The COVID-19 pandemic has led to unprecedented levels of economic uncertainty. While the US labor market has rebounded since 2020, money remains a significant source of worry for many Americans. Media reports about mass tech industry layoffs, a looming recession and inflation may be intensifying these concerns.
Financial stress often contributes to overall feelings of anxiety and depression. In turn, mental health problems can affect financial wellness.
Here are ways that financial stress might be affecting your wellbeing and vice versa, and what you can do about it.
Finances are a leading cause of stress
If money woes are making you tense, you’re not alone. In a 2022 survey from the American Psychological Association, more than 80 percent of adults reported that inflation is a source of stress.
Of those who are stressed about rising prices, most worry about having enough money to pay for basic needs. Slightly more than half said financial stress has led to family fights or tension.
Those results align with Capital One’s 2022 CreditWise survey, which found that finances were the No. 1 cause of stress (73 percent) among respondents — more than politics (59 percent), work (49 percent) and family (46 percent). Finances are especially stressful for Gen Z (82 percent) and millennials (81 percent).
The money and mental health connection
Our relationship to money can have serious impacts on our thoughts, feelings and behaviors. Often, there is a cyclical connection between financial and mental health problems, in which one continuously worsens the other.
Nearly half of people in debt also have a mental health problem, and 1 in 5 people with mental health problems are in debt, according to the UK-based Money and Mental Health Policy Institute.
In a 2022 study in the Journal of Aging and Health, researchers found that those who were often unemployed in their mid- to late 20s and early 30s had poorer physical and mental health by age 50 compared to those who experienced very little unemployment over the course of their careers.
Financial difficulties can affect your mental health in multiple ways:
- You might be forced to cut back on basic essentials, like food, heating and transportation. Research has shown that these stressors are likely to lead to numerous negative health outcomes, including higher cortisol levels, which has been linked to anxiety and depression.
- Stigma around debt, unemployment and financial difficulties may prevent you from reaching out to others. Money problems can also cause tension between friends and family members, further isolating you from your support network.
- Money stressors reduce recovery rates for common mental health conditions, potentially because people needing services, like therapy and behavioral health counseling, can no longer afford them.
- Financial hardships have been linked to suicidal ideation and attempts, according to a 2020 study in The American Journal of Epidemiology.
Mental health problems can also affect your finances:
- The connection between mental health diagnoses and unemployment is understudied, but research suggests that mental health problems can be a barrier for finding and keeping stable employment.
- Common symptoms of mental health problems, such as impulsivity and memory issues, can make it harder to manage finances.
- Those experiencing mental health problems could have problems connecting to and communicating with essential service providers, such as unemployment benefits offices, medical assistance, and career counselors.
The good news is that this correlation can work in the positive direction as well — meaning that improving your financial wellness can help your mental health and vice versa, though the tactics may look different for tackling each.
How to work on financial wellness
We don’t have control over many of the sociodemographic factors that can affect our financial situations later in life, like where we grew up or access to higher education. Nor can we predict every financial hardship, like a layoff or a medical diagnosis.
But developing good personal finance habits and planning for unexpected events can help to keep your bank account and your mental health in check.
- Avoid lifestyle creep: A new job with a higher paycheck might create a false sense of security, but you should avoid spending as much as you earn, personal finance experts warn. Instead, pay yourself first by putting some money in savings or investments, and budget your expenses for the month and year. There are many budgeting tools to help you track your spending and reach your financial goals, including ones that you can connect directly with your bank or credit card.
- Budget for medical bills: In addition to saving money for fun purchases, like vacations or hobbies, try to also set aside funds for surprise medical expenses. Accidents, diagnoses, pregnancies and even global pandemics can and do happen. Even if you have health insurance, certain tests, treatments, and specialist visits can still be expensive.
- Put mental wellness first: Aim to prioritize the expenses that will provide long-term benefits rather than short-term gratification. Finding and building a long-lasting relationship with a trusted mental health professional can be invaluable. While you might encounter therapists who don’t take your insurance, you do have options for paying for lower-cost mental health care. These include seeing licensed providers who offer services based on a sliding scale and taking advantage of your employer’s employee assistance program. There are many options for those seeking affordable therapy options, including telehealth.
How to work on mental health
- Make time for you: Self-care is about more than scheduling bubble baths and facials. It means finding activities that bring you joy, such as cooking or going to a sports game. Practicing gratitude, like through journaling or meditation, is another effective way to care for your mental health. Finally, moving your body throughout the day has been shown to boost endorphins and improve overall wellbeing. That doesn’t have to mean paying for an expensive gym subscription or a trainer. Low-cost, fun options include yoga, playing a sport, taking a dance class or going for a walk.
- Focus on sleep: While more research is needed to fully understand the connection between sleep and mental health, scientists know that sleep plays a vital role in the brain and bodily functions engaged in regulating emotions, behaviors and memories. Sleep deprivation has been linked to heightened anxiety and depression; in turn, those with mental health disorders are more likely to experience chronic sleep issues like insomnia. Experts recommend maintaining a bedtime routine to optimize sleep, including going to bed and waking up at the same time each day, avoiding screen time at least an hour before shut-eye and keeping the bedroom dark and cool.
- Examine your relationship with news and social media: News headline overload, often a symptom of “doomscrolling,” can heighten anxiety and depression. One 2020 study found that the more frequently people sought information about COVID-19 across various mediums — television, newspapers and social media — the more likely they were to report emotional distress. Social media can also lead users to compare themselves to others, contribute to FOMO (fear of missing out) and create unrealistic beauty standards — a recipe for mental health struggles.
- Talk to a trusted friend or family member: Outdated ideas about mental illness can make it challenging to get help or talk about problems. But opening the lines of communication with someone you trust may be the first essential step toward recovery. If you’re not ready to discuss mental health with a friend or family member, you can also begin the conversation with your primary care doctor.
Dealing with financial and mental stress is extremely common, but with diligence, you can make positive changes and take back control. Ultimately, mental wellness affects all other areas of life, including the ability to make money and thrive in your career. Investing in your mental health now could pay off for the rest of your life.