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Financial Stress And Mental Health

Dr. Charryse Johnson is an author, speaker, and mental health consultant whose work focuses on the intersection of integrative wellness, neuroscience, and mental health.

Executive Contributor Dr. Charryse Johnson

Financial stress can profoundly impact the brain, affecting cognitive functions, decision-making abilities, emotional well-being, and overall mental health. For example, chronic financial stress can impair cognitive function, particularly in areas related to problem-solving, decision-making, and memory. When individuals constantly worry about their financial situation, it can be challenging to focus, make sound decisions, and retain information effectively.

Woman taking a break from doing home finances and feeling stressful.

Prolonged financial stress can also lead to changes in the brain's structure. Research suggests that chronic stress can cause the brain to shrink in certain areas, such as the prefrontal cortex, which is responsible for decision-making and emotional regulation.

For example, individuals experiencing financial stress may be more prone to mood swings, irritability, and emotional outbursts due to the overwhelming pressure they feel about their financial situation.

In some cases, financial stress can lead individuals to engage in risky behaviors, such as excessive gambling, substance abuse, or impulsive spending, as a way to cope with their stress and anxiety. These behaviors can further exacerbate the financial challenges individuals face.

The impact of financial stress on the brain can also impact physical health. Financial stress is the most harmful type of stress to biological health. Chronic stress is associated with a range of physical health problems, including cardiovascular issues, a weakened immune system, and an increased risk of various illnesses. 

Physical and emotional symptoms of financial stress can also disrupt sleep patterns, leading to difficulties falling asleep, staying asleep, or experiencing restful sleep. Poor sleep quality can exacerbate stress and affect cognitive function and overall well-being.

Individuals experiencing financial stress must seek support and resources to manage their situation effectively. Seeking help from financial advisors, mental health professionals, and support networks can provide valuable assistance in coping with economic stress and mitigating its impact on the brain and overall well-being.

Financial stress and mental health

Money and mental health are often linked, and the two have a cyclical relationship. Financial stress can negatively impact mental health, and mental health issues can make it harder to manage money.

Money and Mental Health Policy Institute, 2019

Source: Money and Mental Health Policy Institute, 2019

As individuals face the ever-mounting pressures of financial strain, they can battle shame and increased impulsivity and struggle personally and professionally. Recent research continues to highlight the intricate link between mental health and money problems. 

  • 86% of respondents to a Money and Mental Health survey said that their financial situation has made their mental health problems worse.

  • 34% increase in absenteeism and tardiness

  • Financially stressed employees are also 5x likely to be distracted by finances at work.

Common effects of financial stress on mental health

1. Anxiety and depression

Financial stress can lead to feelings of anxiety and depression. Constant worry about money, debt, or financial instability can affect a person's mental well-being. The uncertainty of the future and feeling overwhelmed by financial burdens can exacerbate these conditions.

2. Poor decision-making

Individuals may struggle to make sound decisions under financial stress. Stress can impair cognitive abilities, leading to a lack of focus, poor judgment, and impulsiveness. This can further compound financial problems and increase stress levels.

3. Physical health issues

Financial stress can also manifest in physical health problems such as headaches, digestive issues, insomnia, and even heart problems. The mind-body connection means that stress can directly impact physical health, further worsening overall well-being.

4. Relationship strain

Financial stress can put a strain on relationships, leading to conflicts, arguments, and even breakdowns in communication. This can further contribute to feelings of isolation, loneliness, and overall mental distress.

5. Decreased self-esteem

Financial stress can erode self-esteem and self-worth. Individuals may feel a sense of failure or inadequacy if they are unable to meet their financial obligations or if they compare themselves to others who seem to be more financially secure.

6. Social withdrawal

Financial stress can lead to social withdrawal as individuals may feel embarrassed or ashamed of their financial situation. This social isolation can further exacerbate feelings of loneliness and depression.

Chronic financial stress can have a significant impact on overall well-being and quality of life. It can lead to feelings of hopelessness, helplessness, and a sense of being trapped in a difficult situation. While these feelings may be a typical response, it is essential to seek support and resources to help cope with these challenges. This may include seeking financial counseling, therapy, or support from friends and family. Taking steps to address financial issues and develop coping strategies can help improve mental health outcomes in the face of financial stress.

Improving your relationship with money

Improving your relationship with money is an important step towards financial well-being. Here are some tips to help you improve your relationship with money:

1. Understand your beliefs and mindset

Reflect on your beliefs and attitudes towards money. Consider any negative beliefs you may have inherited or developed over time. Work on changing negative beliefs into positive ones to cultivate a healthier relationship with money.

2. Create a budget

A budget helps you understand where your money is coming from and where it is going. It allows you to prioritize your spending, save for the future, and avoid unnecessary debt. Track your expenses and make adjustments as needed.

3. Set financial goals

Setting clear financial goals gives you something to work towards and helps you stay motivated. Whether it's saving for a vacation, paying off debt, or investing for retirement, having goals can help you make better financial decisions.

4. Educate yourself

Take the time to educate yourself about personal finance. Learn about budgeting, saving, investing, and managing debt. The more you know, the better equipped you will be to make informed decisions about your money.

5. Practice gratitude

Cultivate a sense of gratitude for what you have. Focus on what you have achieved rather than what you lack. Gratitude can help shift your mindset from scarcity to abundance, positively impacting your relationship with money.

6. Avoid comparing yourself to others

It's easy to fall into the trap of comparing your financial situation to others. Remember that everyone's financial journey is unique; what works for someone else may not work for you. Focus on your own goals and progress.

If you're struggling with managing your finances or changing your mindset towards money, consider seeking help from a financial advisor or counselor. They can provide guidance and support to help you improve your financial well-being.

By implementing these tips and being mindful of your thoughts and behaviors around money, you can improve your relationship with money and work towards a more secure financial future.


Dr. Charryse Johnson, Expert Mental Health Consultant

Dr. Charryse Johnson is an author, speaker, and mental health consultant whose work focuses on the intersection of integrative wellness, neuroscience, and mental health. She is the founder of Jade Integrative Counseling and Wellness, an integrative therapy practice where personal values, the search for meaning, and the power of choice are the central focus. Dr.Johnson works with clients and organizations across the nation and has an extensive background and training in education, crisis and trauma, neuroscience, and identity development.



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