How money affects your mental health

9 September 2021 - 3-4 minute read

Job, family, divorce, moving house…few things in life are more consistently stressful than money – or to be more precise, the lack of it. And as one of the constants we need to consider throughout our lives, our finances are something that can seriously affect our mood and mental health, especially in the long term.

Yes, wealth and mental health are very definitely connected; financial difficulties cause stress, made worse by our inability to enjoy what we might consider life’s essentials, which can lead to mental health problems; and mental health problems may make it harder for us to earn, or manage our money and spending. And so ad infinitum.

A vicious cycle, then, and one with other potentially serious knock-on effects too, such as sleep disorders, greater susceptibility to illness and heart disease, gambling and substance abuse as coping mechanisms, or even depression.1

Counting the cost
Even before the added stress of the COVID-19 pandemic, our mental health as a nation was in some peril. It is estimated that one in five New Zealand women and one in seven men suffer from some form of depressive or anxiety disorder.2 And while money isn’t always a contributory factor, studies elsewhere in the world show that debt vastly increases our risk of mental health issues.

For example, a 2016 UK survey found that nearly half of all people experiencing debt difficulties also had a mental health problem. And nearly 90% of those said their financial situation had made their mental health problems worse. Likewise, people experiencing mental health problems were found to be three and a half times more likely to be in problem debt than those without. And 72% said their mental health problems had made their financial situation worse.3

How one affects the other
But how exactly does financial difficulty affect your mental health, and vice versa? Well, money troubles can cause stress and stigma, meaning that people often struggle to talk about it or ask for help, leading to feelings of isolation. This in turn can impact on our health, both physical and mental, as documented above.

If you do have a mental health problem, you’re also less likely to be in gainful employment. Which means you may be reliant on government or other benefits. This in turn can affect how favourably you see yourself – your mana, or self-respect. That vicious cycle again.

What you can do about it
The good news is that although getting sorted with your money might feel like an insurmountable task, taking things one step at a time can help you feel more in control. With this in mind, here are our top tips to getting your money - and your mental health - back on track:

1) Get your finances sorted
First things first, get a plan. Now, this may be easier said than done, and if you’re already not great with money it may seem like a daunting task, but there are a lot of organisations that specialise in financial advice. If you’re unsure where to start check out sorted.org.nz

2) Understand the link between your mood and money
Another great place to start is working out your money habits. For example, think about when you spend or save money, and why. Do you feel better or worse for spending? You might also want to keep a diary of how you felt, both before and after. Getting to the source of the problem might help you make adjustments accordingly, so you feel more in control.

3) Avoid spending to cheer yourself up
We’ve all done it, but buying something for instant gratification can lead to regret further down the line. So learn to say no, and shop around. Another great method is to wait as many days before purchasing as there are figures in the price tag, to find out how much you really want something – for example, stall yourself two days for that $50 dress, 3 days for that $450 TV, etc. Or if you don’t trust yourself with cards at all, then don’t take them shopping with you. Simple. 

4) Manage your money anxiety
If money is constant worry you’d rather avoid, try not to completely bury your head in the sand. Online banking can make things a lot easier to deal with these days. Or if  you hate opening bills, maybe get someone you trust to do it for you, and let you know which ones are urgent.  Getting your retirement plans sorted can also help give you some peace of mind for the future. 

5) Talk to someone
No person is an island. Sharing your worries with someone you trust really can make you feel better. Friends and family are a good start, but there’s also free professional help you can benefit from – for both your financial and mental health. For example, the Citizen’s Advice Bureau, sorted.co.nz - depression.org.nz – or talk to your local GP if you feel things are really getting on top of you.

6) Be kind to yourself
Like we said, your body and mind are closely connected in many different ways. So if you are experiencing  financial difficulty, try not to be to self-critical. And remember, when you feel good physically, you’ll feel better mentally too, so try to improve your eating, sleeping and exercise habits where you can. Every little pays forward.


These are just some of the ways you can manage your money in tandem with your mental health. Everyone has their own methods. But the most important thing is to understand how and why money affects you, then take action. That way your finances become less scary, and you can break that vicious cycle.