How to Stop Money Worries Affecting Your Mental Health

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Have you ever lain awake in bed, wondering where the money for an upcoming bill or your future pension is going to come from? I certainly have.

It’s no secret that money matters are a leading cause stress and anxiety. Apart from the rare meticulous planner amongst us, who can honestly say that they have never struggled to pay their bills, run short at the end of the month, or come up against an unexpected expense? Even if you are generally pretty good at managing your monthly income, you’ve probably worried about whether you have enough for your retirement or savings goals.

Simply put – money and mental health go hand in hand.

With the UK Mental Health Week coming up soon (18-24 May) and the world’s current COVID-19 pandemic wreaking havoc on many people’s finances, this topic could not be more relevant. Read ahead to learn more about how money affects your mental health, in both positive and negative ways.

How do financial problems affect our mental health?

Mental health and financial problems tend to compound one another. People dealing with money issues often deal with high levels of anxiety and stress, and these nasty feelings can then lead to depression. Worse still, a lot of us turn to buying ourselves nice treats to ‘cheer ourselves up,’ which then of course exacerbates the problem.

Think about it this way: when you’re in a good mental state, you can ‘rally’ and more easily build up the motivation to work on your financial situation. Like going on a diet, improving your financial situation requires a long-term commitment – there are no quick fixes. If you are in a poor mental state, it becomes much more difficult, if not impossible, to get and stay motivated.

This isn’t just anecdotal – science backs these theories up. Research published in the journal ‘Psychological Medicine’ showed that people who had problems affording their rent or mortgage payments experienced the same amount of stress and anxiety as someone going through a divorce! A survey conducted by the Money and Mental Health Policy Institute (MMHPI) found that 86% of those interviewed had experienced a worsening of their mental health problems based on their financial situation.

This all means that if you are experiencing financial insecurity, you are likely in a constant state of distress, akin to losing a job or going through a big break-up.

That said, many banks, utility companies, and government agencies don’t know exactly how to deal with their customers’ mental health issues. This explains why you might not get the help or compassion you need when you try to call your debtors to explain your situation.

Helen Undy, director of the MMHPI, explains. “If someone has a physical disability or sensory impairment, most companies know what to do. Even if they’re not doing it brilliantly, if someone says they’re visually impaired or have hearing loss, firms tend to know what adjustments they should be making, and generally those things tend to be available.”

When someone is dealing with mental health issues brought on by financial stress, they don’t always know what to do. The result? Wave after wave of even more stress and anxiety, compounding the problem and making it worse.

Financial insecurity can make you sick – not the other way around

In the past, poverty has often been portrayed as an issue that plagues those with poor health, but research shows that the opposite is actually true. Many studies show that not having enough money can actually cause health problems. People who live in poverty throughout their lives suffer from a myriad of both physical and mental health illnesses. Of course, this makes their financial problems worse, and the whole vicious cycle starts over again, often passed on to the next generation.

If this all sounds familiar, don’t despair. There are manageable steps that you can take to repair your negative relationship with money and improve your mental health.

So, how can you build a positive relationship with money?

While you might think that the only solution to your money troubles is to earn more money, this isn’t the case. You can take many small steps that will improve your financial situation and your health.

Understanding money can help you gain the confidence you need

In our primary school education we learn all about history, literature, and maths – but very few schools actually teach children how to manage their money and save for the future. It’s clear that more education about money is needed, and so we can start with breaking down the jargon that surrounds all things financial.

Check out this money jargon buster to help understand some of the more complicated terms and concepts that surround savings, credit, and investments. If you don’t know your APR (Annual Percentage Rate) from your AER (Annual Equivalent Rate), this is a great place to start.

Think about this as ‘learning the tools of the trade’ – you’ll feel more confident and empowered when you know the technical terms.

Write – and then follow – a budget

You might think, “oh, I have a budget, after all, I pay my rent on time every month.” But do you have a successful budget in place that is really working for you?

Budgeting helps you to make financial decisions about what you will spend your money on, helps you to determine your priorities, and sets your financial boundaries. The end result?  You gain control over your money, and it no longer controls you.

Budgeting helps you to save money for a big-ticket item or a deposit for a house, as well as save for your future and pay off your debts. If you get in the habit of sticking to a budget and living within your means now, your financial future will get a whole lot brighter, and so will your mental health.

Remember – budgets are a lot like diets. That is, not every diet will work for every person in the same way. Your best bet is to do your research and decide on the best method for working with your money.

Some popular types of budgets include:

  • The cash envelope method – This is a tried and tested method that involves taking all of the money out of your bank account every month, after your fixed expenses (rent and bills) have come out. You then divide it up into different categories, and place this money into different envelopes. The one downfall is that fewer people use cash these days, and some businesses do not even accept paper currency. However, there are plenty of new apps that allow you to divide up your bank account into ‘digital envelopes.’
  • The 50/20/30 Method – You don’t have to be a fan of American politician Elizabeth Warren to benefit from her budgeting expertise. In her book All Your Worth: The Ultimate Lifetime Money Plan, she recommends taking your net income and putting 50% of it towards your needs. 30% should then be allocated for wants, and the remaining 20% put into savings and debt repayments.
  • The Reverse Method – This is arguably the simplest budgeting method, allowing you to keep things simple and get rid of the spreadsheets. This method focuses on prioritising either savings or paying down debt by paying yourself first. First, you work out your individual expenses and deduct them from your net income. Anything that is left over is popped into savings.

Resources for sorting out your finances – and improving your mental health

There are many available resources to help you sort out your finances and improving your mental health, but knowing where to go for help is half the battle.

If you find that your income isn’t stretching far enough and you are frequently worrying about money, get in touch with your utility company or creditor. Most do have payment plan options that are designed to help take the pressure off. As mentioned above, many companies are making leaps and bounds in training their staff to be more sensitive to those who are struggling.

If you require advice, help and support to reach out to your creditors, you should reach out to the Citizens Advice Bureau. They offer sensitive and knowledgeable advice, and can send you in the right direction to get the help you need.

Don’t be afraid to reach out to your GP for more resources. We know that money woes can be a taboo topic, but you don’t have anything to be ashamed about – remember, everyone can relate. You can also contact Mind, the UK’s largest mental health charity. They offer specific advice about mental health and money matters.

Remember, if you are struggling with your money and it’s affecting your mental health, you are not alone. Reaching out for help will help, and talking about the problem will start to lift the weight from your chest, improve your outlook, and help you get some sleep. You deserve to have a good relationship with money.


  1. It just hit me reading this – I think part of the reason this pandemic hasn’t really stressed me out as much as I would have expected is because I’m in a much better place with money these days. I’ve paid down the majority of my debt and have my expenses under control. And I’m luck enough to have kept my job. I used to be brimming with anxiety, back when things in the world were fine. I can’t imagine what I would have been like during this if I was buried under credit card debt.

    Thanks for the overview. Nice piece!

    • Ditto – apart from keeping the job part. But with my finances in a good place it’s a blip I can manage ok. If this had happened 10 years ago – i’d’ve been in bits! Glad you liked the piece + good luck on your FI journey (we’re the same age with the same goals, so i’ll be following you closely!).

  2. I have to have a budget for everything, spending money on things is so easy to do when not needed. It’s also scary when you don’t realise what money is going out too

  3. Gosh yes to all of this. I got made redundant in 2016 from a job that I had worked in for a long time. He have 3 kids. I struggled to find another job that would be flexible for the children. I was on job seekers allowance, I was so depressed. My husband couldn’t cover the bills. I got some part time work but it just wasn’t enough. I remember being out with the kids one day and just that feeling of failure and anxiety. I used to wake in the night thinking of money, feeling sick. I now freelance and we are doing better. I think it is always something that will make my anxiety flare up, but I feel more in control now.

  4. A very apt post for the time we are currently living in! I completely agree with your point about the fact that everyone deserves to have a good relationship with money!

  5. Can definitely relate to the snowballing of money and mental health worries! Really useful post, especially the part about different ways to budget.

  6. Great tips. I definitely find that when i am in control of my money, i feel more in control of my mental health. There is nothing more stressful than not knowing where your money goes every month. Writing a budget is invaluable!

    • Totally agree – me too. If even the picture isn’t great, it’s less stressful to at least know where you’re at with everything so you can devise a plan!

  7. On February I resigned, after I applied for other jobs, but due to the coronavirus pandemic I couldn’t find anything. It is not a nice period for me and I can hardly stay calm and happy. At least I’m lucky my husband is still working.

    • It’s such a tough time for so many people. I take solace in knowing that we will come out the other side, and i think we’ll all be stronger for it. Hang in there – we’re almost through x


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