Finance and mental health

Human beings are the only species with rational thinking and decision-making powers. We can also be self-centred to only benefit our self more than others, more so, when we are insecure or going through negative life events or threats. Since we are humans, emotions are a part of our existence. These emotions influence and guide our decisions and behaviour in every way.


Do we always make decisions after weighing the pros and cons. Perhaps, not always. What come in the way are not just external factors, but also our emotions and its health. We all know emotions play a huge role in decision making, which we should not neglect but we need to be aware about when and how it affects. Financial experts reveal that only 20% of the clients respond to logic and education, the other 80% let underlying emotional issues affect their money spending and investing decisions and habits.


So, if something is bothering us, and we are in a state of unrest mentally and emotionally it will be difficult for us to be focussed and work productively, be it a social, personal or financial problem. We have started having conversations about mental health but there is still a gap about how the state of one’s finances can negatively affect not only our mental health but also our overall well-being.


Our financial status has a significant effect on our mental health, more so now post the economic upheaval caused by COVID-19. Over 122 million people in India have lost their jobs in April 2020, according to estimates from the Centre for Monitoring Indian Economy (CMIE).


The World Health Organization (WHO) has been warning us of the silent pandemic of economic and mental health crisis. Money controls almost every aspect of our lives and most importantly our mental health.


Lack of sleep, anxiety, depression, low self-esteem, mistrust and hopelessness are the common symptoms of poor mental health. Unfortunately, these are experienced symptoms of poor financial health also.


The relationship between one’s finance and mental health is very closely associated. Money is the main source of stress and concern for most of us. Do we not spend more than we can afford or should because of our emotions. Boredom, stress, depression and peer pressure could be blamed for this. Money is strongly emotional. Accepting this and gaining insight and control over how we think and feel about money is one of the biggest tools to be good with it. We may not have control over our income or our expenses but we can control how we feel about it.



Photo Credit: Rayan Mehta


Unemployment and mental health during the pandemic


In the three years of pandemic, with millions losing their jobs every month, we have been witness to a rise in mental health disorders. The reaction to a loss of job is similar to that of losing a loved one. Debt and mental health are related too, resulting in depression, anxiety, stress-related disorders, substance use and these may lead to suicide too.


Research on unemployment shows work provides us time structure, identity, purpose and opportunity for social interactions with others. When a job is lost, all of these are lost too.


Studies reveal that an individual’s attitude and perception to the loss also matters. Those who perceive more financial strain from unemployment are less satisfied with their lives (Frances McKee-Ryan, PhD, professor of management at the University of Nevada, Reno writes in Journal of Applied Psychology, Vol. 90, No. 1, 2005).


It is important to understand that our career is not our identity. We need to separate our self-worth from our work especially in these times when employment instability has been on the rise and at its worst in three decades.


The stages of grief in a job loss, is similar to the emotional experience of dying as developed and outlined by Dr Elizabeth Kubler-Ross in her book, On Death and Dying.


The emotional stages are shock and denial; anger; bargaining; depression; and acceptance and moving on.


It is important to know that you are not alone, and equally important to reach out for support from friends and family, or seek professional help from a counsellor or therapist. It has been seen that after gaining employment, mental health improves considerably. The longer one is unemployed, worse is their mental health. The study also found that countries with high wealth inequality, with weak unemployment protections had worse mental health outcomes (Paul and Moser).


People who blamed job loss on their own failings felt worse about self but remained optimistic about learning new skills and finding a better job. Those who saw fault in the system viewed themselves less negatively but felt more frustrated with their own inability to change their conditions (Journal of Vocational Behaviour, Vol. 82, No. 3, 2013).


Therefore, it is important to destigmatise unemployment and discourage self-blame. Evidence so far for underemployment suggests that job insecurity and instability promote poor mental health, particularly when a person’s wage is low or if they are forced into temporary positions, says Blake Allan, PhD.


Seeing themselves as retired rather than unemployed had improved life satisfaction (economist Clemens Hetschko, PhD, and colleagues, The Economic Journal, Vol. 124, No. 575, 2014).


The COVID-19 crisis is affecting women more. Till schools and child care centres do not open full time it is a double burden for them with domestic responsibility along with child care.


The middle-aged losing their job has shown increase in their mortality rates, possibly because of the loss of health insurance (Coile, C.C., et al., American Economic Journal: Economic Policy, Vol. 6, No. 3, 2014).


The careers of the youth with many jobs not available, may affect their career development. Schools may need to provide guidance and career counselling along with vocational development to build the lack of skills needed to secure new jobs. They need to be psychologically prepared to cope with rejection and how to stay motivated (Psychological Bulletin, Vol. 140, No. 4, 2014).


Financial difficulty affects mental health


Evidences show that people from low socio-economic status are more vulnerable to mental health problems. It could also be that if you have mental health problems, it is harder to hold on to a job and handle finances. Therefore, this makes one more vulnerable to these difficulties.


Research reveals that students from financially challenging backgrounds are not able to make the most of their college experience. Students found struggling financially suffer more symptoms of being overwhelmed, poor mental health, anxiety, and have a greater risk of drinking problems and eating disorders. All this affects their productivity and puts them at higher risk of substance use and suicide. Those with poor mental health could be unable to handle their finances. So it works both ways. It affects self-esteem, causing anxiety, depression and thereby making one lose confidence and decision-making powers, leading to helplessness.


What we do with money speaks a lot about our own psychology i.e. our thoughts, emotions and behaviour. We all learn about money through our experience. We are never taught about handling money in school or college. We learn through life experiences.


The American Psychology Association conducted a survey called, ‘Stress in America’. The survey showed money as the second and work as the third reason for stress. An individual’s financial well-being is one of the greatest indicators of the person’s mental wellness.


Everyone has financial problems, even the rich. They did not always have the best financial situation. Studies claim that low income also causes mental disorders like stress, anxiety, depression, substance abuse and suicide attempts.


Never allow money problems to become larger and more significant than you, affect your mental health, and not let you live a happy life.


The common warning signs are:

  • Disturbed sleep: Insomnia, hypersomnia or reduced quality of sleep, waking up several times in the night.

  • Disturbed eating: Eat more or eat less or indulge in emotional eating like eating sweets, etc.

  • Stress: Can cause binge eating or eat less to save money. Financial worries can result in changes in sleeping and eating patterns. Both are signs of depression.

  • Anxiety and panic attacks: Feeling down, feeling anxious and depressed all the time. This may lead to poor decision-making skills, poor concentration, unable to perform everyday tasks, and low energy.

  • Physical symptoms: Pounding heartbeat, trembling, sweating, constipation, body ache, headache.

  • Relationship difficulties: Money is one of the common stressors in marriage, leading to resentment affecting intimacy, and loss of interest in sex. When not addressed, it may lead to domestic violence, create unhealthy psychological environment for the children and lead to divorce.

  • Financial abuse: The commonest form of abuse experienced within the family.

  • Social withdrawal: Affects relationship with friends and family. Without money socialising can be difficult.

  • Unhealthy coping mechanisms: People with money issues may resort to unhealthy coping mechanisms like substance abuse (drinking and recreational drugs).

  • Reckless behaviour: Gambling, making money through illegal means or by selling valuable items pushes them into larger risk of debts.

  • Self-harm or suicidal thoughts and attempts: If you are experiencing these kinds of thoughts or know someone who has suicidal thoughts, seek help right away. Call suicide hotlines, get the support you need, or talk to someone you trust promptly.

Psychological interventions is essential to help people cope


Research suggests that information regarding mental health is helpful, and therefore essential. Employment intervention programmes need to work on a person’s motivational and cognitive resources to make rehabilitation effective.


Psychologists are suggested to share their evidences to policymakers on the physical and mental health consequences of unemployment.


Losing a job and being unemployed for a long period is a psychological and a financial trauma, and the two are closely associated. Mental health support can be lifesaving, psychologists cannot solve the economic problem, but they can definitely help people cope and manage their crisis.


Policy measures to help manage the COVID-19 pandemic have now been in place for over two years. The complex connection between mental health and unemployment means that systems designed to address one area must not neglect the other area.


An important initiative has been taken by the Government of India to cater to the post pandemic mental health concerns and need.


The Union Budget speaks about the same – open platform, the national digital health ecosystem – the announcement of the much needed national tele mental health programme, to cater to the exponential rise in mental health concerns.


They have proposed to start with at least 23 centres offering free services by trained and experienced mental health professionals.


Mental health, getting attention in the national budget and a dedicated fund for the same, is commendable.


Take control of your life now. Remember that you are precious and blessed. Do not be stressed.


Stay safe, stay healthy.



Photo Credit : Rayan Mehta


How to cope


Financial problems, like any other problem, will resolve with the right attitude, the willingness to make changes. Being mentally resilient is important to reduce stress, and avoid mental health problems.


Identify the problem: No one knows your financial situation better than you. To identify why you are under financial stress, analyse your spending habits. Do you have a shopping addiction? Are you underpaid at work? Are you spending way beyond your means? It is like a disease; find the cause, and you will know its cure.


Budget: Take control of your funds by prioritising your expenses. Learn budgeting and stick to it: monthly income, expenses per month, and the rest savings. Do not overspend. Feel the power of saving.


Deal with your debt: Being debt-free is the first step towards finding financial and mental freedom.


Another source of income: Relying on one source of income may not seem enough. You may try freelancing. Remember not to overwork as this can affect your mental health too.


Talk to your family: The financial burden should be a family matter. Talk calmly about your financial situation. Talking helps, it bonds family together.


Do not bottle up your emotions: This can affect your mental health. It’s ok to ask for help. The sooner you do that, the faster you resolve your problem.


Stress management: Brooding over a problem does not help. Physical health also affects mental health. Work on your lifestyle. Exercise, eat well, get enough sleep, and do not overwork. Learn relaxation techniques, and deep breathing exercises.


Get professional financial advice: Learn how to manage your debt and finances better from sites offering it free.


Take counselling: If your financial state is affecting your mental health, talk to a mental health professional. Better mental health leads to better problem solving.

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