Do people with depression, anxiety, or other mental health disorders disproportionately fall into debt and financial disrepair, or do money problems lead to poor mental health?
In the United States, The average student loan borrower carries over $48,00 worth of student loan debt and the average household carries more than $15,000 worth of credit card debt and for some it's even more.
European Journal of Public Health reported that adults in debt were 3 times more likely to have a mental health diagnosis.
With these stats, there is no wonder why so many people are faced with financial struggles.
Let’s talk about some strategies we can use to address debt and depression.
1. LOOK AT THE NUMBERS
Avoidance or avoidant coping has been defined as a maladaptive coping mechanism characterized by the effort to avoid dealing with a stressor. Coping refers to behaviors that attempt to protect oneself from psychological damage.
Many people experience this by not opening bills, not answering calls from debt collectors, or simply glancing at the statements. This avoidant behavior will eventually cycle into a bigger problems if you continue. Depression and anxiety are just a couple of those issues.
To prevent this from happening or to start seeing an improvement in your mental health, the first thing for you to do is face it head on. Laying out all of your debts and understanding the terms, especially interest rates, is a good place to start. Though this can be very different, it’s doable. One step in the right direction is a start.
Related Blog: "How to Set and Achieve Goals the Right Way"
2. DECIDE WHICH DEBT TO PAY OFF FIRST
If you want to get moving on your debt, a great way to get started is using the Snowball Method by Dave Ramsey.
HERE’S HOW IT WORKS:
- Identify all your debt (as previously mentioned).
- List all your debt in order from the lowest to the highest
- Make minimum payments on all your debts except the smallest.
- Pay as much as possible on your smallest debt.
- Repeat until each debt is paid in full
Though this isn’t a “quick fix”, this helps you start tackling at least one of the issues that could be causing your depression or anxiety.
3. IDENTIFY SPENDING HABITS
Sometimes our behaviors are unconscious. We have certain behaviors as a response to events that have occurred, past or present. Being honest with yourself is the first step to possibly elevating some of your stress.
Journal of Consumer Psychology, consumers typically shop while feeling sad, an emotion strongly linked to feelings of lack of control. Researchers found that making purchases—also known as retail therapy—not only reduced feelings of sadness but also restored a sense of personal control.
In other words, if we shop while in a bad mood, we’re likely to spend more money on items we hadn’t planned to purchase. Moreover, individuals in a bad mood are more likely to spend money on material items rather than experiences because the former offers instant gratification, allowing us to feel better faster.
INSTEAD OF DOING THIS, TRY:
- CHECKING IN WITH YOURSELF. Figure out what’s really going on that is causing you to want to spend
- STICK WITH CASH. This makes you more aware of how much you are truly spending
- LIMIT TEMPTATION. Make a list of the places you enjoy spending your money at the most and try to avoid those places.
4. DEVELOP A BUDGET
One popular technique is the 50/30/20 rule, where you set aside 50 percent of your income toward needs, 30 percent toward wants, and 20 percent toward savings and debt payoff.
This system is far easier to manage, which also makes sticking with it easier.
5. GET HELP COPING WITH YOUR DEBT
Here are some places you can start with seeking help:
There are also financial therapists, licensed mental health therapist with a focus on money issues. Check out the our directory here.
Debt, anxiety, and depression can go hand-in-hand, but there are ways to overcome both. Figuring out which healthy financial habit works best for you is the key to lessening your financial (and general) anxiety.