The mind–money connection: Why financial stress takes a toll
Accessing clients’ financial standings can help clinicians identify a possible cause of anxiety, depression, sleep disturbances, harmful self-medication, and other issues.
“Research has shown that financial stress and our mental health have a cyclical relationship,” said Traci Williams, Ph.D., a Chandler, AZ-based psychologist and certified financial therapist. “This means financial stress can worsen our mental health and our mental health directly impacts how well we earn income and manage our finances.”
Two-thirds (66%) of respondents to the American Psychological Association’s (APA) annual Stress in America survey last year cited money as a significant source of stress, with only work ranking higher (69%). And only half (51%) said they felt financially secure.
Times of economic uncertainty typically lead to an increase in referrals, and financial stress can often lead to other problems, said Williams.
“Clients who come to therapy because of financial stress are often also experiencing difficulties in their relationships. Some of my clients show up with their partners because the money stress, secrecy, or mismatch in their expectations has led to arguing and disconnection in the relationship,” she noted. “They come to therapy not only because of dollars and cents, but because they are longing to feel safe and like they have control over their lives.”
Americans face a variety of financial stresses right now, agreed Mary Gresham, Ph.D., an Atlanta-based psychologist and financial coach. This includes the cost of health insurance and the uncertainty of the job market.
Certain fields, such as government work or higher education used to be thought of as secure, but that is no longer necessarily the case. This can make people anxious and more conservative about making life or job changes, she noted. “And the easiest place to park anxiety is money, because we live in a very materialistic culture, and many people don’t have a savings plan.”
Some communities, such as minority groups and women, tend to disproportionately experience economic inequalities and discrimination, Williams said. Individuals who have irregular incomes, like freelancers and gig workers, also feel the strain, as do clients with ADHD who struggle with organizing their finances, sticking to a budget, and avoiding impulsive spending.
Past experiences can also be a factor, Williams added. “People who previously experienced scarcity or conflicts around money often struggle with emotional dysregulation and can have patterns of behavior at the extremes, excessively saving or overspending.”
The trauma following financial instability or sudden significant financial loss can have lasting effects over generations. “We develop what’s known as money scripts,” added Williams. “These are unconscious, deeply ingrained money beliefs over our lifetime, and they can impact how we think about money, as well as how we save and spend.”
How to help
Financial therapists can take a blended approach when treating financial stress, said Williams. This could include exploring clients’ money beliefs, addressing avoidance, or feelings of shame, as well as helping them create financial solutions.
Ways to support patients experiencing financial stress include:
Initiating conversations about money. This can start right at the intake process, said Williams. “Model normalizing talking about money to reduce shame and the stigma clients may present with. Open a dialogue around the meaning of money for your clients and how it impacts their lives.”
Identifying values about money. If clients understand what their values are related to money, this can give them a clear view into what really matters in their lives long term. More importantly, they can see if their spending supports these goals, says Gresham. “For example, if someone says that financial security is one of their core values, are they automatically contributing to savings?”
Encouraging financial literacy. A professional can help clients review spending patterns, assist in creating a realistic budget and/or a schedule for paying off debts or explore ways to increase income, said Williams.
Creating coping strategies. Learning how to regulate your emotions and think calmly is critical, because people often don’t make good choices when they feel anxious. “Get centered before you make a decision about money.” Successful coping strategies aren’t the same for everyone, said Gresham. Even something as simple as a short-guided meditation can be helpful. “The future is unpredictable, and being present in the moment can create a feeling of resiliency.”