How Does Mental Health Affect Your Financial Health?December 8, 2021 December 8, 2021 /
In the past few years, there has been increased awareness about mental health issues. This leads to more and more people to realize that they may have underlying and unresolved problems that they need to address in order to lead better lives. Most of the time, mental health can also have a serious impact on one’s financial health, and it can cause them to make poor decisions.
How Does Mental Health Affect Your Financial Health?
You might not know it, but there is a significant relationship between your mental and financial health. Both of them can have an adverse impact on the other. By improving one’s mental health, you can also greatly improve your financial health.
Six Ways Poor Mental Health Can Affect Your Financial Health
Your psychological well-being is like a scale. On one side, you have mental health, whereas on the other side, there is mental illness. The scale tips from one end to another, or somewhere in the middle, due to several instances in your life. Moreover, it depends on your physical health, quality of sleep, nutrition, activity level, stress, and other factors.
If the scale tips towards the mental health side for too long, you are at risk of developing financial problems as well. Let’s have a look at six specific ways poor mental health can be the cause of your poor financial health.
1). You Start Losing Control
When you are dealing with disturbed mental health, it feels that life is spiraling out of control, and you can’t do anything to get it back on track. During this time, you aren’t sure about the future as well, and you stop paying attention to how you are spending your money. Therefore, you start spending mindlessly, and at such a time, saving money is the least of your worries.
2). You Start Avoiding Problems
Another thing people with poor mental health often do is that they start putting off important tasks and things that need their immediate attention. Crucial daily tasks like paying the bills, managing mortgage payments, and paying your credit card bill can also be difficult for you. As a result, you are bound to get extra charges and interest on your bill payments and your credit card debt may also start rising. When you finally get your bearings, you would have to look for desperate measures like credit card consolidation and asking for extensions on your installment payments.
3). You Start Spending for Temporary Relief
When you are mentally stressed, you tend to look for temporary relief in other things, even if they are harmful for you in the long run. One such thing is retail therapy, which causes people to spend money on buying unnecessary products and clothes. As a result, they are drained of their finances, and this adds to their stress and financial woes.
4). You Experience Low Self-Esteem
Mental illness also brings with it decreased self-esteem, which causes you to feel worthless or bad about yourself. The lower your self-esteem goes, the more you try to fill the void and overcompensate by buying expensive gadgets, clothing, accessories, and much more. However, this doesn’t help you at all. Rather, it causes your financial health to worsen.
5). You Have Lower Energy
Another side effect of having poor mental health is that you start sleeping less, or the quality of sleep decreases significantly. As a result, you start feeling fatigued and exhausted all the time, mainly due to a lack of energy. Due to this, you have lower energy throughout the day, and this takes your focus off paying your bills or clearing off an outstanding debt. Plus, the debt starts to grow and it becomes even more difficult for you to manage your finances.
6). You Recall Similar Instances
If you have faced mental health problems earlier in your life, your current state will cause you to reminisce about all of them. When you start thinking about the times in your life when you were at your lowest, you start feeling worse than before. Most people try to cover up the wounds from their past by spending more on the future.
For instance, if you were neglected as a child or bullied because of your looks, you might dish out a lot of money on expensive clothes, makeup, treatments, and much more. If you don’t have the money for all these, you might even go to the extent of maxing out your credit cards or taking out a loan just to pay for everything, and this can haunt you in the future.
Five Mental Steps to Improve Financial Wellness
While poor mental health can lead to financial stress issues, there are some steps you can take to refocus your financial mindset by practicing mindfulness. Here is a look at five mental steps that you can take to put your financial life on the right track.
1). Make an Honest Assessment of Your Financial Situation
Many people who have financial problems will resist looking at how much they owe. However, if you want to get yourself on the right track, then you have to make an honest assessment of your situation. Spend an afternoon sitting down and assessing all of your bills.
2). Create a Budget
Creating a budget is much like creating a diet and exercise regimen to get yourself in shape. You can use free apps such as Mint by Intuit, Pocket Guard and Personal Capital to help you create a budget. This will help you avoid spending more than you make each month. It can also help you create a plan to pay off your debt.
3). Resist Emotional Spending
Many people end up breaking their budget due to impulse spending. Therefore, you should put a 24 hour moratorium on any unplanned spending. Ask yourself if you really need this product or service and will it adversely affect your budget.
4). Avoid Comparing Yourself Financially to Others
Numerous studies have shown that social media exposure has a net negative effect on mental health. When we see someone on vacation or living their best life, we can become tempted to spend money to emulate that lifestyle. Don’t try to live your life to someone else’s standards. This can hurt your mental health no matter how much money you make.
5). Set Financial Goals
Instead of focusing on any money problems, focus on solutions instead. For instance, start planning for retirement, the purchase of a home or perhaps a new stream of investment income. This type of focus will allow you to make better financial decisions and put your mental health in a state of control rather than helplessness.
Good Mental Health is Good Financial Health
As you can see, keeping your mental health in check isn’t important just for your wellbeing, but it also has a major impact on your financial health. Mental health problems and illnesses also impair your ability to save money or to perform financial planning. Therefore, it is very important for you to seek help if you aren’t in the right headspace, and also try to take care of yourself with proper sleep, exercise, nutrition, and also engaging in social activities.
By Lyle Soloman of Oak View Law Group
Lyle Solomon has considerable litigation experience as well as substantial hands-on knowledge and expertise in legal analysis and writing. Since 2003, he has been a member of the State Bar of California. In 1998, he graduated from the University of the Pacific’s McGeorge School of Law in Sacramento, California, and now serves as a principal attorney for the Oak View Law Group in California. He has contributed to publications such as Entrepreneur, All Business, US Chamber, Finance Magnates, Next Avenue, and many more.