Link Between Financial Stress and Mental Health & How To Fix It
Anxiety, depression, lack of sleep, hopelessness, low energy, confusion, and low self-esteem. These are the most common signs of poor mental health, but also are common signs of poor financial health. Conversations around mental health have gained popularity, especially during the covid-19 pandemic which is a great improvement compared to before the pandemic. These conversations however have tended to shy away from including financial stress in the equation.
Some financial stresses that are impacting people include high levels of debt, restricted income, more financial responsibilities, and uncertainty around job security which can impact income. Most people are living paycheck to paycheck and with the uncertainty of the pandemic leading to job losses and business closures, financial stress among the population is on the rise.
Stress impacts our choices and our spending. When we’re stressed, we’re unable to set healthy boundaries, we might spend more on food, alcohol, or drugs while in a natural search for something to make us feel better.
Poor financial health goes hand in hand with poor mental health. Having multiple bills, huge loans hanging over your head can lead to loss of sleep. The higher the amount of debt one has the more stressed they are. If no action is taken sooner rather than later it can lead to depression. Stress and depression can cause one to even spend further in an attempt to make themselves feel better resulting in more credit card debt.
Retail therapy every time you feel sad and lonely leads to more problems than it solves.
Tips for Fixing Your Finances to Improve Your Mental health
Get organized – Start by downloading your credit card statement and check your credit score to know exactly where you’re starting from. Next, put together a basic budget noting all your expenses down as well as your income and monthly debt payments. I always recommend to my clients a zero-based budget whereby your income minus expenses minus debt payment minus savings equals zero. This budgeting method makes sure you think about where every dollar is spent every month.
Money management involves being conscious about where your money is going. This can be done by tracking your expenses daily for at least two weeks. This is a tedious exercise why is why I usually recommend for my clients to do it for two weeks to create awareness of their expenses. You will be surprised how the awareness can lead to cutting out unnecessary spending, which is what you’re looking for at this stage.
Ask for help - Finances can be complicated and most people need help with them. You’re not alone in needing help with your finances. Don’t let ego and shame prevent you from accessing financial advice from a qualified financial advisor. Other people you can reach out to include a friend, family member, or a caregiver.
Find a support system - Make sure you have a good financial advisor and money coach to guide you through your financial journey as well as accountability partners to help you stay on track.
Create a plan to pay off your debt – As the old adage goes failing to plan is planning to fail. This is true especially when you have a lot of debt which can bring a lot of anxiety leading to poor mental health. List all your debts from the smallest to the largest on a piece of paper or an Excel spreadsheet or a budgeting tool. Start by making minimum payments for all the debts except the smallest. Pay the smallest as much as possible with an aim of eliminating it. This is called the debt snowball method. Do this while still maintaining a reasonable standard of living to avoid further depression.
Set healthy boundaries with people around you - This helps you from spending unnecessarily, not purchasing something out of financial peer pressure. Set boundaries with your young-adults kids to nurture them into becoming more financially independent through assertive communication. One of the best ways you can support your kids is by giving them financial literacy, teaching them how to budget, invest, and plan for their future from a young age.
Paying close attention to your finances and mental health is critical. Positive mental health improves our relationships, increases our emotional intelligence, and if we apply mindfulness to our financial life, we become more conscious about our spending. It’s important to know you’re not alone when it comes to overwhelming financial stress. At Topspin Finance, we are here to help. Our financial coaches will work with you to create a solid plan that’s practical to get you out of debt and calm your cash flow chaos so that you can live the life you’ve always wanted.
Got any questions? Ask a Topspin Finance Money coach.
