Money — and often the lack thereof — can have a serious impact on your mental health. For decades mental health experts have tried to address the link between money and mental wellness.
Money and Happiness
The topic of mental health and money is often oversimplified into whether or not someone is happy or sad. This oversimplification is often compounded by debates over whether or not money can buy happiness and, if so, if money is the only thing required to be happy and maintain a healthy mental state.
In 2010 researchers at Princeton University claimed to have found an answer to this question. Their findings? Money can buy happiness – but only up to about $75,000 per year; after that, the effect tends to stall out.
However, like finance, mental health is nuanced and there are many other ways to define happiness beyond income.
The first happiness consideration could be your day-to-day mood. The second might be a deeper feeling of purpose and satisfaction. And while making more than $75,000 doesn’t seem to have a big impact on day-to-day mood, those who make more tend to feel more satisfaction with their lives.
The study did not find that lower incomes caused sadness by itself; it more so revealed that subjects were more worn down by financial issues.
A 2010 Time article pulls out this except from the study: “…Divorced people, about 51% who made less than $1,000 a month reported feeling sad or stressed the previous day, while only 24% of those earning more than $3,000 a month reported similar feelings. Among people with asthma, 41% of low earners reported feeling unhappy, compared with about 22% of the wealthier group.”
Money and Health
Beyond general happiness and satisfaction, money has an impact on mental health in somewhat of a self-fulfilling cycle.
According to the 2019 Money and Mental Health Institute survey, 72% of respondents said that their mental health situation made their financial situation worse. This is because experiencing a mental health challenge can dampen some of the financial skills needed to maintain a solid financial state.
When experiencing mental health issues, 93% of respondents spent more money than usual. 92% found it harder to make financial decisions, and 56% take out loans that they otherwise would not have taken out. More than 7 out of 10 respondents in the same study also avoided dealing with creditors and putting off bills.
A mental health challenge could be a result of losing a loved one, losing a job, or even an undiagnosed condition that — if unrecognized and untreated — could spill over into one’s financial life very quickly. Here are a few ideas to help.
Ways to Cope
Athena Valentine Lent, is a certified trauma support specialist and the CEO of Money Smart Latina, she says, “Money can affect your mental health by limiting what services you can and can’t have access to.” Someone who has had previous trauma like PTSD, she stated, may eventually need psychotherapy to process those traumatic events.
“Therapy costs money, and a lot of health insurances are limited on what they will cover exactly,” Lent said. But there are other ways to cope:
Managing your money isn’t always about following strict rules and superhuman feats of self-control. It is important to carve out a place in your budget to treat yourself to nice things from time to time.
The popular 50/30/20 rules suggest that 50% of your income should be designated for expenses, 20% for saving and investing, and the remaining 30% to enjoy. And contrary to conventional wisdom, an occasional splurge that is within limits can actually help you save more. This is because the constant obsession with budgeting down to the last penny can cause more anxiety and eventually take a toll on your mental health and your finances.
An unhealthy obsession with frugality and budgeting without the feasibility to enjoy a portion of the funds is similar to a crash diet in that it may work in the short term but often leads to unhealthy results in the long run.
Find Ways to Increase Your Income
“When you feel discouraged about your finances, you already can’t see where to cut expenses,” Lent says. While cutting expenses can help alleviate some financial stress, you may want to avoid a race to the bottom putting you in a situation that is not conducive to your mental health. Lent continued, “I suggest finding a way to make more money to alleviate mental stress.”
Seek Out A Professional
If you are dealing with financial stress and you think it could be impacting your mental health, seeking the help of a professional is often the best investment. People like Athena there are certified mental health professionals with financial expertise. You may also want to consider a licensed clinical psychologist for more specialized mental health counseling and support.