term problem. 

The Increasingly High Cost of Financial Stress

Business professionals often overlook the link between employees’ financial well-being and professional performance. Generally, the worse off they are, the poorer they will perform at work. Stress adversely affects productivity, focus, engagement and retention, negatively impacting output, innovation, competitiveness and profitability. 

The psychological impact of personal money-related stress is more prevalent than management may think. In the 2024 Future of the Workplace report, around 33% of employees said it impacts their ability to focus. On average, they dedicate 20.5% of their workweek to dealing with these issues, which amounts to an entire eight-hour workday each week. 

This is because stressing about money hinders their ability to focus and engage properly, causing deadlines to pile up. If they spend so much time and effort working just to struggle to make ends meet, they may become apathetic, diminishing their motivation. At home, they lose sleep, and their mental health suffers as a result. 

They may become even more tense if they take on a second job to ease their monetary worries. They’d have to prioritize work over completing chores, getting sleep or maintaining relationships, compounding the problem. 

Research on a sample of workers in Italy found that economic stress positively correlates to absenteeism — the more worried they are, the more often they miss work. This problem creates a feedback loop for hourly workers whose income depends on their presence. Ultimately, it impacts workplace dynamics, undermining their ability to perform effectively. 

Strategies for Supporting Employees’ Financial Health

In a perfect world, companies could dramatically increase everyone’s salaries to eliminate their financial woes. However, few have the resources to do so. Besides, as long as inflation and the cost of living continue rising at their current pace, a workplace-wide raise won’t be an effective long-term solution. 

However, as the provider of workers' primary source of income, they still have a duty to foster financial stability. Their support can have a substantial positive impact, benefiting everyone from entry-level employees to owners. These strategies can help them encourage financial health, thereby creating a more stable and productive workforce.

1. Promote Work-Life Balance 

People with an effective work-life balance are two times happier, more loyal and more productive than those without. They have more time to stabilize their income without worrying about job security. This data point aligns with research showing that 36% of people would take a $5,000 salary cut to be happier at work, meaning businesses may see a larger return on investment than expected. 

2. Match Workers’ Contributions

Employer-matched savings contributions can increase staff retention because people benefit from staying. Organizations can match student loan payments with contributions to a retirement fund or establish health savings accounts. Either way, they provide flexibility and offset economic woes. 

3. Encourage Financial Literacy 

Many Americans are financially illiterate. In the 2023 P-Fin Index, respondents answered less than half of the questions correctly. Providing financial literacy programs or offering access to affordable monetary counseling services can help them make smart spending and saving decisions when faced with complex economic situations, lessening their stressors.

Creating a More Stable and Productive Workforce

Even though employers are often people’s primary source of income, they are not the end-all-be-all of budget stability. However, by providing financial literacy courses, matching workers’ contributions and promoting a work-life balance, they can become a guiding light, improving the organization’s performance and profitability.