In today’s fast-paced world, managing our finances effectively is a daunting task. Maintaining our finances is actually crucial for our overall well-being. Financial wellness and mental health are deeply interconnected, as money-related stressors can have an impact on our emotional and psychological well-being.
We will explore the various ways in which money can influence mental health, understand the stressors triggered by money issues, delve into the relationship between overspending and mental health, and provide practical tips to take control of your finances to manage your mental health.
How Money Can Impact Your Mental Health
It can go without saying that money plays a significant role in our lives. Its influence extends beyond our wallets. Financial challenges can impact our mental health in various ways.
The stress of financial instability, debt, or the inability to meet basic needs can lead to anxiety, depression, and a diminished sense of self-worth. The constant worry about money can also cause chronic stress, which further exacerbates mental health issues. In fact, the number one stressor across all age groups according to a 2018 Everyday Health stress survey, is finances. Also, 78% of U.S. adults are losing sleep worrying about everyday expenses, saving for retirement, and healthcare costs.
By focusing on financial wellness, we can improve our overall mental health and quality of life. It is important to note that financial wellness or stability isn’t focusing on having all the money you want, but instead, it is about being able to live comfortably without worrying about if you are able to pay your bills or not.
Common Stressors Related to Financial Issues
Financial issues can trigger a range of stressors that take a toll on our mental health. These stressors include:
The fear of not being able to provide for oneself or loved ones
The uncertainty surrounding financial matters can cause endless worry, sleep disturbances, relationship strains, and overall emotional distress. Being under constant stress, regardless of the stressors, can actually shorten your life expectancy.
These facts aren’t here to make you feel grimmer about your situation but rather to help you understand if you are suffering from financial-related mental and psychological stress. Often times people don’t realize what the true cause of their stress comes from which can lead to attributing it to other issues.
The Emotional Side of Money
Money causes a range of emotions, and these feelings can significantly impact our mental health. Financial success can bring feelings of security, pride, and accomplishment.
On the contrary, financial challenges can lead to emotions such as stress, frustration, shame, and even guilt. These emotional responses can shape our overall well-being and influence our behaviors and decision-making processes.
We may better prepare ourselves to handle financial stress and make more informed decisions by identifying these triggers and emotional responses.
How Is Overspending Related to Mental Health?
Overspending is a common behavior that can be linked to mental health problems. For some individuals, overspending serves as a coping mechanism or an attempt to fill emotional voids.
It can provide temporary relief from stress or emotional discomfort, but it often leads to a cycle of guilt, regret, and worsening financial problems. Overspending can contribute to anxiety, depression, and a sense of being out of control, further impacting overall mental well-being.
This impulsive buying habit may go unrecognized by someone who is using it as a coping mechanism. Impulsive buying refers to the tendency to make unplanned purchases without carefully considering the consequences or long-term value. Examples of impulsive buying when it comes to overspending include online shopping, limited-time offers, sales and clearance, and referring to overspending as “retail therapy”.
The last thing you need to be doing while being stressed about financial issues is to overspend on things you don’t need. Ask yourself before you buy, do you need this item? Will this item truly benefit your happiness, or will it make your financial situation worse?
How Can I Take Control of My Finances?
Create a Comprehensive Budget
Developing a budget is a fundamental step in taking control of your finances. Start by tracking your income and expenses to gain a clear understanding of your financial situation.
Categorize your expenses, prioritize essential needs, and allocate funds for savings and debt repayment. Regularly review and adjust your budget as needed to ensure it aligns with your financial goals.
Set both short-term and long-term financial goals to provide direction and motivation. Identify what you want to achieve, whether it’s paying off debt, building an emergency fund, or saving for a specific purpose. Break down your goals into smaller, actionable steps, and track your progress along the way.
Debt can be a significant source of financial stress. Develop a debt repayment plan by prioritizing high-interest debts or utilizing strategies like the debt snowball or debt avalanche methods. Consider seeking professional advice from a financial counselor or credit counseling service to explore consolidation options or negotiate repayment terms.
Build an Emergency Fund
Creating an emergency fund acts as a safety net during unexpected financial challenges. Aim to save three to six months’ worth of living expenses in a separate, easily accessible account. Start by setting aside a small portion of your income each month until you reach your desired emergency fund amount.
We understand that having an emergency fund may be too much for people to prepare for, considering their financial circumstances. Even setting aside $20 to $50 each month can make a huge difference in a year. Start off with small amounts and work your way up.
Increase Financial Fitness
Invest time in expanding your financial knowledge. Read books, attend workshops, or explore online resources to learn about personal finance, budgeting, investing, and other relevant topics. The more informed you are, the better equipped you’ll be to make sound financial decisions and navigate complex financial situations.
Tips to Reduce the Impact of Financial Stress on Your Mental Health
Engage in activities that promote relaxation and stress reduction. This could include:
Getting sufficient sleep
Listening to music
Take time for hobbies, and interests, and spend quality time with loved ones to recharge and foster emotional well-being.
Do not hesitate to reach out for support when facing financial stress! Talk to a trusted friend, family member, or mental health professional. Sharing your concerns and emotions can provide a fresh perspective and help alleviate the burden.
You are never alone in the emotions you’re feeling. More often than not, we share the same concerns, problems, or feelings as those around us without even knowing. Don’t be ashamed to seek support.
Focus on What You Can Control
While financial circumstances may sometimes be beyond your control, focus on what you can manage. Direct your energy towards improving your financial situation by following the steps mentioned earlier. Taking action will empower you and reduce feelings of helplessness.
Practice Mindful Spending
Be conscious of your spending habits and develop mindful spending practices. Differentiate between needs and wants, and practice delayed gratification when making purchases. Pause and evaluate whether a purchase aligns with your financial goals and values before committing.
You’ll experience greater joy from saving for something you need, reducing debt, or increasing your savings rather than impulsively buying things you may not need (and add on to your financial situation). This isn’t to say you shouldn’t spoil yourself here and there, but be mindful to not just swipe your card at any chance you get to feel that temporary emotional relief.
Celebrate Small Wins
Recognize and celebrate your progress along the way. Whether it’s paying off a debt or achieving a savings milestone, acknowledging your achievements will boost your motivation and confidence. Reward yourself with non-financial treats or experiences to maintain a positive mindset.
You got this. We believe in you.
Investing in Your Financial & Mental Health for a Better Life
By taking control of your finances and implementing strategies to reduce financial stress, you can significantly improve your mental well-being and overall quality of life.
You’ll start to sleep better and worry less about important financial decisions. When you are financially fit and educated, you are unstoppable in improving your mental health. It just takes one small step after the other.