Explaining the connection: Money is indispensable to mental health, and vice versa

Money isn’t everything, but everything needs money. From rush-hour traffic to wars, money is often the common denominator, a cornerstone of much of the good, bad, and ugly in this world. So, it is safe to say that money, or the lack thereof, has a significant bearing on one’s mental health. Over the years, the relationship between money and mental health has been the subject of multiple studies. With the rising cost of living and unemployment rates, the scope of such studies has expanded significantly, shedding more light on a rather obscure connection. 

Turns out, according to a comprehensive study(1), financial difficulties and debts are associated with an increased incidence of mental health disorders like anxiety, depression, etc. Empirical evidence also suggests a correlation between low household income and the occurrence of mental health issues. Following the pandemic outbreak, however, the money-mental health connection has come into stark focus as a result of widespread economic and psychological hardships. According to a post-COVID survey(2), as of March 2022, around 72% of Americans reported stressing about money at least some time in the last month. The impact is rather pronounced among women respondents, 65% of whom were found to be anxious over their finances, compared to 54% of men. 

Mounting debts, dwindling mental health

Debts are part and parcel of overall finances. About two in three persons have/had debts at some point in their lives. However, when debts continue to mount, combined with economic downturns and job losses, they begin to take their toll on the borrower’s mental health. In fact, some of the statistics(3) surrounding debts and mental health issues are distressing:

  • About 46% of people with debts have a mental illness diagnosis
  • 86% of people with mental health issues say their debts aggravate their problems
  • People with depression and debts are four times more likely to be still indebted in 18 months, in comparison with their debt-free counterparts
  • Those with debts are three times more likely to contemplate suicide than their debt-free counterparts

Many borrowers opine that a mere debt-collection phone call or a mailed bill can send their anxiety through the roof. In turn, the constant stress and anxiety can undermine the person’s ability to recover financially, leading to debt accumulation and further mental health challenges. Such possibilities warrant greater attention in light of the finding(4) that five in ten people in the UAE have outstanding debts and almost a third of the population are unable to save money at all. 

How mental health affects money, and vice versa

Stress: When their finances are in order, people tend to procure loans for a vehicle, house, etc. The repayment often hinges on a single source of income. So, in the event of a job loss — the likelihood is high at the moment — the debt becomes unsustainable. This begets stress, which can become chronic if the employment situation remains dicey. Chronic stress has cardiovascular implications and can potentially lead to mental health issues. Unemployment alone, without any outstanding debts, can weigh heavy on the mind.

The vicious cycle: Mental health and money are intertwined — financial struggles lead to mental health issues, which, in turn, impede the person’s ability to operate optimally and alleviate the burden. As a result, debts or financial struggles often continue to mount, creating a vicious cycle that keeps getting harder to break. At times, mental health issues lead to physiological problems as well, especially cardiovascular-related, thereby further complicating the situation. 

Compulsive spending: Despite existing financial stress, people with mental health issues tend to find some comfort in shopping or retail therapy. While it could give temporary respite, it could grow into a habit, which cannot be broken without the withdrawal symptoms. If they forcibly try to snap out of this compulsive spending habit, the result can be fatal at times. 

Unhealthy coping mechanisms: People suffering from mental health issues are also prone to develop dependencies on alcohol, prescription, and non-prescription drugs. Substance abuse can snowball into crises if continued for prolonged periods without intervention. While the procurement of the substance drains the finances, the addiction incapacitates the addict from earning. 

Relationships: Money is a common cause of problems in marriages. Marital woes are linked to mental health and more financial issues, which subsequently hamper the scope for reconciliation. 

Tips to overcome mental health-dependent financial issues

There are multiple variables in the mental health-money equation, making the redressal anything but straightforward. However, one must understand that, no matter how hopeless the situation is, there is always hope. The internet is rife with stories of people who hit the bottom of the barrel only to pick themselves up and go on to live a healthy life, both mentally and financially. The essence is to let neither mental health issues nor financial stress impact one another. The following tips can help. 

Know your finances: Awareness is key to averting a full-blown crisis. If one is experiencing mental health issues or symptoms, and if there are outstanding debts, it is important to revisit the budget and spending habits. It is advisable to tabulate the earnings and expenses, create an action plan for repayment, and adhere to it religiously. 

Emphasize physical health: Considering mental health issues can have spill-over, physiological consequences, it is important to ensure quality sleep cycles, exercise periodically, be active, and develop healthy eating habits. 

Seek help: The prevalence of mental health issues has translated to destigmatization. People are increasingly seeking help, and mental healthcare is generating investments. If mental health issues are the root cause of financial troubles, addressing them will significantly improve the situation. Denial or reluctance to seek help has often led to poor results. 

Talk to a financial advisor: If financial stress, due to debts or unemployment, etc., is the underlying cause of mental health issues, then it demands immediate attention. However, financial problems can have complex causal factors, which may require counsel — much like mental health. Psychiatrists cannot help with the finances in the same way financial advisors cannot treat mental health conditions. If the problems lie at the intersection of mental health and money, they call for both financial advisors and medical professionals. Get in touch with us at XXX for an extensive, free consultation. 

  1. https://pubmed.ncbi.nlm.nih.gov/24121465/
  2. https://www.apa.org/news/podcasts/speaking-of-psychology/financial-stress
  3. https://www.moneyandmentalhealth.org/money-and-mental-health-facts/
  4. https://gulfnews.com/how-to/your-money/nearly-half-of-uae-residents-still-in-debt-28-failing-to-save-money-at-all-1.2107171

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