Can Your Mental Health Predict Your Financial Health?

The connection between money and mental health impacts more areas of your life than you might think. Learn how mental health can determine your financial health, and the other way around. Plus, find some tips to keep your personal finances on track while you cope with psychological and emotional challenges.

Key Takeaways

Mental health impacts more than our thoughts and feelings. It touches every part of our lives.

If you’re dealing with mental health challenges AND financial challenges, you’re not alone. Two recent statistics highlight the alarming connection between money and mental health:

  • 46% of people with debt also have a mental health diagnosis
  • Nearly 1 in 5 adults with a mental health diagnosis are in “problem debt”

These numbers raise questions. Do mental health challenges create financial challenges, or is it the other way around?

The truth is: mental health and financial health go hand-in-hand. 

How money impacts mental health

Financial difficulties can create or exacerbate a mental health condition. In fact, 86 percent of people with mental health issues and debt say their debt makes their mental health issues worse. 

Additionally, 39% of people with a mental health problem recently reported that their financial situation had worsened their mental health problems.

It’s not just money-related stress that affects mental health. Expenditures on things that boost our mental wellbeing, like enjoying hobbies or traveling, are often the first to go when the budget is tight. 

At a more serious level, money problems can force people to forego mental health services and medication. Without treatment, mental health challenges grow in severity. 

In extreme circumstances, even basic necessities like heat or electricity may become inaccessible, leading to chronic stress and depression. 

Mental health problems can affect financial capability

People living with a mental health condition can find that their illness leads to problems with money, and makes it harder to solve these challenges.

For example, a recent study revealed that those living with depression and debt are four times more likely to still have debt in 18 months (compared to their counterparts without debt).  

Money management challenges faced by people with mental illness diagnoses include:

  • Difficulty solving problems
  • Organization struggles
  • Severe memory deficits
  • Debilitating panic responses to stressful situations
  • Challenges in planning and prioritizing

Personal finances are complicated and often emotionally difficult. It’s no surprise that this is a key area impacted by mental health challenges.

Can better mental health resources solve these issues? 

Mental healthcare in the United States is costly, and access is limited. Racial disparities make mental health treatment even less accessible for people of color. 

According to a report by the Congressional Black Caucus Foundation, mental disorders in Black Americans are often misdiagnosed, or there are significant delays in diagnosis, because these communities either lack access to culturally competent health care, or the care they receive is of a lesser quality. In fact, only one-in-three Black Americans who require mental health treatment actually receive it. 

Tips to reduce the financial impact of mental health struggles

If you’re stuck in the cycle of mental health and money challenges, there are a few things you can do to work toward a solution:

1. Look for free or affordable mental health resources.

Find out from your health care provider if your insurance covers mental health related consultations. Also, your city or state’s website can be a resource to learn about free or affordable mental health treatment in your area. 

2. Ask a friend or family member to help with tasks that overwhelm you, like calling a creditor or setting up a bank account.

Identify your biggest stressors and call in reinforcements to help you conquer the “impossible tasks” that have been weighing on you.

3. Budget for self-care essentials.

Include items or services in your monthly budget that inspire positive feelings, such as time with your friends, a hair appointment, a good book or two, or a hobby you enjoy.

4. Keep an eye on mental health-related budget breakers.

Review your spend throughout the month to ensure that you are not going over your budget as this could cause anxiety, depression or other mental health problems. 

Credit and Mental Health

When mental health challenges arise, credit can be the last thing on your mind. It’s common for people with a mental health diagnosis to feel that much of your energy is devoted to basic necessities.

A solution like StellarFi can make it easier and less stressful to manage your money and your credit. By linking your bills, you can set up automatic payments that won’t come out if your account has insufficient funds. Plus, you’ll get alerts and reminders when bills are due, and avoid the added anxiety of late fees.

Another mental-health-friendly benefit is that your credit score will grow as your bills are paid. Rather than adding yet another service or taking on the stress of a new loan or credit card, you can build credit just by paying the bills you already have.


StellarFi (StellarFinance, Inc.) and its affiliates do not provide financial, tax, legal, or accounting advice. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal, or accounting advice. You should consult your own financial, tax, legal, and accounting advisors before engaging in any transaction. StellarFi receives a referral fee from the partners mentioned in this article.