3 mins read
May 2, 2023

Broke and Broken: The Toll of Financial Stress on Mental Health

Broke and Broken: The Toll of Financial Stress on Mental Health

Financial stress is an ever-present issue for many people. It's not hard to see why; from the cost of housing and healthcare to student loans and credit card debt, anyone can feel overwhelmed by their finances. In fact, according to a survey by the American Psychological Association, money is the top source of stress for Americans. But what are the actual effects of financial stress on mental health, and what can be done to manage it?

The Impact of Financial Stress on Mental Health

It's no secret that financial stress can negatively affect mental health. According to a study by the National Institute of Mental Health, people under financial pressure are more likely to suffer from depression and anxiety. In addition, people who are in debt or struggling financially are more likely to experience insomnia, headaches, and other physical symptoms.

In a survey by the American Psychological Association, 72% of adults reported feeling stressed about money at least some of the time. Of those, 22% said they felt extreme stress about their finances. Furthermore, the same survey found that financial pressure was linked to poorer physical health, as well as poorer mental health.

Managing Financial Stress

Given financial stress's impact on mental and physical health, it's essential to take steps to manage it. Here are a few tips for doing so:

1. Identify the source of your stress.

The first step in managing financial stress is to identify the source of your stress. Is it debt? A need for more savings? Once you know what's causing your stress, you can begin to take steps to address it.

2. Create a budget.

Creating a budget is one of the most important things you can do to manage financial stress. A budget can help you see where your money is going and identify areas where you can cut back. In addition, a budget can help you prioritize your spending, so you can make sure you're putting your money toward the things that matter most to you.

3. Practice self-care and mindfulness.

Financial issues often aren't solved overnight, so it's important to prioritize healthy routines to keep your stress in check. Taking care of your physical and mental health will enable you to maintain a clear mind and function at your best in the long term. Self-care includes keeping a healthy diet, getting a good night's sleep, and exercising regularly. Mindfulness can also reduce stress and help you feel more rooted in the present. Take some time each day (even just for a few minutes) to practice a relaxation technique, whether it be a breathing exercise, meditation, journaling, some light stretching, or a bubble bath. It is also vital to have compassion for yourself during tough times because sometimes financial stress can come with self-judgment, and self-compassion is the antidote. Research indicates that self-compassion may help reduce stress during difficult economic times. Taking care of yourself is always important, especially under financial stress. Make sure you're getting enough sleep, eating a healthy diet, and taking time to relax and unwind.

4. Seek help if you need it

If you're struggling with financial stress, it's essential to seek help if you need it. Seeking support could mean talking to a friend or family member, seeking a therapist or financial advisor, or joining a support group.

5. Create a "Free Fun" List.

In a world that feels like you have to pay to exist, it's important to find joyful activities that bring you peace and happiness; that are also 100 percent free. Engaging in enjoyable activities can help you recharge, destress, and boost your mood. Come up with a list of free things you enjoy doing. Being proactively armed with a list of free things you can do can help reduce financial anxiety."

If you're looking for something fun to do, here are a few budget-free options:

  • Search online for free and local events.
  • Sit outside and watch the sunset.
  • Visit the library and read a book.
  • Call a friend or schedule a time to hang out and talk.
  • Go for a walk or run.
  • Volunteer at an animal shelter.
  • Download a free language-learning app.
  • Try a free YouTube workout.
  • Journal.

Making Smarter Financial Decisions

In addition to managing financial stress, there are also steps you can take to make smarter financial decisions. 

  1. Build an emergency fund:Building an emergency fund can help you feel more financially secure. Aim to save at least three to six months' living expenses in an easily accessible account.
  2. Pay down debt: Paying down debt can help reduce your financial stress and improve your credit score. Make a plan to pay off your debts, starting with the ones with the highest interest rates.
  3. Save for the future: Saving for the future can help you feel more financially secure and can also help you achieve your long-term goals. Consider investing in a retirement account or saving for a down payment on a home.
  4. Live within your means: Living within your means is one of the most important things you can do to avoid financial stress. Make sure your spending aligns with your income, and avoid taking on debt for things you can't afford.

In conclusion, financial stress is a real and pervasive issue for many people. It can have adverse effects on both mental and physical health, but there are steps you can take to manage it. By identifying the source of your stress, practicing self-care, and seeking help if needed, you can regain control of your finances and mental health and move towards a more stable and fulfilling life. Financial stress is a common experience, but it doesn't have to define your life. With the right mindset and tools, you can overcome it and thrive.


MentalHappy, a digital health platform for mental well-being, publishes the MentalHappy blog. MentalHappy is on a mission to expand access to peer support and group therapy, especially for people of low-income, underrepresented populations, and people living in rural areas. Any general advice posted on our blog, website, or app is for informational purposes only and is not intended to replace or substitute for any medical or other advice. 

Mentalhappy, Inc.make no representations or warranties and expressly disclaim any and all liability concerning any treatment, action by, or effect on any person following the general information offered or provided within or through the blog, website, or app. If you have specific concerns or a situation arises in which you require medical advice, you should consult with an appropriately trained and qualified medical services provider.

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