What is the Relationship Between Our Finances and Mental Health?

The link between money and mental health is undeniable.  Finances shape our bank accounts but also our sense of well-being.  This article may help you understand the psychological factors driving your financial choices and explore ways to reduce financial stress.

According to a 2023 Forbes survey, financial stress not only impacts your financial choices but can also significantly impact mental health.  This can lead to headaches, sleep disturbances, social withdrawal, depression and anxiety.

Forbes.com states that money shapes our emotions, influences our decisions and impacts well-being.  A MarketWatch survey from last year shows money can account for stress in 88% of people.  Did you know that 94% of people said they sacrifice their mental health to keep up with financial obligations?  People who fear losing money through investing actually may lose the chance to gain money from long term growth.  Impulse or emotional spending can lead to financial regret.  Avoiding bills and conversations about money can lead to bigger problems.

Anxiety about money is not a “low-income” issue.  There can be a personal connection to money, which can produce anxiety and feelings of loss of control.  Mental health issues cost the US economy around $282 billion dollars a year.  Psychological factors can influence financial behavior and more. Workplace performance can be affected, reflected in decreased productivity, higher absenteeism, job turnover, and increased risk for substance abuse.

According to Mindful Process, there are benefits of financial security on mental well-being, such as decreased stress and anxiety, improved relationships, and opportunity for personal growth.

Here are some practical ways to promote mental peace and financial well-being:

• Strive to communicate openly with your loved ones about your financial worries.
• Focus on financial education/planning to reduce uncertainty and find financial direction.
• Align intentional spending with long-term goals to increase your sense of control.
• Build an emergency fund and build long term security with automatic savings and investments.
• Know your emotional spending triggers such as stress and boredom.
• Build your mental capacity and wellness with a balanced diet, regular exercise, mindfulness and meditation, and good sleep habits.
• Focus on what you can control and acknowledge what you cannot change.
• Seek professional help as needed.

Financial stability can improve mental well-being, while financial stress can challenge metal health.  Awareness of this dynamic can be a first step to addressing a positive move toward mental wellness.

Want to learn more about the Embrace Mental Wellness initiative? View the archives.