How financial stress and mental health
How financial stress and mental health are related: Your mental health and your financial situation may appear to be completely different aspects of your life at first. People who have dealt with the consequences of both financial stress and mental health issues, however, will frequently tell you that the two may have a big influence on one another.
Financial difficulties can cause a lot of anxiety, particularly if you’re unemployed or don’t make enough money each month to pay your expenses.
Indeed, according to the American Psychological Association‘s Stress in America 2022 poll, 87% of Americans believe that a major source of stress in their life is the increase in the cost of necessities due to inflation.
financial stress and mental health
Opens in a new tab. Therefore, making financial health improvements might be beneficial to your mental health.
It’s likely that you may run into financial difficulties at some point in your life, regardless of how careful you are with your finances.
- Making the switch from a two- to a one-income household
- Having a disagreement with your spouse on how to spend money
- Expenses that are excessive in comparison to your income
- accumulating excessive debt
- missing payments as a result of inadequate funding or a chaotic financial situation
- assuming interest rates and late fees that cause your debt to increase faster than you can pay it
- not establishing a safety net for finances, such as liquid assets or an emergency fund
- Managing the pandemic’s economic effects and inflation
Regrettably, these stresses frequently overlap and have the potential to worsen other issues, which may swiftly become overwhelming. But if you can effectively handle even one of these, it could help you with the rest as well.
Actions that affect stress related to money
While certain reasons of financial stress, such as losing your job due to your employer going out of business, may be beyond your control, many other causes may be attributed to making bad financial decisions.
Long before the epidemic transformed everyone into devoted online shoppers seeking solace, consumers engaged in a behaviour known as retail therapy:
purchasing something only for the purpose of making oneself feel better. Dopamine is released in the brain when you treat yourself to something new, and this makes you feel happy.
But the excitement of making a purchase will soon fade and become financial worry if you charge it to an already-maxed-out credit card or utilise the money you need for bills and other necessities.
Relying on enticing financing programs rather than making cash payments is another behaviour that might exacerbate financial hardship.
At major retail stores, you may frequently be asked whether you would want to open a store credit card when making a purchase. You could even receive a discount in exchange for doing so.
Retailers may also provide exclusive financing options, such as interest-free terms for a predetermined period of time. The caveat is that you will have to pay the accrued interest, which may mount up to large expenditures, if you don’t pay off the loan within the allowed period.
Making financial comparisons with friends and neighbours is another habit that can lead to financial stress. It seems sense that if they acquire a new automobile, you’ll want one too. But, following their financial lead could entice you to spend money on unaffordable purchases.
Rather than dwelling on your lack of a new automobile, acknowledge and applaud the efforts you’ve made to better your financial circumstances.
Furthermore, it’s unlikely that you are aware of your friends’ and neighbours’ actual financial situation. Behind their ostensibly opulent lifestyle, they can be deeply in debt and under financial difficulties.
Money management strategies that enhance mental well-being
Sadly, there are rarely easy fixes for issues like mental health issues and financial stress. They can be fixed in manageable steps, but it will take time, focus, and resolve.
Finding the biggest areas that require improvement is a smart place to start when trying to reduce your financial stress.
Let’s imagine you and your spouse don’t agree on how to spend your earnings. Alternatively, perhaps you’re routinely accruing large bank fees as a result of inadequate finances.
You may next concentrate on the best ways to address the issues producing your stresses after you’ve made a list of them. Whatever they are, you can always count on the following tactics to work well.
Make a financial plan.
You will probably experience financial difficulties if you are unable to monitor the money coming into and going out of your account.
Make a basic budget that reflects your earnings and outlays. Having a clear picture of your finances allows you to make decisions about where to make savings or increase your income.
Additionally, since you’ll be more organised, you won’t forget to make payments or accidentally overdraw your account. When you and your partner can clearly see where the money is going, you might also be able to negotiate better on spending.
Pay off debt
Achieving any kind of financial wellness might be challenging if you have a lot of debt, such as from credit card, loan, or mortgage payments.
Make a determined effort to pay off your obligations if you want to advance. This entails paying more than the statutory minimum, which could only pay interest and never the principle.
To lower the minimum amounts owed each month, think about completely paying off certain obligations. While making the minimum payments on other obligations, pay attention to the debt with the highest interest rate or the smallest sum first.
After that, use the money you were paying towards that payment to tackle the next problem, developing a plan that will keep getting better until you are completely debt-free. Repaying debt also frees up funds for other objectives.
Put away for a wet day.
Regardless of your level of financial diligence, one unforeseen expense has the power to completely destabilise your budget. The secret to weathering the storm without suffering major damage is to have an emergency or savings account.
To assist you handle an unforeseen expenditure, think about adding additional money to your emergency fund—ideally three to six months’ worth of salary.
Your income and a number of other criteria will determine how much you should set aside. But even if you’re just investing a few bucks at a time, it’s crucial to get started right away. It will eventually build up to a big cushion.
Set monetary objectives.
Determine how much you’ll need to start saving each month if you have large aspirations, such as funding your kids’ college tuition. Enrol in any accessible programs that direct a portion or fixed amount of your pay cheque to be automatically sent to a savings account.
When saving is not an issue for you, you are more likely to do it. Additionally, you won’t be as prone to splurge since you’ll become accustomed to having less take-home money.
advantages of enhanced emotional and financial well-being
There are advantages to managing your financial stress and mental health that go beyond your money account, such as those that affect your physical well-being.
Actually, research indicates that stress raises your chance for a number of illnesses, including as diabetes, heart disease, Alzheimer’s, and digestive issues. Opens in a new tab.
You may enhance your connections at work and at home by lowering your stress levels. As a result, you could discover that you’re a better friend or partner, offering more quality time and assistance.
You can experience more inner peace and tranquilly when you’re not concerned about money, which can improve your ability to think clearly and make wiser judgements. Additionally, you’ll be better equipped to handle and conquer life’s unavoidable problems since you’ll have the mental capacity to do so.
Reaching even the first of your financial objectives can boost your self-esteem by demonstrating that you are capable of getting back on track towards financial wellness. It will be significantly simpler to accomplish the next objective as a result.
Reducing your financial and emotional stress can also have a big influence on your general quality of life. The sensation of not having to worry about making ends meet and having enough time and money to pursue your passions is priceless.
Conclusion
Although it may feel difficult to plan for the future, you don’t have to do it alone. When the time comes to convert your life plan into a financial plan, speak with a reputable financial advisor who can assist you in reaching your goals.