4 Ways Finances Can Impact Your Mental Health (Stress Is Just The Tip Of The Iceberg)

When we have unacknowledged concerns around our finances, those fears might undercut our wellness and mental health more than we realize. Because we seem to need money for almost everything, not having enough of it or even dealing with challenges like unemployment can feel overwhelming. That anxiety can lead to insomnia, worsen food or alcohol addictions, and spark mood shifts or even arguments. Financial issues can change other behaviors too, such as avoiding our bills or withdrawing from friends. Debt can stealthily erode our self-confidence and create shame, creating an endless cycle — especially if one gets stuck in patterns of overspending on buy now, pay later financing.

Financial challenges and mental health are two issues that are frequently under-discussed. They both carry an unnecessary stigma that can make it harder to ask for help. That's why we're unpacking these four ways finances can impact your mental health. Remember, there's no shame in asking for help, and help is available if you need it.

The first way that financial instability affects mental health is that it causes acute stress and worry. This sense of unease makes it almost impossible to focus on anything else, like creativity, nurturing close relationships, or even conducting a calm job search. Heightened stress and anxiety levels elevate cortisol, the stress hormone, and when cortisol levels are high, the decision-making part of our brain goes offline. That can mean poor memory and weakened executive function. This can lead to another impact on mental health: feeling overwhelmed. A chronic state of being overwhelmed can create forgetfulness and confusion, sabotaging your problem-solving skills.

Financial instability can also detract from self-worth. Our self-esteem can take a hit when dealing with financial difficulties, which impacts mental health. Even if a financial event happens that's not our fault, we might feel like a failure when we don't have enough resources. Finally, depression worsens from financial difficulties. The Money and Mental Health Policy Institute's study found that "People with depression and problem debt are 4.2 times more likely to still have depression 18 months later, compared to people without financial difficulty." Severe depression that stems from money problems has led some people to self-harm; depression needs to be taken seriously and treated.

If you or anyone you know is having suicidal thoughts, please call the National Suicide Prevention Lifeline​ by dialing 988 or by calling 1-800-273-TALK (8255)​.

Resources exist that can improve mental health during times of financial stress. BetterUp.com suggests creating awareness — ask yourself some key questions in a journal to identify spending patterns. Note what feelings you experience when making a purchase, especially a large one. Ask yourself how comfortable you feel discussing money, how often you check your bank account, and how that makes you feel. When it comes to money and mental health, notice what actions (paying rent, etc.) make it worse.

Dr. Megan McCoy, a licensed marriage and family therapist and Kansas State University financial planning teacher told the New York Times people should ask themselves, "What can I cut that won't negatively affect my mental health? I think people tend to restrict too harshly." If you're in a partnership, instead of trying to convince your partner to change their habits, Rick Kahler, a co-founder of the Financial Therapy Association, suggests empathy. He says, ask "What is your hope for spending this money?"

If you have an overspending habit that's contributing to money issues, getting your budget in check could be helpful. Look into the Financial Therapy Association to find a qualified therapist. Or, you might find a certified financial behavioral specialist at the Financial Psychology Institute. 

If you or someone you know needs help with mental health, please contact the Crisis Text Line by texting HOME to 741741, call the National Alliance on Mental Illness helpline at 1-800-950-NAMI (6264), or visit the National Institute of Mental Health website.