Effects of Financial Health on Mental Health

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Our mental health has become a massive discussion point in recent years as more people have opened up to talk about it, which has then helped to destigmatise conditions like anxiety and depression. However, many of us are still unaware of the connection between money and our mental health. As someone struggles with financial problems, their mental health goes downhill, which makes it even harder to manage money. And then, these difficulties lead to more money troubles, and so it goes on. Below are ways that financial stress can affect mental health, and how to stop that from happening. Unfortunately most people live month to month on their earnings and cannot afford to walk out on a job like Prince Harry.

1 Anxiety

This is one of the main effects financial worries can have on your mental health and one that is inevitable. If you are struggling to make ends meet every month, having to use credit cards that you can’t then pay off next month, paying some bills late, cutting back on food shopping, then you are going to of course notice feelings of paranoia and anxiety. Signs of suffering from anxiety include:

  • Feeling nervous/tense
  • Sweating
  • Trembling
  • Feeling on edge
  • Increased heart rate
  • Rapid breathing

If your financial worries are causing these effects on your mental health, then something needs to be done to address the issue. Myths about social anxiety

2 Depression

Living under a cloud of money troubles can, understandably, affect anyone’s mood. However, if these financial problems continue for a long period, a bad mood can very quickly develop into hopelessness and severe bouts of depression. Research has found that people who live below the poverty line are one-and-a-half times more likely to suffer from this mental illness than those who live above. Researchers found that it was the psychological distress, reduced quality of life, and the looming obligation to repay the debt as the main reasons for developing depression. Signs of suffering from depression can include:

  • Low mood
  • Feeling hopeless
  • Having low self-esteem
  • Feeling teary
  • No motivation or interest in things
  • Changes in appetite or weight
  • Disturbed sleep

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3 Social Withdrawal

This is one of the most common side effects of financial instability. People who are struggling with their finances will very often turn down social invites, possibly making other excuses as to why they can’t attend. They may avoid seeing others in an attempt to save any cash they may have. And although this does then benefit their bank balance, their mental health is taking the impact. When you become socially withdrawn, loneliness can set in and this then leads to suffering from further anxiety or depression. Even if the person then does become more financially stable and able to spend money recreationally, their mental health may be too damaged to want to.

4 Feeling Ashamed

Although mental health is now a more socially acceptable topic to talk about in public, financial worries are still surrounded by a certain stigma. It’s common for those with money troubles to experience feelings of humiliation, shame, and low self-esteem. In this case, individuals might try to maintain a certain level of self-respect by showing off their strengths and confronting those who express negative attitudes toward them. When these strategies are ineffective, many people fall into a downward spiral of more money problems, problematic behaviours, and in turn, an even further decline in mental health.

5 Unhealthy Coping Strategies

People who suffer from financial worries will reach out to find ways of coping and to escape their reality, and these will tend to be unhealthy for our bodies and minds. In an attempt to numb any pain they are feeling they will turn to drugs or alcohol, which could then lead to substance abuse and addiction. An addiction like this only adds more financial stress onto the person, as they not only need money to survive but extra to fund their habit.

Some may also develop unhealthy relationships with food. These could be either under-eating or over-eating. Having an appropriate and healthy diet is vital to keep our mental health in a good position. Disrupting the balance of our diet, will in turn disrupt our ability to function physically and mentally.

How to stop the cycle

Understanding how financial stress affects mental health can help individuals develop healthier coping mechanisms to improve their situation and stop the cycle. If you feel you are struggling mentally due to financial instability then you must reach out and talk to someone. Keeping money worries to yourself only amplifies them until they seem insurmountable. The simple act of telling your problems to someone you trust can make them seem far less intimidating and improve your mental health.

Getting to grips with understanding your finances will help to feel a little bit more in control. It can be easy to avoid looking at bills or checking bank balances but denying the reality will only make it worse in the long run. Understand what direct debits are needed and when and how much they will be. There are lots of apps now that can help you to see everything all in one place. 

Creating a monthly budget will allow you to see where your money needs to go and any extra that you may have for saving etc. Then you can easily see where there are patterns in spending that can be stopped or reduced. Also, if you live with a partner, share this with them so that they can be working off the same page as you.

All clinicians at Birmingham CBT practice Cognitive Behavioural Therapy, or are Psychologists offering evidence-based interventions and support for a range of issues for both young people and adults. If you would like to book an appointment you can do so on our online booking portal. If you have a question please get in touch via our online contact form or call us on 01865 920077. 


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