How to handle the effect of your mental health on your financial wellness

When your mental health is in a downward spiral, your finances often pay the price.

“When you are stressed or anxious, you are more likely to make impulsive purchases or take on debt. Stress and anxiety can lead us to seek immediate gratification rather than considering the long-term implications of our decisions,” Wanita Isaacs, Momentum’s head of key accounts, says.

People with strong mental health are better at managing their finances and making sound investment decisions. They are less likely to succumb to impulse buying and more likely to be able to think through their decisions rationally before making them, she says.

Given this financial juxtaposition between mental states, she says it is important to take care of both your mental and financial wellbeing to be successful in both areas of life.

“Taking some time out for ourselves, whether it is to meet a friend or take a relaxing walk, can help reduce stress levels. It can also help us to be mindful about how much money we spend every month.”

Although it is usually never as easy as ‘taking a walk’, she believes seeking advice from a mental health professional when needed and a financial adviser can help with striking a healthier balance between mental and financial wellbeing.

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Mental blockages impact spending decisions

Isaacs says habitual decision-making is one way your mental health affects your finances.

“When you are used to making the same choices, it is easy to buy things without considering if they are necessary or not. The same applies to subscriptions, cars and entertainment.”

Decision fatigue also plays a major role in your financial decisions. You only have so much energy and focus when it comes to making choices. When it runs out, you are more likely to turn to bad spending habits.

“Instead of focusing on what you need and working slowly to achieve your financial goals, some of us obsess over material possessions or the desire to become wealthy quickly. If left unchecked, both of these can leave us with debt or other financial problems. This exacerbates the stress and anxiety that triggered the behaviour in the first place, causing a spiral that erodes both mental and financial wellbeing.”

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Talk about your mental health and finances

To prevent or stop this kind of spiral, she advises speaking to the professionals who can support you in clarifying things, provide insights and help you work out a personal plan for your unique situation.

“Talking to a professional can help you find a way out of a challenging situation and towards healthy mental and financial habits. Together, you can work towards achieving your goals. Our money and minds are inextricably linked. One impacts the other and we need to equip ourselves with the best advice to fuel our different journeys to success.”