Mind over money
27 Oct, 2023

Claire Klassen, Consumer Financial Education Specialist at Momentum Metropolitan

 

Momentum Metropolitan’s Consumer Financial Education Specialist, Claire Klassen discusses the impact that poor mental health can have on your relationship with money

 

They say money can’t buy you happiness. But does happiness (or at the very least, a sound mind) help prevent poor financial decisions?

 

The influence that financial hardship has on one’s stress levels is well-documented. A  research paper published last year found that financial worries were associated with higher psychological distress, while the link between money troubles and psychological stress was stronger among those with a greater financial burden, such as the unemployed, unmarried, or those from lower-income households. Moreover, the annual Money Stress Tracker found that 78% of South Africans were experiencing stress as a result of money issues.

 

Financial worries cause us a great deal of distress, that much is clear. But what about the other way around? What impact can conditions such as depression, anxiety, obsessive-compulsive disorder (OCD) and post-traumatic stress disorder (PTSD) have on the way we relate to and manage our money?

 

Sadly, mental illness is all too prevalent in South Africa. Claire Klassen, Consumer Financial Education Specialist at Momentum Metropolitan, says that South Africa struggles with its collective mental health, citing Sapien Labs’ Annual Mental State of the World Report, which found the country to be one of the worst in the world when it came to the mental well-being of its people. “South Africa only spends 5% of its total health budget on mental health – putting South Africa at the bottom of international benchmarks of country public spending on mental health. This translates into less than 1 person per 10 receiving mental health care. Poor South Africans are worse off when it comes to access to mental care – because of the lack of capacity, accessibility and resources in the public health sector for mental health care.”

 

“Financial and mental health are interconnected, she says, “and when someone is struggling in either area, it can perpetuate a vicious cycle, which goes something like this: Poor mental health leads to poor financial decisions. These poor decisions, in turn, lead to money issues such as debt. Worrying over these money issues then knocks one’s mental wellbeing.

 

“Good mental health means that you are focused and sure about the decisions you make for yourself, your career, your family and your finances. By that same token, when you do not have a clear mindset or a positive mental state, you are more likely to fall victim to poor money decisions that will derail the plans you might have set for yourself when you were in a better frame of mind,” says Klassen.

 

Klassen shares how mental illnesses might influence your relationship with money:

 

It changes the way you relate to money – mental illness impacts every facet of life, including your relationship with money. It is far harder to draw up or stick to a budget when you’re struggling mentally, or to retain the discipline you need to keep your financial plans on track. Your ability to make financial decisions could be compromised or the way you normally spend money might shift, leading to traits such as impulse buying. Depression often makes everything feel pointless – including financial goals – while conditions such as anxiety can lead to avoidance behaviours, such as struggling to deal with bills.

 

An article by the Money and Mental Health Policy Institute stated that: “while unwell six in ten (63%) people found it harder to make financial decisions, 42% put off paying bills and 38% took out a loan that they would not otherwise have taken out.”

 

It impacts performance at work – mental health issues may lead to increased absenteeism or presenteeism, and performance at work could suffer. This, in turn, often impacts earnings.

 

In the United Kingdom, the income gap between those with mental illnesses such as anxiety and depression and those who don’t equate to an average gross annual income difference of around GBP 8,400, while less than half of those living with mental health issues were employed, compared to the four out of five people who didn’t suffer from these problems. Moreover, when employed, those with poor mental health were more likely to occupy lower-paying roles.

 

However, Klassen says that establishing solid good financial habits will stand you in good stead when you go through a period which sees you struggling mentally. “When sound financial practices are engrained in us, we tend to continue these come rain or shine, which reduces the potential for further financial stress caused as a result of bad money decisions.”

 

She suggests the following practices to safeguard your money when you are struggling mentally.

 

Automating savings – by automating your retirement contributions or emergency fund savings, you make it harder for indecision or doubt to creep in, reducing the temptation to make reckless decisions.

 

Spend thoughtfully – while it is important to avoid spending carelessly and landing yourself in debt when you’re struggling mentally, that doesn’t mean you shouldn’t spend money (with careful consideration) on things that bring you joy and some mental relief. This could be a good book, or an outing with a friend, for example.

 

Limit your exposure to social media and online advertising – when you’re going through a rough time mentally, social media, especially ‘doom scrolling’, often makes you feel even worse, while influencers – and the barrage of online advertising – might convince you to splash out on items you don’t need. This will give you a momentary dopamine rush, before leaving you feeling worse than before.

 

Reach out to a financial adviser – they will guide you when you are struggling to make decisions or prevent you from making poor ones, ensuring that your finances remain in good order during times of stress.

 

“If you are suffering mentally, it’s important to get professional psychological help. There are numerous organisations out there, such as SADAG, which can help you. There are also steps you can take that will help you to not let the challenges you are facing now sabotage your future financial well-being.”

 

ENDS

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@Claire Klassen
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