Financial stress is no longer confined to employees’ personal lives. Increasingly, it is shaping how people perform, engage and plan their future at work.
New findings from the ARAG 2026 Employee Financial Stability Study reveal that nearly 6 in 10 employees (58%) experience moderate to extreme financial stress, and more than half (55%) say that stress is affecting them on the job. For HR leaders already grappling with productivity challenges, burnout concerns and retention pressures, the data points to a growing reality: Financial insecurity has become a workplace issue with significant business consequences.
The findings arrive amid continued concerns about rising living costs, economic uncertainty and household debt. While employers cannot solve every financial challenge employees face, the research suggests organizations can play a meaningful role through benefits, education and resources that help employees build financial confidence and resilience.
“Financial wellness is the ability to make informed financial decisions, adapt to life’s challenges and continue moving toward financial goals with confidence and resilience,” says Denise Keiser, AFC®, Vice President of Empowerment at Balance Financial Wellness. “Ongoing education, coaching and practical resources can help employees build those skills, creating a workforce that is better equipped to navigate financial challenges and remain engaged and productive.”
See also: How AI is helping drive employee financial wellness
Financial stress is affecting more than employees’ bank accounts
The drivers of employee financial stress are both widespread and persistent.
The study found that 59% of employees cite rising living costs as a primary source of financial pressure, while 39% point to broader economic uncertainty. Many are also struggling to build savings while managing debt and day-to-day expenses.
For some workers, the challenge is attaining financial stability. As one employee described the experience: “I feel very stressed because my bills keep piling up faster than I can pay them, and I’m always worried something unexpected will make things worse.”
That concern is understandable. Only 30% of employees said they could cover an unexpected $1,000 expense using savings or an emergency fund. Most would need to rely on credit, delay other bills or find alternative ways to cover the cost.
The effects are showing up at work. Among employees whose financial stress impacts their jobs, 61% report feeling mentally drained or distracted, and 58% struggle to concentrate. Others report lower motivation, reduced engagement and a greater likelihood of exploring new job opportunities.
Together, these findings suggest financial stress is more than a personal concern. It can affect focus, productivity, engagement and retention, creating hidden costs for employers.
Navigating the financial wellness journey
The study underscores that financial stress is not a singular experience. Employees face different challenges and those concerns change over time.
ARAG’s research suggests employees generally move through three financial wellness states: financial recovery, financial preparedness and financial literacy. Understanding those distinctions can help HR leaders design benefits programs that better support employees throughout their careers.
Financial recovery: Regaining stability
Here, the immediate challenge is recovering from a significant financial burden, whether from mounting debt, medical expenses, caregiving costs or other major life events, such as divorce, death in the family, legal issues or unexpected financial disruption.
The study found that 72% of employees experienced at least one major life event during the previous two years, and 21% experienced an event with legal or financial implications. Among those individuals, more than half reported financial setbacks of $5,000 or more, and 78% said they had not yet recovered financially.
Support at this stage may include debt-management resources, financial counseling, legal guidance, employee assistance programs and access to professionals who can help employees navigate complex financial and legal decisions.
Financial preparedness: Building resilience
Other employees are focused more on future security. Their goals may include saving for retirement (#1 for most employees), homeownership, kids’ education, caregiving responsibilities, or building a financial safety net.
Financial anxiety over covering potential costs prevents employees from addressing important legal and administrative matters: Nearly half (46%) have delayed or avoided a financially significant task as a result.
For this group, retirement-planning resources, estate-planning assistance, savings tools and access to professional counsel can help strengthen their long-term financial resilience before challenges arise.
Financial literacy: Building confidence
For some, the greatest need is foundational knowledge and confidence. Only 45% of employees feel very or extremely confident in their understanding of personal finance concepts. Budgeting, debt management, savings and retirement planning remain common sources of uncertainty.
Educational resources, digital learning platforms, financial coaching and decision-support tools can help employees better understand their options and make informed decisions.
As their needs evolve, employees may move between recovery, preparedness and literacy. Someone focused on paying down debt today may shift focus toward retirement planning, while another may unexpectedly find themselves facing a major financial setback. Recognizing this dynamic helps organizations better support employees across the financial wellness journey.
The financial wellness paradox
The research reveals a familiar challenge: Employees say they want financial support, yet many don’t utilize the resources available to them.
Nearly half (48%) believe employers should offer benefits and resources that support their personal finances, but 57% of employees with access to employer-sponsored financial services have not used them.
Why the disconnect? Employees may not know what’s available, question its relevance or worry about privacy. For employers, offering benefits is only half the battle. Employees must understand how available resources can help them and trust their use remains confidential.
A broader opportunity for HR leaders
The research suggests financial wellness is most effective when viewed as part of a broader employee well-being strategy, one that recognizes the connection between financial stability, mental well-being, workplace performance and long-term engagement.
“One of the most meaningful things employers can do is make financial wellness an ongoing part of the employee experience, not just a benefit employees use during times of crisis,” says Keiser. “That means providing access to trusted financial education, coaching, digital tools and practical resources that help employees make informed financial decisions throughout every stage of life.”
For HR leaders, the takeaway is clear: Financial stress increasingly influences workforce performance, engagement and retention. Employers that support employees across the financial wellness journey and connect them with relevant resources may be better positioned to improve both employee well-being and business outcomes.
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