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The Hidden Link Between Money Worries and Mental Health

  • Writer: Larissa
    Larissa
  • 6 hours ago
  • 4 min read

Money touches nearly every part of our lives. From paying rent to saving for the future, financial decisions and pressures shape daily experiences and future plans. But for many people, financial concerns go far beyond budgeting or planning: they begin to affect wellbeing, mood, sleep, relationships, and overall mental health. The connection between money worries and mental health issues is real, widespread, and backed by research.



Why money worries matter for mental health


Research consistently shows that financial stress can increase the likelihood of anxiety, depression, and emotional distress. A large study of adults in the United States found that higher levels of financial worry were significantly associated with greater psychological distress, especially among unemployed or low-income individuals (Prawitz et al., 2013). Other surveys support this link: the American Psychological Foundation reports that for many adults, money is a major source of stress, with a significant proportion of people admitting that finances weigh heavily on their minds (American Psychological Association, 2023).


What financial stress looks like in everyday life


Financial worries can take many forms, but some of the most common include:


  • Debt and bills: Struggling to pay off loans or make ends meet can create chronic stress.

  • Job instability: Uncertain employment or unstable income magnifies fear about the future and basic security.

  • Rising cost of living: Inflation and everyday expenses can leave people feeling powerless and trapped in a cycle of worry.


These pressures don’t just stay in the mind; they affect behaviour and physical health as well. Constant financial concern can lead to sleep problems, difficulty concentrating, and heightened anxiety or hopelessness (Sweet et al., 2013).


A vicious cycle: money and mental health feed each other


The relationship between financial problems and mental health often works both ways. Worrying about money can worsen mental health, while poor mental health can make managing finances harder. Persistent concerns about money can dominate thinking and reduce a person’s ability to manage daily tasks like paying bills or making sound financial decisions. This creates a vicious cycle where avoidance of financial issues leads to more stress and anxiety (Hojman et al., 2021).


People under financial strain also report feeling low, ashamed, or isolated, which are known risk factors for depression and social withdrawal (Money and Mental Health Policy Institute, 2022).


Wider impacts on relationships and wellbeing


Money worries don’t just affect an individual’s mind. Financial stress can strain relationships with partners, family members, and friends. Disagreements about spending, debt, or financial priorities are among the most common sources of tension in close relationships (Sweet et al., 2013). Chronic financial stress can also manifest physically, contributing to headaches, high blood pressure, sleep disruption, and a general sense of being overwhelmed (Money and Mental Health Policy Institute, 2024).


The broader picture: research and real-world evidence


A growing body of research highlights how financial strain contributes to mental health problems globally. For example, during economic disruptions such as the COVID-19 pandemic, financial difficulties like income loss and inability to pay bills were associated with higher rates of anxiety and depression (Prawitz et al., 2013). In workplaces, employees dealing with financial stress often experience higher absenteeism, reduced productivity, and difficulty concentrating, all of which can exacerbate mental health challenges (TIAA Institute, 2024).


Even at a population level, surveys indicate that rising financial pressure is a leading cause of worry. Research from the UK found that money worries directly influenced mental health, sleep quality, and emotional wellbeing for a significant portion of the population (Hojman et al., 2021).


Practical ways to break the cycle


While financial stress is serious, there are ways to reduce its emotional impact and regain a sense of control:


  1. Create small, achievable financial habits: Even modest steps, like scheduling regular savings or consistently paying down debt, can improve well-being over time (Investopedia, 2023).

  2. Focus on what you can control: Making a simple budget, automating savings, or setting spending limits can create a sense of agency.

  3. Talk to a professional: If financial worries affect mood, sleep, or daily functioning, a therapist or financial counsellor can help you develop coping strategies.

  4. Build a support networkSharing your feelings with trusted friends or family can reduce isolation and remind you that you are not facing these challenges alone.


When to seek further support


Money worries can be overwhelming, especially when they impact mental health significantly. Persistent anxiety, depression, panic attacks, insomnia, or loss of interest in daily activities are signs it may be helpful to speak with a mental health professional. Approaches such as cognitive behavioural therapy, counselling, or hypnotherapy can provide tools to manage stress responses, reframe unhelpful thinking patterns, and support emotional resilience.


Final thought


Money and mental health are deeply intertwined. While financial stress can have a serious impact on emotional wellbeing, understanding the connection and taking proactive steps can help break the cycle. With the right support and tools, it is possible to find stability both financially and psychologically.


References

American Psychological Association. (2023). Stress in America: Money matters. https://www.apa.org/news/press/releases/stress

Hojman, D., Maldonado, L., & Ortigosa, J. (2021). Money worries and mental health: Evidence from the UK. Journal of Economic Psychology, 85, 102350. https://pubmed.ncbi.nlm.nih.gov/39983776/

Investopedia. (2023). Reduce stress with these 2 simple money habits backed by experts. https://www.investopedia.com/reduce-stress-with-these-2-simple-money-habits-backed-by-experts-11794598

Lees, C., & Stacey, B. (2024, March 20). Always on your mind: Preventing persistent money and mental health problems. Money and Mental Health Policy Institute. https://www.moneyandmentalhealth.org/publications/always-on-your-mind/

Prawitz, A. D., Garman, E. T., Sorhaindo, B., O’Neill, B., Kim, J., & Drentea, P. (2013). InCharge financial distress/financial well-being scale: Development, administration, and score interpretation. Journal of Financial Counseling and Planning, 24(2), 34–50. https://www.researchgate.net/publication/26437007_InCharge_Financial_DistressFinancial_Well-Being_Scale_Development_Administration_and_Score_Interpretation

Sweet, E., Nandi, A., Adam, E. K., & McDade, T. W. (2013). The high price of debt: Household financial debt and its impact on mental and physical health. Social Science & Medicine, 91, 94–100. https://pmc.ncbi.nlm.nih.gov/articles/PMC3718010/



 
 
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