The mental health and money cycle (and 8 tips to help break it)

The American Psychological Association recently ran a survey. As of March 2022, 72% of Americans report stressing about money at least some time in the prior month. 

Research has shown that finances are the number one cause of stress. According to a FINRA report, the mental health impacts of money aren’t equitably experienced. Anxiety about personal finances disproportionately impacts certain communities. Like women, people from under-resourced or low-income communities, and communities of color.

In fact, 65% of women feel anxious about their personal finances compared to 54% of men. Women, young adults, those who are low-income, and those who are unmarried or unemployed are most financially anxious. 

There’s a big problem when it comes to mental health and money. It’s a complex relationship, one with many contributing factors that might feel totally out of your control. You might not notice how money and mental health have impacted you yet. But it could be influencing your decisions, your physical health, and even your behaviors. 

I’ve personally experienced the mental health impact of financial stress and well-being. At one point in my life, I was working three jobs to cover my rent and expenses—and it still wasn’t enough. I found myself relying on my credit card more than I wanted. Now, I’m on my own journey to financial wellness. It’s taken years of learning and behavior changes to get here but it’s possible. 

If your mental health is negatively impacted by money, you’re not alone. You’ll learn how mental health and money impact your well-being. You’ll learn how your mental health can impact your decisions and relationships with money. But you’ll also learn ways to reduce the impact of money on your mental health. 

How does money affect mental health?

So, how does money affect mental health? In more ways than you may think. At its heart, money can cause an incredible amount of stress. When humans experience stress, the mental health impacts ripple from there. 

Stress and worry about money impact those living with depression and anxiety. Stress about money can exacerbate existing mental health conditions. But it can also contribute to developing other mental health conditions, from your mood to your emotional health. Financial stress can negatively impact self-esteem and confidence. 

Mental health and money statistics 

Here’s what we know from research and science. The Money and Mental Health Policy Institute have conducted studies on the relationship between mental health and finances. 

How does money affect human behavior?

It’s surprising the impact money can have on human behavior. But according to researchers, money has a significant influence on how we think, act, and behave. 

Science tells us that money (or lack thereof) shapes our sense of morality. One study found that luxury cars were four times less likely than less expensive vehicles to allow pedestrians to cross at crosswalks. Luxury vehicles were also more likely to cut off other drivers, a sign of wealth and entitlement. 

Multiple studies show a connection between money and empathy. Some research found that people of lower economic status were better at reading facial expressions than wealthier people. This is an important marker of empathy. 

It’s also shown that wealth is linked to addiction. Money itself doesn’t cause substance abuse. But studies have found that wealthy children are more vulnerable to substance abuse issues. 

When we think about human behavior, money plays a big role. It shapes how we think, feel, and act — for better or for worse. 

How mental health can impact your finances

Just like money impacts our behavior, your mental health can also impact how you handle your finances. Here are four ways mental health influences your relationship with your finances. 

• Mental health can contribute to your mismanagement of money 
• Mental health conditions can make it harder to control your spending, pay bills, or budget appropriately 
• Certain mental health conditions can sometimes result in impulsive behavior 

If you’re experiencing mental health issues, it’s important to factor financial wellness into your well-being plans. Talk with a trained mental health professional or doctor about ways you can seek support. 

Understanding your relationship with money 

It took me a while to understand my relationship with money. 

To this day, I still don’t fill up my gas tank all the way, despite the fact that my bank account is able to afford a full tank of gas. It’s a habit and limiting belief that I’ve carried into adulthood from my childhood. My mom always used to keep $5 or $10 in the glove box for gas. Somehow, I internalized that I only put small amounts of money into my gas tank at a time — just in case I needed money for something more important. 

And while I know that I’m in a position where I can afford to fill up my gas tank, I still tend to only fill it around halfway. I never let the tank click full. 

Do you understand your relationship with money? There are lots of factors that can influence your relationship with money. From your socioeconomic background to debt to even how your parents talk about finances, it’s a tough nut to crack. 

But it starts with being open and honest with yourself about where you’re at. Without that level of vulnerability to recognize your current state, you won’t be able to make any positive changes. 

Questions to ask yourself to recognize spending patterns 

• How do you feel when you make a purchase? 
• What feelings do you experience when you need to make a big purchase? 
• Are there moments in time where you’re more likely to spend money? 
• Are there moments in time where you’re less likely to spend money? 
• How comfortable do you feel talking about money? 
• How often do you check your bank account? How does it make you feel? 
• What aspects of coping with money and mental health make things worse? (i.e. opening a bill in the mail, online banking, paying rent every month) 

How money can impact your mental health

Just like mental health can impact your finances, your finances can also impact your mental health. It’s a symbiotic, cyclical relationship. Here are four ways money can impact your mental health: 

• Problems with money can lead to increased mental health problems, specifically depression and anxiety 
• Those living with debt are more likely to be depressed, anxious, or consider suicide (data cited above) 
• Problems with money and debt lead to increased stress 
• When people are stressed, their physical and emotional health suffers 

8 tips to reduce the impact of financial stress on your mental health

If you’re struggling with your mental health and money, you’re not alone. It’s possible to build a strong mental fitness plan to help gain focus and control in your life. Here are eight tips to help reduce the impact of financial stress on your mental health. 

1. Make one decision at a time. Money can be overwhelming. When you’re faced with multiple decisions at once, it’s more likely you’ll have a knee-jerk reaction. Try to focus on one financial decision at a time. 
2. Create (and stick to) a budget. It’s hard to set goals if you don’t know where you’re starting from. Do an audit of your finances. Then, create your budget. Once you’ve created your budget, try to think through behavior changes that will help you stick to it. 
3. Monitor your spending. This is a big one — and one that I’ve personally struggled with as well. It’s important to know where your money is going.
   
   For example, I didn’t realize how much money I had spent on takeout food until I combed through my bank account. Pay close attention to your spending habits. Lean on your decision-making skills to make good choices about your spending.
4. Pinpoint your financial stressors. Do you get overwhelmed when you get a bill in the mail? Are you stressed at the end of the month, waiting for that next paycheck to make sure you can cover your upcoming rent? Whatever your stressors are, get to know them. 
5. Recognize the emotions you feel related to money. Similar to getting to know your stressors, get in touch with your emotions. Try to identify what emotions come up as it relates to finances and money. Sometimes, journaling about your emotions can help to pinpoint what you’re feeling. 
6. Implement healthy coping mechanisms into your mental fitness plan. Your mental fitness should be a holistic reflection of how you take care of yourself. And there are lots of healthy ways you can cope with your emotions and stress.
   
   For example, let’s say you get overwhelmed every time you have to pay your bills. Can you practice Inner Work® for 10 minutes before and after you have to look at your bills? Can you go for a walk, meditate, or journal about your feelings? Think about ways you can tack on small mental fitness practices to help re-center yourself. 
7. Seek the support of a coach. A coach is like your personal guide to staying mentally fit. By working one-on-one with your coach, you can build a catered financial wellness plan that works for you. 
8. Talk to a trained mental health professional. If you’re living with a mental health condition, talk to a doctor or trained mental health professional.
   
   You may be feeling symptoms of mental illness for the first time. Or maybe you’ve noticed your symptoms are worsening with the impacts of your financial situation. Regardless, seek support. 

Start getting a hold of your financial health 

Financial issues and financial problems aren’t uncommon. In fact, we know that money problems and mental health are intimately linked. Poor mental health can lead to increased financial stress and vice versa. It’s a vicious cycle, one that typically results in financial difficulty and poor well-being. 

But you’re not alone. First, get some breathing space. Your financial worries are valid — but you don’t have to combat them alone. You can take control of your finances with the right support. There are plenty of money helpers and money management services but sometimes, you just need a person to help guide you. 

With BetterUp, you can work one-on-one with a coach to build a strong mental fitness plan. Take control of your money worries. With BetterUp, you can live with more purpose, clarity, and passion.