What you need to know about debt and mental health

Around the world, studies have shown that debt problems are inextricably linked with mental health.

In a recent Canadian survey, 44 per cent said their financial situation negatively affects their mental wellbeing. In the UK, people suffering from mental health issues were three-and-a-half times more likely to be in debt than those without such conditions. Psychology Today even goes so far as to link debt problems with considerably higher risks of suicide.

It’s no secret there can be an emotional and psychological price to pay when it comes to dealing with too much debt. The road to financial recovery is a lot more complex than simply sorting out your balance sheet. When debt problems and mental health go hand in hand, it’s next to impossible to fix one without checking in on the other.

Mental health and financial wellbeing

The Canadian Mental Health Association (CMHA) has identified six common features of good mental health. Familiarizing yourself with them enables you to check in and see how you’re doing. These include sense of self, purpose and sense of meaning, belonging, resilience, contribution, and hope and enjoyment.

When it comes to debt, it’s not hard to see how a person’s finances can cast a shadow over their mental health. A debt problem can affect not only your enjoyment of the present, but can also taint your sense of self and undermine your hopes for the future.

So what can you do? When you’re preparing to deal with a debt problem, it helps to take some cues from the mental health discussion. Here are three steps to help you start the process.

Step one: Realize that you are not your debt

One of the defining features of an unhealthy relationship with your finances is feeling like your debt is a reflection of who you are. Identifying with your debt not only encourages you to feel guilty but will often backfire in the form of more debt.

Melanie Lockert, from the website Dear Debt, advises you to do the following:

“Say it out loud, write it down: You are not your debt. It doesn’t mean you’re a bad person, a stupid person, or a lazy person.”

In other words, understanding that your self-worth is different than your net worth is a crucial part of debt recovery.

Having a sense of self that is distinct from how much money you have is a foundation of good mental health. Knowing that you are not defined by your bank account, the clothes you wear, the vacations you go on or what other people think of you (it’s really none of your business) will help you look at your financial situation with more clarity and purpose.

Step two: Be honest about your financial reality

Once you have established a clear distinction between your debt and your sense of self, you are mentally prepared to face your financial reality, which is the toughest part.

Mental health issues or not, everyone goes through times when they’re not on top of their finances. Bank and credit card balances are tactically avoided in order to delay the inevitable. The writer David Goetsch (Big Bang Theory) expresses this feeling well. Facing your financial reality can make you feel like you’re “sitting in a bathtub of fear.” The idea of being naked, cold and wet hits home. Facing your financial reality is definitely not pleasant, but it needs to happen sooner than later.

Once again, Melanie Lockert gives some great advice about how to approach this important step. For her, “if you need to cry, cry. Scream into a pillow. You will feel emotional and that is completely normal. Go for a long walk. Don’t do anything that first day. Let it sink in for a few days.” Setting aside a time and even a few days for the emotions involved in facing reality is sometimes necessary.

Once you’ve had a look and processed everything, it’s time to find purpose and meaning in your relationship with money.

Step three: Find financial purpose

A debt problem can make your financial future seem hopeless. You may ask yourself what’s the point of trying to be better with my money when I have so little? If purpose is already something you are struggling with mentally, careless spending can make matters worse.

The problem with a lack of financial purpose is that it can lead to a short-term view of how you spend your money, even for the small amounts that you may think are meaningless (they aren’t). For example, you may find yourself spending money simply to get by or to make yourself feel better in the present without thinking about the long-term. Focusing your spending on immediate gratification can quickly derail your finances.

A healthy, purposeful relationship with money is all about practicing the opposite as much as possible: delaying gratification in order to achieve a long-term goal that’s important to you. What do you really want? The willpower it takes to save your money and plan your spending will fill you with a sense of accomplishment. This helps you find joy within yourself and feel optimistic about the future. Two key ingredients for a healthy state of mind.

Find help

There is help out there if you are struggling with mental health and debt. A great place to start is by finding out if your employer offers an Employee Assistance Program (EAP). If not, the CMHA can help you find support programs in your area. Our local BDO offices can also provide you with a list of local resources and help point you in the right direction.

Getting help with your debts is a great first step towards feeling more resilient and optimistic about your future. You can meet with a Licensed Insolvency Trustee (LIT) to go over all your debt relief options while learning how to set financial goals and live according to a budget.

Are your debts affecting your mental health? Join our conversation on Facebook or on Twitter #MentalHealthWeek #GetLoud