How Financial Stress Harms Your Mental Health

By Jackie Lam

This is likely not a surprise, but stressing out about your money situation can take a toll on your mental health. 

According to the Money and Mental Health Institute in the UK, people struggling with mental health issues also have a problem with debt. What’s more, per the American Psychological Association (APA), six in 10 adults noted that money was a significant source of stress.

And when you feel a mixture of negative emotions – whether it be anxiety, depression, guilt, or hopelessness – this can actually worsen your financial state.

Mental health is of prime importance. And, there are steps you can take to lower your stress levels — no matter what your situation. Let’s delve deeper into the link between financial stress and health, and how you can reduce your money stress.

The impact of money stress

Several studies reveal how money stress affects your mental health and overall well-being. Per a study by the Journal of Consumer Research, when someone feels good about their financial health, in turn, they feel good about their overall health.

What determined their perceptions about financial health? Two things: how stressed out they are about their money situation, and how secure they felt about their finances.

Another study by the University of Nottingham finds that those who struggle to pay off their debt are in far worse psychological states. And on a more grim note, according to a survey by Student Loan Planner, one in 15 student loan borrowers have contemplated suicide because of their debt load.

5 signs that you’re suffering from financial stress

Here are five tell-tale signs that you’re struggling with money stress:

  • Feeling a loss of control. Do you feel as if the world has turned on its head, and that you can’t do anything about it? You might be dealing with money stress. A loss of control might be coupled with intense bouts of anxiety. And to mask the pain, you might resort to modes of escapism — playing lots of video games, eating junk food, or even drinking or smoking more than you should. 
  • Problem avoidance. Do you avoid looking at your bank account balance and ignore notifications that your credit card or student loan payments are due? Perhaps you even throw bills in the trash. And to further avoid the reality of your situation, you resort to putting everything on a credit card.
  • Loss of self-esteem. Your ego and feelings of self-worth might feel deflated more often than not. And, perhaps you feel that other people have their stuff together – and you don’t. This in turn may make you less inclined to socialize with others, apply for that promotion, or pursue romantic partners.
  • Lower energy levels. Having trouble getting out of bed? Or, are you having trouble finding the energy to go out and do things? A slump in energy is a sign that you might be depressed. 
  • Loss of concentration. Are you having trouble focusing? This can also be a sign of depression.

What to do about financial stress

The good news is that it’s not all doom and gloom. Here are some ways to deal with financial stress:

List your debts

You’d probably rather get your eyebrows plucked. Or pick lint off a moist towel. But being honest with your debt is a necessary step to improve your financial situation. Take a deep breath and pull back the curtain. It might be unpleasant and a little scary. But you’ll want to sit down and make a list of your debts that include lenders, the amount of money owed, and interest rates.  

Track your spending

While there are a lot of things out of our control — including the gender pay gap and wealth inequality — you can focus on what you can control. For instance, take a look at your harmful spending patterns and the last few months of your bank statements. This will help you see exactly where your money is going. You can also use your bank account app. This way you can see what your spending triggers are.

Assess your savings

You might be thinking: How can I possibly save when I can barely cover my bills, or there’s debt looming over my head? So, start small and make it simple. Make your savings goal $50 or $100. To make it even more simple, set up automatic savings. By setting a savings goal on autopilot, this will help you keep on track.

Create a budget

The word “budget” can be a turn-off, as it can sound a lot like dieting and deprivation. But it’s really about being vigilant with your money and spending habits. Coming up with a spending plan doesn’t have to be a tedious affair, either. The hardest part is figuring out much you’re spending in different areas — groceries, eating out, clothes, personal items, household items, and so forth. After you get a clear picture of your spending habits, you can make some long-lasting tweaks.

Talk about it

Part of money stress comes from bottling up feelings of shame, guilt, and embarrassment. Hashing it out with a trusted pal or family member might help ease the burden you’re shouldering. 

The bottom line: By following the suggestions here, you may notice an improvement in your financial stress. And, by facing your money woes head-on, you’ll be able to take steps to improve your financial situation.

Jackie Lam is an L.A.-based financial writer whose clients include Fortune 500 companies and FinTech startups. Her work has appeared in Forbes, Business Insider, and GOOD.

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