Financial Strain: How Money And Mental Health Are Related

Randy Withers

By Beau Peters

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When the stress of your finances sets in, you feel its effects in more ways than just a lighter wallet. Concern over money can translate into increased psychological stress, low self-esteem, and strained interpersonal relationships. It's almost impossible to separate mental health and money in the 21st century.

A study found individuals with depression and anxiety were three times more likely to be in debt, and others have found that financial stress can also cause PTSD-like symptoms.

The Disturbing Link Between Mental Health and Money

While discussing exactly how finances can impact your mental health, Dr. Samantha Rodman, a clinical psychologist, explains that the increase in stress is due to a few key factors:

Insufficient Safety Net

Living paycheck to paycheck can result in constant worry. A leak in the roof, car trouble, an especially high power bill -- anything that can take a chunk out of the budget can quickly turn into a domino effect.

More Daily Stressors

Forgetting your lunch at home is a much different story when you have disposable income. Having money isn’t only helpful for bills and paying off debt. in many ways, it makes life simpler.

Increased Anxiety

How can one ever feel confident setting goals and making future plans if going broke is only one accident or lost job away.

Mental health and money matters are intricately connected in more ways than listed above. Getting a handle on one can positively impact the other. Unfortunately, many are stuck in impossibly tricky situations that are difficult to escape from.

Perhaps if more people had a better understanding of exactly how money, or lack thereof, can seriously impact a person’s quality of life and trap them into a vicious cycle, then we could come together to create more resources that better serve our fellow man’s needs and livelihood.

The Cycle of Stress and Financial Strain

Beyond drying up savings or driving you deeper into debt, a financial setback can also lead to bad credit. Regularly missing payments or wage garnishment can do serious damage to your credit score. This is problematic as credit is a commonly used metric for vital life necessities including access to safe housing.

For example, attempting to rent an apartment with bad credit is tough, especially if you don’t have a co-signer. It can also take a while to fix bad credit as any negative dings stay on your credit report for seven to 10 years. This cycle, once started, is hard to break.

Financial strain can cause serious mental health problems, too. In addition to the stress of potentially being denied housing, financial problems also cause you to feel like your life is spinning out of control.

No matter how badly you might need to be approved for a new car to help with your commute to work, you could be denied for having bad credit.

Being able to work towards important financial milestones also ends up being difficult when money is tight, like saving for your first home or contributing to a retirement fund.

This loss of control can spiral into depressive moods and anxious thoughts. The future starts to look bleak and you find yourself not wanting to set goals, financial or otherwise.

These negative side effects can further extend to your self-esteem and self-worth, causing you to believe the worst about yourself and your life.

Furthermore, this sense of failure can actually trick you into actively avoiding choices that help you succeed, which ultimately contributes to a continuation of the financial strain. When people are always struggling they can turn on themselves and convince themselves that they are the sole problem when it comes to money issues.

In truth, various factors cause financial problems.

If you don’t have a car, you could be missing out on better paying job opportunities because you can’t make it to the interviews, which makes it hard to buy a car. If you’re living on a low-income budget, the internet might be too expensive, leading you to miss out on other job opportunities that could potentially increase your income so you can afford wifi. If your work has a payroll bug and your paycheck comes late, you might be late on bills and wrack up late fees, which eats away at your already tight budget. It’s stress on stress.

The Connection Between Mental Health And Money

Mental health and wellness have long been a topic of discussion in the United States, and while there's a much greater understanding and much less stigma surrounding mental illnesses, we still need to look at the root cause of various mental illnesses and how class and financial status plays a role. In other words, we need to be talking about the relationship between mental health and money.

As has previously been explained, money problems can lead to mental health concerns including depression and anxiety. It should come as no surprise then that those earning higher incomes also tend to have better mental health. When you have more disposable income, it makes life easier, but it also affords you access to crucial mental health services like counseling and therapy. Those living on a lower-income have more life stressors and limited options to help with these stressors.

Beyond being able to afford mental health services, many often don’t have the time.

Some living on a tight budget have to work two jobs or care for a family member. Furthermore, without a vehicle, the internet, or even depending on where you live, access to mental health services is further limited.

Final Thoughts

As tempting as it can be to blame people for their money issues, it’s worth keeping in mind that other contributing factors often play a role. Managing your mental health is tough even in the best of situations. With the added burden of financial stress, it becomes even harder to separate your mental health and money.

While there may not be a simple solution, it’s important that we put better resources in place and work to dismantle the systems that keep people trapped in the vicious cycle of debt and low-income living.

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Board-Certified and Licensed Clinical Mental Health Counselor and Addictions Specialist. I write about mental health, therapy, substance abuse, and recovery. All opinions are my own.

Charlotte, NC
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