The Toll of Financial Stress on Health

Countless people experience financial stress. It doesn’t matter how much you make—financial stress does not discriminate. According to the American Psychological Association, 7 out of 10 respondents are very stressed about money. That stress brings many negative consequences.

The most serious repercussion of financial stress is the toll it takes on employees’ health. Of course, employers’ healthcare costs are affected as well.

A Health Affairs report analyzed the health risks and medical expenses of more than 92,000 employees over a three-year period. Those reporting high stress were $413 more costly than workers who were not at risk from stress. By comparison, smoking—a common health risk targeted by corporate wellness programs—was found to raise health care costs by $587 dollars on average. This amounts to 10% and 14% increases in claims, not much of a differential between the two hazards.

In a study published in the journal Diabetes Care, Finnish researchers found that people who reported stressful work or money-related events had an increased risk for having metabolic syndrome, a group of conditions that puts you at risk for heart disease, diabetes, and stroke. And the risk was increased if people reported several episodes of stressful, money-related events.

Employers also feel the effect of their employees’ financial stress. The ripple effect of financial stress is far and wide. In a recent SHRM survey:

  • 61% of HR professionals say financial stress is having some impact on employee work performance
  • 22% also say that worries over personal finances have a “large impact” on employee engagement.
The most serious repercussion of financial stress is the toll it takes on employees' health.


A study performed by The Pension Consultants in 2014 quantified the cost of financial stress due to absenteeism, disengagement, lack of presenteeism, turnover, alertness, and ethics. A hypothetical company of 1,000 employees realized an expenditure of $5.5 million annually. Amazingly, this figure does NOT include the additional cost of healthcare due to financial stress.

Impact of financial stress on the workforce
Unscheduled Absenteeism $2,520,000 per year Engagement of Financial Issues During Work Hours $1,750,000 per year
Fatigue-Related Presenteeism $500,000 per year Accidents Due to Stress-Related Distractions $667,000 per year
Stress-Related Turnover $210,000 per year Workplace Theft $18,500 per year

Financial stress and employee performance are inextricably linked. A person’s ability to think clearly is also impaired. The journal Science published a study in 2013 that demonstrated this. The researchers had people fill out questionnaires in which the test-takers had to imagine paying car repair bills. The researchers also gave the subjects a standard IQ test and checked their stress levels. They found that people under a lot of stress, regardless of their income, did poorly on the IQ test.

Stressful work or money-related events increases your risk for heart disease, diabetes, and stroke.

People with high financial stress are almost six times more likely to have severe depression. The Health Affairs study also found that people with depression were 48% more expensive than were people not at risk.

Brandon Conroy

Brandon Conroy

Brandon Conroy, ASA, FCA, MAAA, is a leader in developing and implementing new tools and strategies that reduce client risk. He’s developed and implemented an interactive healthcare cost projection model, underwriting templates, renewal presentations, IBNR tools, a health plan chooser tool, and financial wellness education models. Brandon left Innovu in February 2019 to pursue other interests.

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