It’s no surprise that your socioeconomic status affects many aspects of your lifestyle. Your finances are directly tied to everything from housing to the food you eat, the car you drive—or don’t drive—and the medical care you seek. Money is necessary to fund travel, entertainment, and necessities alike. Pursuing higher education comes at a cost, as does own a pet. The point is: The impact of money extends far beyond just the financial realm of your life.
Money can also have a significant impact on your mental state. In particular, not having enough money to cover living expenses tends to affect mental health adversely. Research shows that struggling financially may fuel a “self-perpetuating cycle.”
Here’s the breakdown, according to The Atlantic: “The people who are less wealthy struggle to cover their expenses. They get stressed, remember worse, and thus perform worse at the very same cognitive tasks that tend to increase wealth in today’s information economy.”
Carrying debt also has the potential to affect consumers’ mental health in a major way. Here’s a closer look at what happens when debt and money meet mind.
Mental Effects of Debt
One study on the correlation between debt and mental health issues found that people who struggle to pay off their debts “are more than twice as likely to experience a host of mental health problems” like depression and serious anxiety.
First of all, consumers in debt may find themselves trapped in a constant loop of worrying about money. If you’ve ever fretted about money before falling asleep or felt apprehensive checking the mailbox in case a new wave of bills arrived, then you can attest to how debt causes stress. In turn, this can fuel “debt denial,” which makes it more difficult to confront your debt because it becomes increasingly harder to face the financial facts.
Debt can also put a strain on interpersonal relationships. For example, debt can act as a catalyst for disagreements in a partnership. Many people also harbor resentment related to debt, depending on the specific conditions surrounding it. Stress from debt may even start to impact people’s school or work performance if they find themselves preoccupied with money troubles.
There’s also an element of shame associated with debt, though so many people carry it in different forms. The act of feeling like you need to “hide” your debt from the world adds another psychological burden.
Psychology of Debt Repayment
The best and only way to get true relief from the psychological strain of debt is to eliminate it. It’s important to choose a strategy that keeps you motivated over time, so you’ll stick with a repayment method for as long as it takes to get out of debt.
Doing it alone can be daunting. For this reason, some consumers choose to work with a debt relief organization like Freedom Debt Relief to negotiate with creditors. The ultimate goal here is to save enough money in a designated account, then get creditors to agree to lower the amount owed. It can be helpful to have a team of professionals on your side to answer questions and help you along the way. However, debt settlement only works if you commit for as long as it takes to save up and repay your debts—which can be months or years.
If you choose a do-it-yourself approach to tackle your debt, keep in mind that some experts believe paying off your balances smallest to largest in what’s known as the “snowball method” can help you stay on track by accumulating psychological “wins” that fuel motivation. Just make sure you pay the minimum balance on all credit card debts, even while you’re focusing more heavily on a single balance.
Debt, money and the mind are all intertwined. Getting financially healthy can help you get mentally healthy, too.