Finances and Mental Health
In today’s world we are surrounded by instant gratification and social media flooding us with the things we should be doing or should have. That can lead to comparing yourself to others and spending. That could include making spending and financial decisions that don’t fit your lifestyle or what you can afford which can lead to debt and stress. Today we are diving into the impact financial well-being can have on our mental health and vice versa. It’s something that’s often over looked and there is a certain taboo it seems attached to even discussing it, but it is crucial to our overall health.
The relationship between finances and mental health is indeed intricate. Financial stress, such as debt, job loss, or insufficient savings, can significantly impact our mental well-being. Studies have shown that financial difficulties can lead to anxiety, depression, and even more severe mental health issues.
On the other side of that, poor mental health can also affect our financial decision-making, leading to impulsive choices and difficulty managing money effectively. It’s a bit of a two-way street, with each affecting the other.
There are several ways financial stress can effect you:
1. Your life may feel out of control or you may feel hopeless, especially about future big expenses like buying a home or retirement.
2. You may have trouble thinking clearly and making decisions.
3. Financial struggles and stress can bring on anxiety and depression.
4. You may find yourself avoiding problems. This includes avoiding paying your bills and incurring late fees.
5. Buying things you can’t afford. This could be for a couple of reasons.
a. Many people turn to what we call retail therapy where you buy things you can’t afford to try and feel better. That instant gratification that gives you a moment of feeling better, but then it goes away.
b. Others will also buy things to increase their self-esteem and to project an image of success.
6. Some people are affected physically with energy decreases and trouble sleeping.
7. You may even be having feelings of shame or guilt about financial decisions you’ve made.
Living in that type of anxiety can cause people to be a fight or flight mode which can cause you to make decisions out of fear and the truth is, that could make things worse.
With the recent interest rate hikes and record inflation, even seasoned investors can become stressed watching their accounts go up and down so often.
Financial stress can truly affect anyone.
If you notice any of the signs mentioned or you are just feeling generally overwhelmed by all of it, it really is a good idea to get some support and someone to talk to. This may be a loved one, like a family member or even a friend you trust or even professional help.
In a recent cnbc survey, the results said at least 70% of Americans struggle financially. 52% say their struggle has gotten worse since the pandemic.
What does that tell you? You aren’t alone. Financial struggles affect almost everyone at some point in their lives. The good news is, there are things you can do to help.
You really want to address both the financial and mental health aspect for better overall well-being.
Let’s get into some practical tips to help.
Tips for the financial side:
1. Create a budget and begin to track your expenses. This can give you a clear picture of where your money is going and help you make better financial decisions.
You can see where you need to make adjustments to reduce your expenses. There may be things to cut for even a short period of time while you get into a better financial situation. You can also see if you need to increase your income.
2. Work on reducing your debt. If you have collections that are hurting your credit score, create a plan to pay those down. Consider setting up payment plans and then make that part of your budget to pay toward those bills. Do the same with credit cards. Pay the highest interest rate ones first, then go onto the next one. Take a look at your debt and what you can pay down.
3. Automate payments so you’re not always worried about being late and incurring late fees. You can do that through your credit union or bank or even through the vendor you need to pay. You still need to make sure the funds are in your account before the bill goes through.
4. Emergency funds and insurance - Building an emergency fund can also alleviate financial stress. Make saving part of your budget. Saving can be hard when money is tight, but any little bit you can save will help and the money will build faster than you think. What’s one thing a week or a month that you could cut back on that you could save instead? A coffee, a lunch? You can also have a chosen amount set as a direct deposit from your paycheck. This is a great way to never see it so you kind of don’t miss it. Knowing you have money in the bank to help with an emergency can really give you peace of mind.
If you can get insurance through an employer or any other way, it’s worth a look. It could really help with costs of things like health care, especially if an emergency comes up.
5. Do regular financial reviews. Make sure you are taking time every few months or so to revisit your budget and spending and see what has changed and what needs to be adjusted to stay on track. A raise, moving, paying off a credit card or car all can change your budget so adjust accordingly.
Tips for the mental health side:
6. Practicing mindfulness and stress-reduction techniques, such as meditation and exercise, can be beneficial. Mediations and mindfulness practices can be found online, even on youtube. There are apps you could try. If you’ve never done it, it may feel a little odd at first, but even a 5 minute meditation can help you settle your mind and feel better. And it gets easier as you make it a habit in your life.
7. Self care is important as well. If that’s making sure you visiting your doctor when you should or taking time for yourself to just enjoy a quiet moment. Don’t forget to make that part of your plans.
8. Break the stigma. It's essential to open up and talk about your feelings and concerns with trusted friends, family, or a mental health professional. The stigma surrounding finances and mental health can prevent people from seeking help when they need it most. But by creating a non-judgmental environment, we can encourage open discussions about these topics.
Sharing personal experiences, like success stories of overcoming financial hardships and mental health challenges, can inspire others to seek support and take positive steps. Many of us are in the same boat and sometimes it helps if someone else goes first so to speak. So be open to the discussions, most likely it will end up helping multiple people.
9. Financial literacy is a powerful tool in enhancing mental health. When you understand the basics of personal finance, you feel more in control of your money and are less likely to make impulsive decisions. Additionally, being financially literate helps you set realistic goals, prioritize your spending, and plan for the future with confidence. This sense of empowerment can significantly contribute to your mental well-being.
At First Pioneers, we offer courses as well as a podcast, not to mention our social media channels. We also have financial counselors on staff to help. Always be on the lookout for ways to learn. The key is to be open to learning new things and taking advantage of what’s out there AND ask questions when you need to so you can move forward.
Bonus tip:
Be resilient. Resilience is the key to overcoming challenges. Keep going… keep at it, don’t give up even when you get discouraged. Consider finding a buddy to go on the journey with you so you have someone to talk to and you can hold each other accountable and encourage each other.
Just like the mental health items we talked about, cultivating a positive mindset, nurturing strong social connections, and engaging in self-care practices can contribute to mental resilience.
It is important to be patient with yourself and realize this won’t happen overnight. Resilience is not about avoiding struggles but learning to bounce back stronger.
Remember, your financial and mental well-being are interconnected, and it's crucial to prioritize both aspects of your life.
Let's continue to break the stigma and support each other on this journey towards a healthier and happier financial and mental state.