Money plays an important role in nearly every part of life. It can affect your relationships, work, and even your mental health. When money is tight, stress often follows. This stress can impact your well-being and, if not addressed, may lead to mental health issues. But using a few simple and practical money management tips can help you build savings and work toward lasting financial stability. These changes may also help ease stress, support your mental health, and give you more control in other parts of your life.
The Connection Between Money and Mental Health
Research shows that money stress and mental health are closely linked. A 2023 Forbes Advisor survey found that 54% of people said debt causes them stress. Another 34% said it leads to depression, and 40% said it increases their anxiety. People in debt often feel guilty or stressed about spending, even when the purchase is necessary. Some also feel ashamed because of the negative views society may have about money problems.
The same survey also found that 48% of people said debt affects their sleep, and 38% said it keeps them from socializing. Money stress can also follow you to work. A report from the TIAA Institute found that money-related stress caused more missed work and late arrivals. People were also five times more likely to be distracted by money worries while working.
What Is Financial Well-Being?
Financial well-being means different things for different people. It depends on your income, life goals, and the systems around you. Over time, your idea of financial health may change based on age or lifestyle. But in general, it means feeling more confident, stable, and in control of your money. Financial well-being often includes being able to handle unexpected expenses and not feeling constant stress about money.
Why Money Issues Cause So Much Stress
Money is a major source of stress for many people. There are a few key reasons why. Some people worry they won’t have enough money to cover basic needs like food, rent, or healthcare. Others stress over not having enough saved for retirement or emergencies.
There’s also pressure to keep up with friends or meet social expectations, which can lead to spending more than you should. Not understanding how money works can make things worse. Financial stress comes from both real-life struggles and how we think about money.
Tips for Managing Your Money
Learning about money is a good first step toward better financial habits. You can find many free tools, apps, and classes to help you learn. Feeling informed can give you more confidence and control. Here are a few basic tips to help you get started:
1. Set Clear and Realistic Goals
Think about what you want to achieve. Maybe you want to buy a home, build an emergency fund, plan for retirement, get out of debt, or stick to a budget. Write down your goals and set a timeline. Research shows that people are more likely to achieve goals that are specific and written down.
2. Create a Budget That Works for You
Start by figuring out how much money you bring in and how much you spend each month. Be sure to list your top priorities first, like food, rent, and medical needs. Next come things like insurance, debts, and other regular costs.
If you can, try to save a little each month—even five or ten dollars helps. Over time, that small amount can grow, especially if it’s in an account with interest. There are many online tools that can help you track your spending and cut back on extras you don’t really need.
3. Pay Down Credit Cards and Loans
Paying off debt can be tough, but it helps your overall financial health. If you can, pay more than the minimum each month. You can also try using a plan like the “debt snowball” or “debt avalanche” methods to stay focused. If you’re struggling with debt, a credit counselor may help you find a plan that works for you.
4. Keep an Eye on Interest Rates
High interest rates can make it harder to pay off credit cards and loans. You might want to look into balance transfer cards or a debt consolidation loan. Some cards offer low or even 0% interest for a short time. Debt consolidation can help lower your total interest and make it easier to pay off debt.
5. Practice Thoughtful Spending
Look at your spending habits and cut back where you can. Try to reduce spending on things like eating out, luxury items, or subscriptions you don’t use. Shop with a list and avoid impulse purchases. Choose to spend on things that match your values and real needs.
How Saving Can Build Long-Term Security
Saving money is a key part of planning for the future. Whether you want to retire, take a trip, or simply feel more secure, improving your saving habits can help. If you can afford it, a financial advisor can offer advice. There are also free counseling services that can help you find high-interest savings accounts or plan for things like insurance, taxes, and retirement.
Why Financial Health Can Be Hard to Achieve
Everyone faces different challenges when it comes to money. Some people deal with rising costs while their income stays the same. Others face repeated emergencies or rising debt and interest rates. On top of that, larger systems and inequalities can make it harder for some groups of people to reach financial stability.
Even human behavior can make budgeting difficult. Some people may find it emotionally draining or may struggle with habits like impulse buying. Advertisements also influence our spending more than we might realize.
Mental health issues can also play a part. For example, depression can lead people to avoid responsibilities, including managing money. Conditions like PTSD or borderline personality disorder may lead to reckless spending. In some cases, people use shopping as a way to cope with pain or stress. Being aware of your mental health and asking for help when needed can support your financial efforts.
Money Management as a Form of Self-Care
Managing your money can also be a form of self-care. Here’s how good money habits can support your mental health:
- Budgeting can build gratitude.
When you make smart choices with your money, you may value your purchases more. You also learn to enjoy what you have. - Money plans can reduce fear.
When you know you have a plan and enough for your needs, you may worry less and feel more secure. - Cutting extra spending helps you set boundaries.
Sometimes you need to say “no” to others—and yourself—when a purchase doesn’t fit your budget. This skill can improve both your finances and your relationships. - Budgeting encourages self-awareness.
If you find yourself spending to cope with emotions, this may be a sign to reflect or seek support. Learning the reasons behind your spending can lead to better choices.
Getting Support
You don’t have to go through money challenges alone. Talking to a trusted friend or family member about your goals can help you stay focused. A financial advisor can give you tools to manage money and plan for your future. If cost is an issue, there are low-cost or free options available based on income.
Finding Mental Health Support for Financial Stress
If money stress is affecting your mental health, talking to a counselor can help. They can work with you to understand your relationship with money and build healthier habits. Many people assume therapy is too expensive, but some therapists offer sliding scale pricing. Online therapy is often more affordable and flexible.
A 2022 study in Frontiers in Public Health found that people who tried online therapy for financial stress saw big improvements in their anxiety, depression, and money worries—even weeks after the sessions ended.
Final Thoughts
Money can be a big source of stress, but having a plan can help you feel more in control. Good money management can ease stress and improve many areas of life, including work and relationships. If you’re struggling, help is out there—from financial counselors to mental health professionals—so you don’t have to face it alone.
