Money and your mental health
Money is the top source of stress among Australians, according to private health insurance provider, Medibank. And this pressure is taking a toll on our collective mental health. Another poll conducted in July revealed that almost 90 per cent of us are experiencing anxiety over our finances and the ever-rising cost of living.
Money can hold such power over mental health because it plays a big role in how we navigate our place in today’s world. Our financial perceptions and experiences closely overlap with our sense of self-worth, confidence, and personal power, explains clinical psychologist, Jonathan D. Friedman. That’s why “financial anxiety is a mix of material and psychological concerns,” he says, which can be based on both concrete and perceived realities. This means that freaking out about money may stem from a range and combination of situations, from the actual lack of funds to pay bills to social pressures and obligations.
Why does money cause anxiety?
Your life experiences with money have a big effect on your current relationship with it, explains mental health counsellor, Aja Evans. At a base level, if you grew up in a financially insecure environment, many people will bring this anxiety-ridden scarcity mentality with them into adulthood – spending money feels wrong or dangerous, even if it doesn’t necessarily reflect their current reality. But other messages stick with us, too.
Maybe money was ignored or never discussed in your family, so dealing with finances as an adult makes you feel overwhelmed. Studies show that this type of anxiety often snowballs into to avoidance behaviours, like neglecting your finances. Whether that means you avoid checking bank statements, delay saving (or learning about money-saving methods), or don’t form a budget, “[this] can easily lead to a cycle of overspending and always trying to catch up with financial responsibilities,” says psychiatrist, Dr Jason Hunziker.
Or, if you grew up experiencing money as a way to deal with problems or your feelings, that can help explain your attitude toward “retail therapy” impulse buys today, Evans says. Similarly, society props up wealthier people as being smarter or happier, she says – cues we’re exposed to from a young age that are difficult to unlearn, even if we know better. And social media makes these messages stronger than ever. According to a survey from Allianz Insurance, 57 per cent of people spend money they hadn’t planned to because of what they see on social media.
Why do I keep overspending?
“Our emotions or moods govern a lot of our actions,” Evans says. Often, she says, overspending and impulse-buying are coping mechanisms to deal with uncomfortable feelings. And research confirms that we’re more likely to spend money when we’re stressed out.
A major part of this tendency is that it works, in a sense. Spending money is a form of instant gratification, triggering a rush of dopamine through the body. But when this feel-good hormone wears off, we’re left back at where we started – and potentially with some added guilt or stress about that spending. That’s why overspending can be a vicious cycle.
Now, find out how to build better money habits.
“Looking for a quick fix to a problem, a temporary solution is extremely appealing when you just want to feel better,” Evans says. “At some point, the overspending and impulse buying becomes the go-to problem solver” – whether the problem you face is boredom, a bad day at work, or something deeper.
Plus, advertisers and marketers know this human tendency inside and out – and they’re good at using it to their advantage. “Our email inbox, home mailbox, ads on television, and social media are full of advertisements telling us that our life is incomplete unless we have the item that they are trying to sell,” Dr Hunziker adds. “Because this information is present in all aspects of our lives, it makes it easier for us to impulsively make purchases, even when it falls outside of our financial budget.”
