Financial stress – how to reduce its impact on mental health

FINANCIAL stress is affecting us in many different ways. Some people are struggling to pay bills, feed the family, or maintain a place to live. Others are meeting their basic needs but are dipping into their savings for extras.

Financial stress is increasing and, understandably, is causing some distress. But understanding and finding ways to reduce our financial stress – and its emotional impact on us – can help make this challenging time a bit easier.

What is financial stress?

If you’re finding it difficult to meet your current expenses or are worried about your current or future finances, you’re under financial stress. Like other types of stress, financial stress has two components:

Objective: financial difficulty, where you don’t have enough funds to cover necessary expenses or debts

Subjective: perceptions about your current or future finances, leading to worry and distress.

These two are related. But someone can have trouble meeting their expenses, view this as acceptable, and not be overly worried.

Alternatively, someone may be reasonably financially secure but still feel quite stressed about their finances.

Why are we feeling it?

There is a broad range of factors that can influence your current level of financial stress. These include contextual and personal ones.

Contextual factors are societal-level influences on the current financial landscape. These include rates of economic growth, market performance, governmental and political policy, and distribution of wealth.

Personal factors contributing to stress are unique to each person.

For example, demographic characteristics such as age, gender, education and ethnic group may influence someone’s access to financial resources.

The health impacts can be severe

High levels of financial stress can impact people’s wellbeing, raising levels of psychological distress, anxiety and depression. A review found clear evidence for a link between financial stress and depression, and that the risk for depression was greatest for people on low incomes. A large survey of adults in the US also found that greater financial worries were associated with more psychological distress.

What can you do about it?

While we can’t change the broader financial landscape or some aspects of our financial situation, there are some simple ways to help reduce financial stress and its impacts.

1. Take small steps

Try to identify elements of your finances you can improve and act on some of them, even if they are small steps. This may include creating and following a budget, cutting some extra costs, applying for available financial assistance, getting quotes for more affordable utilities or insurance, or contemplating a career change.

2. Check your take on the situation

Examine your perspective. Are you often seeing the negative aspects of your situation but ignoring the positive ones? Are you worrying a lot about very unlikely catastrophes far off in the future? It’s worth checking whether your perceptions about your financial situation are accurate and balanced.

3. Don’t be too hard on yourself

Your financial state does not reflect your value as a person, and over-identifying with your financial status can lead to further stress. Financial difficulties are the result of many factors, only some of which are under your control.

4. Take care of yourself

It’s draining dealing with ongoing financial stress. So focus on self-care and coping strategies that have helped you with past stressors.

5. Ask for help

If you are struggling financially or psychologically, seek help. This may take the form of financial advice or assistance to reduce financial difficulties.

If you notice yourself feeling persistently down, anxious, or hopeless, reach out to friends or family and get help from a mental health professional.