The Impact of Financial Stress

It’s no secret that personal financing can be a burden, but researchers have found that financial stress and poor mental health are inextricably linked. Does debt have a negative impact on mental health, or do mental illnesses result in poor financial management? It’s very likely that both are true and feed into each other. The National Institute of Health reports that, “nearly one in five U.S. adults live with a mental illness.”


Though the level of severity ranges from person to person, financial strain has consistently been found to worsen mental health. Anxiety, depression, fatigue, and sleeplessness are stress-induced mental health issues that can be especially prevalent when facing financial strain. According to the Money and Mental Health Policy Institute, 46 percent of people with debt have a mental health diagnosis and 86 percent of people with mental health issues and debt acknowledge a link between the two, saying their debt makes their mental health issues worse. Increased stress can also lead to unhealthy habits such as excessive drinking and drug use, as reported by the American Psychological Association.


Research shows that depression increases in the face of financial issues, and decreases when one is financially stable. One specific instance of this has been presented by the CDC, which found that as family income levels increased, depression decreased. Conversely, as family income levels decreased, depression increased. There is also a correlation between suicide and financial stress. People who commit suicide are eight times more likely to be in debt, and people in debt are three times more likely to contemplate suicide.


There is a cyclical nature to financial depression. People experience anxiety and depression when in debt, and find it more difficult to manage their money due to that stress. This difficulty only leads to more financial issues and therefore more mental health issues. When caught in the cycle of financial stress and depression, it can be difficult to break out. Additionally, the stress in one’s financial life can lead to a decrease of focus in the workplace.


There are some ways to manage both stress and finances. These include talking to a professional, having a support system, and creating a budget you stick with(or at least do your best to). These things are easier said than done, but they have been found to make a difference in both physical and mental stress. Practicing financial self-care can seem daunting, but in the long run it can lead to better overall mental health, not to mention finances.

Opinions expressed by the author are not necessarily those of WITI.