How Mental Health and Money Are Connected

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Money affects mental wellness, and mental health conditions can impact money management.

Often overlooked, mental health is a crucial factor in your financial health. Since it is estimated that 1 in 5 adults in the U.S. lives with a mental illness, it is likely that you, or someone you know, could be facing financial struggles because of one.

Instead of struggling alone, those with mental health problems should know that there are options to improve their financial life. Read on to find out how your mental health could be affecting your personal finances, how your finances could affect your mental wellbeing, and what you can do to improve your relationship with your money.

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How Can Mental Health Affect Your Finances?

Managing money can be difficult, even if you don’t live with a mental health condition. For those that do, however, it can be even more challenging. Certified Financial Planner and President of Diversified, Andrew Rosen, explains:

“There are several health conditions and mental health conditions that may impact a person’s responsibility to manage their money. Health conditions that impact your memory may make it difficult to pay bills on time. Conditions like depression may impact your motivation and cause disinterest in your finances. A condition such as bipolar [disorder] may impact your finances because you might be prone to overspending during periods of mania. Any health condition that impacts your ability to work may also impact your income, which can impact your financial situation.”

Although having poor financial habits can lead to mental health issues, certain mental health conditions and their symptoms can also lead to money problems, including poor money management. As Rosen explained, those living with mental illness experience many different symptoms. In addition to the ones he discussed, other symptoms can include:

  • Inability or difficulty self-starting: The inability to self-start, a symptom of many different mental health conditions, can sometimes prevent you from tackling a difficult financial situation head-on.
  • Inability or difficulty concentrating: The inability to concentrate affects those with attention deficit disorders, like ADHD, and can make it difficult for them to plan and organize their financial life.
  • Inability or difficulty problem solving: The inability to problem solve is a common mental health symptom, especially for those living with Borderline Personality Disorder and depression. This can make it difficult to make financial decisions, especially those that need to be made quickly.
  • Paranoia: Paranoia, a symptom of disorders like Schizophrenia, can cause those affected to feel like someone is out to get them. This can cause sudden changes to financial habits due to severe mistrust.
  • Fluctuating moods: A symptom of bipolar disorders, constantly fluctuating emotions can lead those affected to make rash decisions with their money.

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Paying for mental health care

The cost of treating mental health conditions in the U.S. can be astronomical. It’s no wonder that 45% of people with mental health concerns don’t seek treatment. To give an example: people with major depressive disorders can pay over $10,000/year to get the care they need. That’s money spent on just one condition. Coupled with other healthcare costs a person may have, it is easy to see why some go untreated: paying for treatment can easily be just another stressor.

Having to find the money to pay for these costs can, in and of itself, cause exacerbated symptoms. The cost of healthcare alone can also cause people without diagnosed disorders to experience mental health symptoms.

How Finances Affect Your Mental Health

Thinking about your finances can be stressful. In fact, a recent study found that 77% of Americans feel anxious about their financial situation. For some, this stress can cause negative impacts on their mental health. When stress becomes severe, it can turn into financial trauma, whether you have a diagnosed mental health condition or not. This can, unfortunately, have long-lasting impacts on your mental health, especially if left untreated.

This is what Rosen had to say about financial trauma: “It often stems from longer-term financial setbacks, such as living in poverty, losing your savings, or even generational financial trauma passed down. Financial trauma can cause prolonged negative feelings and lead to avoiding your finances entirely, over or underspending, and having a poor understanding of financial concepts.”

Signs that money is taking a toll on your mental health

Mental health conditions can cause people to make poor financial decisions, but the opposite is also true: poor financial decisions (often due to a lack of financial literacy) can cause many of the same symptoms certain mental health conditions can. Licensed Professional Counselor and Cognitive Behavioral Therapist, Amanda Levison, explains, “Chronic stress over finances can trigger mental health issues, which is defined as financial trauma.”

Some signs that finances are taking a toll on your mental well-being and you may be feeling the effects of financial trauma include:

  • Sleeping difficulties: Including insomnia, restless sleep, and waking to racing thoughts about money.
  • Weight changes: Overeating and undereating can be caused by financial stress.
  • Depression: Spending money leads to a release of endorphins that provide a temporary sense of euphoria, but this can lead to a very serious credit card debt problem, which can lead to further episodes of depression.
  • Anxiety: Just like with depression, overspending or ignoring your money to cope with difficult times can lead to an immense amount of anxiety, especially when you think about your money.
  • Physical symptoms: Anxiety and depression as a result of your finances can result in physical symptoms, making you feel like your physical health is poor.

How To Overcome Money Struggles Due to Your Mental Health

Your mental health and financial health can have massive impacts on each other. To improve their relationship, consider doing the following:

Create a budget

Creating a budget is one of the best ways to keep your finances in order. For people who have a hard time remembering what needs to be paid and when a budget gives you a place to write it all down. Plus, budgeting can help you save for future financial goals and prioritize your current needs, like mental health treatment or time off work to recharge.

There are a seemingly endless number of ways to budget, so there’s a method for most people’s financial situation. Finding the right one for you can take some time, so try out a few, and choose the method that best fits your lifestyle.

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Make a debt payoff plan

If the thought of debt is keeping you up at night, a debt payoff plan could help you sleep a little easier. To create one, you will need to take a couple of steps.

  1. Total up your debt: Finding out how much problem debt you owe can be terrifying, but once you know the number, you can start doing something about it.
  2. Choose your payoff method: There are a number of payoff methods to choose from. The snowball and avalanche methods are two of the most popular. The snowball method involves paying off your lowest debt first which will help you feel motivated to keep paying down all of your debt. The avalanche method prioritizes the debt with the highest interest rate, which, if paid off first, can help you save the most in the long run.
  3. Consider refinancing: If you have high-interest debt (like an auto loan, mortgage, or student loan) you might benefit from refinancing and obtaining a lower interest rate. This can ensure you’re paying less over the life of the loan. Plus, you could secure a lower monthly payment, which can give your budget some breathing space.
  4. Stick to your plan: The hardest part isn’t always coming up with your debt payoff plan, it’s actually sticking to it. If you get discouraged, remember why you put the plan in place. Getting out of debt can help you feel a lot more secure, which can in turn benefit your mental health.

Improve your financial literacy

If you are feeling anxious about making financial decisions, improving your financial literacy could make a big difference. To increase yours, consider reading about financial topics online or in books, listening to a personal finance podcast, or even taking a course in a financial topic that interests you.

Practice self-care

One of the best tools to fight against the symptoms of poor mental health is to practice self-care. Building a self-care routine is about creating time and space for the things you need, the things you want, and the things that make you feel good. Once you start making time for yourself, you may find that you are better equipped to make serious financial decisions.

The best thing about self-care is that it doesn’t have to be expensive or even cost money at all. To save money, start your self-care routine off small and focus on bettering, or creating, habits that you know need addressing.

These may include:

  • Creating a bedtime routine
  • Improving your hygiene
  • Prioritizing exercise and eating healthily
  • Taking up meditation or yoga
  • Cutting back on social media
  • Journaling

Strengthen (or start) your emergency fund

Worrying about how you will cover your expenses in the case of an emergency is absolutely valid. However, if the financial impact of an unexpected bill or financial emergency is keeping you from mental peace, strengthening your emergency fund is a great way to stop yourself from worrying.

If you don’t already have an emergency fund, now is the time to start one. To do so, open a bank account and aim to save three to six months’ worth of expenses. In the event that you have an unexpected expense, you will be more financially prepared to handle it.

Seek out a financial therapist

Asking for help can be difficult, even for those who aren’t living with mental illness, but doing so can get you on the right track. If your finances are taking a toll on your mental health, consider reaching out to a financial therapist for support. Levison explains:

“A relatively new field has emerged, known as financial therapy, which combines processing emotions with practical financial planning strategies.”

Financial therapists help people learn how to better their financial and emotional health by teaching them how to cope with financial stress. The Financial Therapy Association makes it easy to find a financial therapist willing to help you deal with your money worries, by offering a searchable directory of their members.

Always Prioritize Your Health

Not everyone dealing with a mental illness has bad money habits and not everyone’s mental health symptoms are related to financial distress. However, keeping the warning signs in mind, as well as taking the time to care for yourself, can help improve your relationship with money.

At the end of the day, your priority should be your mental health. If you are struggling, don’t be afraid to reach out to a trusted healthcare provider, loved one, or even a financial therapist.

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About The Author


Micah Murray

Micah Murray is a personal finance writer who has written for Money Under 30, ChooseFi, Leverage Rx, and others. He lives in Maine with his husband, their three cats, and their dog. In his spare time, you can find him around a campfire listening to a true crime podcast.


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