How Can Debt Affect Your Mental Health?

Posted by Sha'Kreshia Terrell in EmotionsMarch 1, 2023(Last Updated March 1, 2023)4 min read
Key Takeaways
  • A recent study discovered that money and mental health go hand in hand, and many Americans worry about their finances.
  • Unmanaged debt leads to chronic illnesses, including clinical depression, anxiety, high blood pressure, and stress.
  • There is still financial hope for those who struggle with mental health issues surrounding their debt.
Are you ready to make some real money moves?

Mental Health Matters


Millions of people experience significant stress due to their finances. A recent study conducted by Bankrate and Psych Central discovered that money and mental health go hand in hand. In fact, numerous Americans worry about their finances in some capacity. Of those surveyed, 42% cited that money concerns negatively impact their mental state.

According to the survey, a decline in psychological well-being was associated with everything from managing debt to managing money, which resulted in symptoms like stress, depression, anxiety, and other worry-related thoughts. 


In the same survey, other money-related issues that triggered negative emotions were:


  • 49% looking at their bank accounts
  • 41% paying bills
  • 34% making purchases
  • 32% talking about money
  • 21% getting paid 
  • 16% looking at investment accounts 
  • 11% looking at social media


As you work to balance your finances, pay attention to how you feel physically and mentally. Over time, having strong negative effects on your mental health can result from feeling helpless or overwhelmed. So, the first step to getting out of debt is to overcome financial stress.


Recommended Read: Relationship Between Mental Health and Money


Impact of Money on Mental Health

Anyone can be impacted by debt and the health problems it causes, but those unemployed are particularly at risk. Families, single parents, and retirees who lack the financial flexibility to deal with economic changes and fluctuations may find themselves in debt.


Other key findings in the survey showed the following:


Women are at higher risk than men, 46% of women, compared to 38% of men, say money has a negative impact on their mental health.


Millennials are the most affected - Financial worries psychologically impact 48% of millennials (aged 26 to 41), followed by 46% of Generation X. (42 to 57 year-olds). But the 18 to 25-year-old Generation Z isn't far behind, with money problems reportedly causing mental health issues for 40% of this group.


The higher the income, the less emotional stress - Only 30% of those with annual incomes of at least $100,000 mentioned money negatively impacting their mental health. In contrast, 48 percent of people with household incomes under $50,000 fell into this category.

It is common to worry about money - Money is a source of anxiety for 28% of those who said it has a negative impact on their mental health. These daily worriers were more likely to be male coming in at 32% vs. 24% of females, to have a high school diploma or less (32% vs. 25% of those with some college or more), and to be younger (34% of Gen Z and 36% of millennials compared to 27% of Gen X and 17% of baby boomers).


How Mental Health Influences Financial Decisions


Unmanaged debt leads to chronic illnesses, including clinical depression, anxiety, high blood pressure, and stress.


A few common ways that mental health issues can affect the way you deal with money are:


  • You may be feeling depressed, so you lack the motivation to try and change your financial situation
  • You tend to overspend to make yourself feel better
  • You make impulsive decisions that negatively impact your finances
  • You avoid paying your bills or checking your bank account
  • Debt could cause a strain in your relationship due to a lack of conversation


Being aware of your emotions and mental health surrounding money can help you get it under control.


Recommended Read: Why Financial Therapy Matters | Culture Meets Money with Steven M. Hughes


Coping with Debt and Financial Stress


High-interest rate debt such as student loans or credit cards can be a huge burden. Unexpected debts, such as medical bills or car repairs, can happen to anyone. You can regain financial and mental health control.

Find a trusted friend. Talking about your problems has been proven to relieve stress. It is not always necessary for someone to be able to solve or even assist with your financial issues, but it helps to acknowledge your debt. A meaningful way to relieve pressure and talk through your feelings and fears with someone, instead of keeping them bottled up and making your anxiety worse, is to open up to someone you trust.


Seek a doctor or therapist. Mental health problems should never be ignored. It's critical to seek assistance if you start to notice a decline in your physical or mental health. Even if you're not sure if you need help, it's a good idea to check your health if you notice any negative changes in your eating, sleeping, or energy levels.


woman with psychologist

Image Credit: Prostock-studio /


Consult a credit counselor. A credit counselor can assess your financial situation and advise you on where to make cuts and pay down debt. You can get in touch with a counselor who can provide advice specific to your circumstances through the National Foundation for Credit Counseling.


Create an action plan and take action. First, list your debt in order from lowest to greatest. Next, list your income. Next, review your credit card or bank statements to identify poor spending habits. Then, determine where to cut back to save more and pay off debt.


After you have a budget, you can carefully consider ways to reduce your monthly expenses. Finding affordable health or auto insurance may be part of this, or combining bills for discounts, such as cell and internet service or home and auto insurance.

CapWay Pro Tip: CapWay offers Money Goals + Human$. It is a community of people setting money goals while holding one another accountable. You can create money goals and share them publicly or privately.


Recommended Read: Why ‘Health is Wealth’ Mantra Should Be a Lifestyle Change


The Money Wrap-Up


Whether trying to have a difficult conversation about money or simply struggling to meet our immediate needs, financial insecurity can significantly impact our mental health. It's critical to be kind to yourself and seek assistance if you require it. Commit to taking baby steps toward financial control. Develop a budget, look for ways to increase income, pay off high-interest debt, and save (even if it's a small amount) for the future.

Main Image Credit: Southworks /

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