When Money Hurts: How Economic Crises Affect Mental Health
BY: Neighbors’ Consejo|
Recently, it made headlines how Silicon Valley Bank  became the second largest bank failure in America. This undoubtedly caused chaos for investors and clients, which affected their finances and of course, influenced their mental health.
Can money buy happiness? The University of Minnesota  affirms, “Money allow us to meet our basic needs to buy food and shelter and pay for healthcare. Meeting these needs is essential, and if we do not have enough money to do so, our personal wellbeing and the wellbeing of the community as a whole suffers greatly.” Christy Rakoczy  , from the University of Rochester considers that “money can’t buy happiness, but it can buy security and safety for you and your loved ones.”
Rakoczy  also mention some benefits and downsides of money:
- Money gives you freedom
- Money gives you the power to pursue your dream
- Money gives you security
- Obsession with money, or a love of money, can create a host of problems
- Money can lead to disagreements
Not surprisingly, the relationship between money and mental wellbeing is complex. For example, when we have it, we are happy and, when we lose it, we are not. Nobel Prize winning economists Daniel Kahneman and Angus Deaton at Princeton University reinforced this argument: They made a research study based on survey data from 1000 people in the US who had been surveyed daily between 2008 and 2009 about their levels of happiness. It found that the more money someone makes, the happier they are, but the curve flattens between $60,000 and $90,000 a year  .
On the other hand, “The exception is people who are financially well-off but unhappy. For instance, if you are rich and miserable, more money will not help. For everyone else, more money was associated with higher happiness to somewhat varying degrees  ”. Then, how does money affect our mental wellbeing?
According to the portal Mind  , these are some common ways your mental health can affect the way you deal with money:
- If you are feeling low or depressed, you may lack motivation to manage your finances. It might not feel worth trying.
- Spending may give you a brief high, so you might overspend to feel better.
- You might make impulsive financial decisions when you are experiencing mania or hypomania.
- If your mental health affects your ability to work or study, this might reduce your income.
- You might avoid doing things to stay on top of your money, like opening bills or checking your bank account. You might try to avoid thinking about money completely.
CNCB published a survey  that affirmed, “That a significant portion of Americans experience financial worries. Of the respondents surveyed, 42% cited money concerns as having a negative impact on their mental health. Everything from dealing with debt to managing money was linked to a decline in psychological wellbeing, leading to such outcomes as anxiety, stress, worrisome thoughts, loss of sleep and depression.”
Additionally, CNCB published that “these are the money-related activities that triggered negative feelings, from least common:
- 49%- Looking at their bank accounts
- 41%- Paying a bill
- 34%- Making a purchase
- 32%- Having to discuss money
- 21%- Getting paid
- 16%- Looking at their investment accounts
- 11%- Looking social media”
On the other hand, “these groups are most affected by money-related stress: Of all age groups, millennials, aged 26 to 41 year old, experienced the most financial anxiety, at 48%. Gen X, ages 42 to 57, doesn’t lag far behind at 46%, and 40% of those aged 18 to 25 in Gen Z say money problems cause mental health concerns for them too  .”
The same source  , gives us three ways to feel financially secure to maintain positive mental health:
- Build a cash reserve: save enough money to fall back on for whatever curveballs life throws your way.
- Have a stated or written plan for paying down debt, and make it achievable.
- Check M.U.G monthly (or weekly) which means taking into account how much money you will need for mortgage (or rent), utilities and groceries. For some, you may also need to consider gas expenses and insurances.
In conclusion, there is a strong correlation between mental health and financial wellbeing. Taking care of both aspects can lead to a better quality of life and overall happiness.