Breeze Logo

Money & mental health: A complicated relationship

Read time
6 mins

In 2021, financial chaos has become the norm for millions of Americans who would have termed their lives as “comfortable” not that long ago. They have lost their jobs because of the pandemic or are now among the ranks of the under-employed. As a result, their stress level and overall mental health have suffered.

For others, their financial difficulties have been caused by a mental health disorder. The finished work of many people has suffered a reduction in quality because of anxiety or depression, and as a result, they have lost their job or are unable to work.

It’s true that financial and mental instability often go hand-in-hand and tend to magnify each other, leading to a downward spiral that worsens over time. Doing something about it is much easier said than done.

Debt and mental health

According to the National Institute of Mental Health, approximately one in five adults in the U.S. experience a mental illness each year. Multiple studies have shown that people with mental health problems are more likely to be in debt.

In a report published in Clinical Psychology Review, researchers from the University of South Hampton examined 65 studies on debt and mental health. They found a positive correlation between mental illness and financial problems.

Researchers concluded that the likelihood of having mental health problems is three times higher among people that have debt. Anxiety, depression, and psychotic disorders were among the most common mental illnesses experienced by people in debt.

There was an even greater link between debt and suicide. People who commit suicide are 8x more likely to be in debt.

Unemployment and mental health

We live in an era of extreme stress, which is among the most commonly reported mental illnesses. Job stress, relationship stress, financial stress, and health stress are just a few of the causes of debilitating stress.

People experiencing extreme stress are subject to a variety of physical, emotional, and behavioral symptoms.

According to the Cleveland Clinic, physical symptoms include:

  • Aches and pains
  • Chest pain or a feeling like your heart is racing
  • Exhaustion or trouble sleeping
  • Headaches, dizziness, or shaking
  • High blood pressure
  • Muscle tension or jaw clenching
  • Stomach or digestive problems

Emotional signs of stress include:

  • Depression or anxiety
  • Anger, irritability, or restlessness
  • Feeling overwhelmed, unmotivated, or unfocused
  • Trouble sleeping or sleeping too much
  • Racing thoughts or constant worry
  • Problems with your memory or concentration
  • Making bad decisions

Behavioral symptoms of chronic stress include:

  • Drinking too much or too often
  • Gambling
  • Overeating or developing an eating disorder
  • Participating compulsively in sex, shopping, or Internet browsing
  • Drug abuse

For someone experiencing any of the above-listed symptoms, daily functioning can be severely impaired, including the ability to function effectively at work.

For example, someone experiencing uncontrollable trembling or shaking couldn’t perform their job duties, nor could they if they had problems with their memory or were abusing drugs. Because of these complications from stress, there is little chance that they would be able to continue with their employment.

The financial ramifications would then be severe. The individual would apply for unemployment benefits, for which they may or may not qualify depending upon the circumstances surrounding their termination of employment. Even if they were to qualify, their finances and their lifestyle would dramatically suffer.

They could also apply for Social Security Disability Insurance (SSDI), for which they would quite likely not qualify. Satisfying the requirements for SSDI qualification is very difficult. Only total disability is paid for; no benefits are payable for partial disability or short-term disability.

You’re only considered disabled under Social Security rules if all of the following apply:

  • You cannot do work that you did before because of your medical condition
  • You cannot adjust to other work because of your medical condition
  • Your disability has lasted or is expected to last for at least one year or to result in death

Even in the rare instances where someone qualifies for benefits, they rarely will receive payment for at least six months from when they applied.

Someone with a mental illness that doesn’t qualify for unemployment insurance and SSDI benefits will suffer extreme financial hardship if they don’t have adequate financial reserves to draw upon. This underscores the importance of having adequate short-term disability and/or long-term disability coverage.

We’ve focused on stress and its impact on finances; however, the same holds true for any number of mental disorders, including depression, bipolar disorder, schizophrenia, and many others.

[ Related read: Is mental illness a disability? ]

Does one cause the other?

Although multiple studies show a definitive link between mental health and financial health, causation isn’t clear. Some researchers hypothesize that worrying about debt leads to increased stress and reduced resilience against mental health disorders.

Other researchers hypothesize that financial management is interfered with by mental health problems. Mental illness may decrease an individual’s self-control and lead to excessive spending. And, as discussed, a mental health problem may interfere with employment, which may lead to increased difficulty paying bills.

There’s also a chance that mental health problems and debt fuel one another. Going into debt may increase a person’s chance of developing a mental health problem, but a mental health problem may increase their risk of falling deeper into debt.

[ Related read: What is financial wellness? ]

Getting money and mental health help

Money affects our mental health because it’s still such a taboo topic. Personal finance and mental health rank right up there with death, politics, religion, and taxes as the most difficult conversations we can have. If someone struggling with debt and mental health issues can’t talk about these problems openly with their loved ones, where can they turn for help?

One option is through counseling. Many employers provide benefits, including counseling, and some offer Employee Assistance Plans (EAP) which include a set number of counseling visits at no cost to the employee. A company’s Human Resources Department can help determine what benefits are available.

The United Way can offer a list of local non-profits that may offer financial counseling. They may be able to help an individual apply for student loan forgiveness, or convince creditors to grant a grace period.

The best way to tackle mental health and financial issues is to tackle them head-on. The only way these problems will get better is if they’re addressed.

Jack Wolstenholm is the head of content at Breeze.

The information and content provided herein is for educational purposes only, and should not be considered legal, tax, investment, or financial advice, recommendation, or endorsement. Breeze does not guarantee the accuracy, completeness, reliability or usefulness of any testimonials, opinions, advice, product or service offers, or other information provided here by third parties. Individuals are encouraged to seek advice from their own tax or legal counsel.

— Published February 15, 2021
Related Articles

Get started online — anytime, anywhere.

(Seriously, it's a breeze.)