Can My Finances Affect My Mental Health?

The short answer is yes. Many people don’t feel great about their finances and that’s especially true in the current financial climate. Paying bills on time, retirement planning and saving for the future are simply out of reach for some people. If your finances are not in great shape and you have debts, you are more likely to have poor mental health and a negative outlook on life. In this article, we will take a closer look at this topic and offer some useful strategies to get your finances under control.

What is the Link Between Poor Mental Health and Finances?

If you don’t feel great about your finances, you can at least take solace in the fact that you are not alone. Around 42% of Americans believe that their lack of money is negatively affecting their mental health. This can lead to stress, anxiety and insecurity which affects different generations to varying degrees. Studies have shown that the financial anxiousness of Gen X is 46% which rises to 48% for Millennials. The major factor is credit card debt, in Q3 of 2021 the national average was $6,569 or $800 billion in total, an increase of $17 billion over the previous quarter. One can only expect that figure to be much higher now, some Americans are even paying for pizzas with credit cards and loans!

Approximately 42.9 million Americans are anxious about their student loan debt. The average is $37,105 and around two thirds of people cannot make their repayments on time. Overcoming this debt hurdle degrades normal human activity and the quality of life for millions of people. Many cannot imagine purchasing a home, getting married, starting a family or other activities that previous generations took for granted. Now that you have a better understanding of these problems and how they affect you it’s time to start moving beyond them. This may seem impossible, but many people have managed to escape the debt trap and live a better life.

How Does Financial Health Affect Mental Health?

Financial problems can lead to chronic long-term stress that degrades our mental health. For many people their financial stress issues are much harder to deal with than work or family problems. If a person has a pre-existing mental health issue, it’s only exacerbated if their financial security is non-existent. This can manifest physically in a number of ways, such as: poor sleep, high blood pressure, digesting problems, migraines, muscle tension, heart arrhythmia and even a weakened immune system. To deal with these problems some people turn to retail therapy, gambling, drugs and other activities which only make the problem worse. Those with a bad financial position tend to overlook obvious solutions that could help them due to a lack of motivation, time pressure, cost and even depression. Around 29% of Americans will now routinely avoid medical treatment because they can’t afford the bill. Ultimately this situation could lead to a health crisis that will be extremely hard to address in the future. The alternative for many is to escape into smoking, habitual drug use, alcohol and other vices. Approximately 33% of Americans overeat poor quality food to fill the void and “deal” with the stress of their daily lives. When people are anxious and stressed they tend to have poor decision making skills. This can lead to impulse purchases, missed opportunities, overlooking commitments, missing bill payments and more. To make things worse, this problem is generational, if you don’t overcome it and have kids you can pass these problems on to them. It’s essential to make financial literacy a priority now, this skill has been forgotten during recent decades and it needs to return. If you can deal with your financial problems head on, you will feel better, being proactive is always preferable to avoidance for mental and financial health.

7 Tips to Get Your Finances Under Control

Let’s take a look at seven tips that will help you to achieve financial control and reduce your mental stress. They are:

•Evaluation: How did you get here? Most modern people have a poor understanding of finances that they probably inherited from their parents. This often manifests as disdain for money and a desire to do without. Some people had good finances at some point, but something terrible happened and they can’t seem to recover from that event. Understand your situation, this will help you to evaluate where you are and then you can think about the future.

•Take Stock: Find out how much money you have coming in and how money you spend every month. Leave nothing out, that $5 daily morning coffee is adding up to a $150 spend every month! Use an app or budget tracker to monitor how you’re spending money and this can help you to identify where you can cut costs. If you can limit overspending you can start to exert some control over your finances.

•Automating Finances: Next, it’s time to automate your finances to gain control over the bills and savings. You won’t miss any future bills and need to make late payments that can derail your plans. 

•Make an Emergency Fund: Save 3-6 months of your regular expenses to create an emergency fund that will act as a financial cushion during financial hardship. This is extremely empowering and it can give you a sense of financial security. This money can be used for an emergency car repair to ensure that you can get to work or to cover an unexpected medical bill. If you have some insurance against something that could derail your life you can divert savings to investing. Place your emergency fund in a high yield account to limit your access and earn extra interest.

•Get Professional Advice: Good money management advice can be invaluable, there are upfront costs, but your finances will improve.

•Become Mindful About Spending: Don’t buy stuff you don’t need, before you make a purchase leave it for 30 days. If you still need it later then you probably should save for it and buy it.

•Take Time for Yourself: Spend at least an hour in nature every day, stay hydrated, eat well and go to bed earlier. Gradually you will notice that you have an improved outlook, your energy levels will be higher and you’re better prepared to make key decisions.