Can your mental well-being and finances really be intertwined? Yes- mental health can affect how you manage money and money problems can negatively affect your mental health.
Financial difficulties shouldn’t cause declining mental health, but that’s not the case. 86% of respondents to a survey of nearly 5,500 people said that their financial situation had worsened their mental health problems.
The same study also showed that around half of the people in debt also have a mental health problem. The income gap for those with mental health problems is significant - people with anxiety and depression have a median gross annual income of £8,400 less than those without those conditions.
Working towards improving your financial well-being can have a positive effect on your mental health, and here are some of the practical ways to boost your financial health:
- Create a budget
The first step to positive financial well-being is to keep a check on where your money is going and how much money you have and are spending regularly - in other words, a budget. This is one of the easiest ways to track your spending on essentials and not essentials.
There are many ways to start budgeting, but the most popular way is the 50/30/20 rule. The rule breaks down your income into expenses on necessities (50%), savings or paying debt (20%) and the rest into non-essential costs (30%).
- Set financial goals
While budgeting is a foolproof way to keep track of expenses, setting a financial goal can also help you stay motivated and save for what matters to you, such as retirement, buying a car or putting down a down payment for a house.
But the key to setting financial goals is to make them specific, measurable, achievable, relevant and time-bound (SMART). The goals should be attainable within a timeframe and clear enough to avoid confusion.
- Financial education
If you want to start budgeting or set a financial goal, educating yourself on personal finance, investments, and money management can help you in the long run.
Financial education helps us understand how money works and how to handle financial challenges that may come across. Understanding how all the factors work together can help us develop a better attitude towards spending and make better decisions.
To know more about how financial literacy helps build positive financial well-being, check out our blog here - Why improving financial literacy leads to better money management.
- Practice self-care
Self-care is important for both mental health and financial well-being. While taking care of your body and mind contributes to overall well-being, money management is the new self-care - says Real Simple.
Facing your financial fears can be stressful, but checking up on where you stand financially might benefit your mental health.
- Get financial advice
Financial advice is another way to learn to handle your finances better. Professional financial advice can help people become more confident about their money and future. They can also help you prepare for financial emergencies or market changes that can affect your money and help you develop a customised investing strategy.
We’ve written another blog about financial advice, and you can read it here - Bridging the Financial Advice Gap.
To sum it all up, money management is essential for developing positive financial well-being and better mental health. If you’re struggling with managing your money and mental health, don’t restrict yourself to reading information online, as it’s best to seek professional advice. Here are some additional online resources that can help -
- Mental Health UK - Money and Mental Health Advice service to help people understand their financial and mental wellbeing
- Money Helper - Free and Impartial money and pensions guidance