How does financial stress affect mental health?
Money can bring a sense of security, but it can also be a significant source of stress. For many of us, finances can directly impact our mental health. In turn, when our mental health suffers, so does our ability to manage money effectively. This relationship is a cycle that can feel overwhelming and, at times, impossible to break.
But here’s the good news — we’re in this together! In this article we’ll explore how money and mental health are closely linked, how it impacts our well-being, and simple tips for managing financial stress more effectively.
The link between money and mental health
To put it simply, money and mental health are deeply intertwined. Financial challenges don’t just weigh on our wallets; they can also take a toll on many other facets of your overall well-being.
If you’ve ever worried about paying bills or making ends meet, you know how draining financial stress can be. A survey conducted by Bankrate found that 52% of respondents named money as being the biggest factor impacting their mental health.
So, why does financial stress affect mental health? Here are just a few examples of factors that could be at play:
- When money is tight, fear of the unknown can set in. Will you have enough to cover future expenses? This uncertainty can trigger anxiety.
- Struggling financially can lead to feelings of failure or shame, especially when comparing yourself to others
- Facing financial difficulties may limit access to necessities like healthcare, proper nutrition, or even a secure home environment, exacerbating stress.
The connection goes the other way, too. Poor mental health can affect our ability to make sound money decisions. A few examples of this include impulsive spending, failure to budget, or neglecting essential financial tasks like paying bills on time.
Tips for managing financial stress
Now that we understand the link between money and mental health, how can we empower ourselves to break the cycle? Here are some practical tips to get started:
1. Take small steps toward financial clarity
Money issues often feel overwhelming because the problems seem so big. Start small by taking a deep breath and reviewing your financial situation step by step. What are your income and expenses? Are there areas where you can cut back, even slightly? Understanding where you stand financially is the first step toward finding solutions.
Bonus tip: Break down money tasks into smaller, more manageable actions. Instead of aiming to save thousands all at once, start by saving a small amount weekly — even $5 counts. Over time, these small actions add up.
2. Create a realistic budget
Budgeting gives you a clear picture of where your money is going and helps you regain a sense of control. Keep it simple by using an app or a spreadsheet to track your income and expenses. Prioritize necessities and allocate a portion for savings, even if it’s a small percentage.
Bonus tip: Budgeting doesn’t have to mean deprivation. Build in room for small joys, like a coffee run or movie night. These little indulgences can do wonders for your mental health. Implementing the 50/30/20 budget rule can help you live a life of balance. Our Money Management tool is also a great resource to use to make sure you’re staying on track with your budget!
3. Seek professional guidance
It’s okay not to have all the answers. Leaning on the expertise of professionals that offer financial counseling can help guide you toward a stronger fiscal footing.
Bonus tip: Our friends at Greenpath offer personalized counseling, guidance, and educational services. And don’t forget that our Clearview team is always here to support and root you on!
4. Set small goals and celebrate wins
When we’re dealing with money and mental health, big dreams like paying off debt or saving for retirement can feel too far away. Instead, focus on small, achievable goals that build momentum. Did you stick to this month’s budget? Set aside a little savings? All those victories matter and should be celebrated!
Bonus tip: Goal Builder can help you turn savings goals into achievements, one dollar at a time!
5. Practice self-care
Taking care of your mental health makes financial stress easier to manage. Whether through meditation, mindfulness exercises, journaling, or simply doing activities you love, self-care restores balance and builds resilience to face money stressors.
Bonus tip: Combine self-care with frugality! A long walk in nature or a cozy night in with a library book (may we recommend a fun financial read) is a budget-friendly way to recharge.
6. Connect with a supportive community
You’re not alone in this journey. Many are facing the same challenges you are, and opening up to loved ones or joining a support group can reduce feelings of isolation. A sense of community can be incredibly uplifting!
When it comes to money and mental health, remember that we’re all works in progress. No one’s financial or emotional situation is perfect, but with small, intentional steps, it’s possible to find balance.