The Relationship Between Mental and Financial Health

Unraveling the Connection: Mental and Financial Health

The intersection of mental and financial health is a complex area, characterized by a cause-and-effect relationship. It’s a cycle where compromised mental health can lead to economic challenges, and financial stress, in turn, can have a profound impact on mental well-being.

The Prevalence of Financial Stress

Remarkably, almost half (46%) of Canadians are on the brink of financial insolvency, being just $200 away from not being able to meet all their financial responsibilities. Moreover, 27 percent of Canadians report that their income is insufficient to cover bills and debt payments. It’s clear that financial stress is a widespread issue that is causing millions of Canadians to grapple with mental health challenges.

According to a survey by Statistics Canada, “43 percent of participants who reported significant impacts on their ability to meet financial obligations reported symptoms consistent with moderate or severe anxiety.”

The impact of financial worries is profound, with 48 percent of Canadians admitting that it has caused them sleepless nights. Furthermore, 40 percent of Canadians agree that their debt levels are adversely affecting their mental well-being.

Various financial obligations, including loans, credit card debt, mortgage payments, childcare costs, and the continually rising prices of everyday items, are contributing to the mental health strain experienced by Canadians across all income levels.

The Burden of Debt

In our practice at Bankruptcy Canada, we often witness first-hand how mental health can deteriorate under the pressure of financial stress. The reciprocal relationship between debt levels, the affordability of those debts, and mental health can quickly evolve into a vicious cycle if not addressed promptly.

If a person’s mental well-being is already strained due to financial instability, they may resort to overspending as a coping mechanism. Overspending can exacerbate feelings of guilt and shame, as impulse buying and a diminished sense of financial control can have a detrimental effect on savings, debt levels, and credit ratings.

The Additional Economic Impact

Individuals grappling with mental health issues or illnesses are statistically less likely to maintain stable employment. If these individuals lack access to necessary resources, tools, or treatments, they may face challenges in securing or keeping a job, or may need to take extended periods off work.

The economic repercussions of mental illness in Canada are substantial, amounting to an estimated $51 billion per year when accounting for healthcare costs, lost productivity, and reductions in health-related quality of life. In a typical week, at least 500,000 employed Canadians are unable to work due to mental health issues.

Underemployment also plays a significant role in financial security as individuals struggling with debt payments and living costs may have to do so on a fixed or restricted income.

These statistics underscore the economic and social costs of mental illness, but they also spotlight the considerable challenges encountered by the individuals and families living with these conditions.

The more proactive we can be in enhancing everyone’s mental health, the better we all stand to benefit.

Addressing Mental and Financial Health Challenges

Here are a few preliminary steps towards gaining control over your financial health, which can, in turn, bolster your mental well-being.

Acknowledge the Financial Problem and Get Organized

Begin by obtaining a copy of your credit report and score, creating a detailed record of your debts, and setting up a basic budget around your income and expenses. This will provide a clear picture of your financial status. While it may be a daunting, even emotional task, it will help put things into perspective.

Utilize the Continuum Model

If you or a loved one are experiencing difficulties due to financial stress, the Mental Health Continuum Model can serve as a useful guide. This model uses gradients from green to yellow, orange, and red to help understand triggers and potential solutions for varying levels of mental health distress.

The colors are used as a self-evaluation tool. Green signifies positive personal well-being, yellow is a caution signal, and red indicates a need to stop and evaluate. It’s important to remember that mental health is a spectrum. While one aspect of a person’s life may be “green,” another part may be starting to experience stress (“yellow”).

Know When to Ask for Help

Recognizing when to seek professional help is crucial, whether you’re struggling with mental or financial health challenges – or both. There’s no shame in seeking assistance to overcome the challenges you’re facing.

There are valuable resources available, such as credit counselors, financial planners, and Licensed Insolvency Trustees, who work with people in similar situations every day. If you’re struggling with mental health issues, consider involving a trusted partner, friend, or family member for support.

A Licensed Insolvency Trustee can provide a holistic assessment of your financial situation, offering services ranging from budgeting and financial counseling to planning. This comprehensive approach can provide valuable insights into your financial status and help chart the best path to a debt-free future.

For those seeking personal support, the Canadian Mental Health Association offers an array of resources to help kickstart the journey towards mental health and wellness.

Albertans can access a free and confidential assessment of their financial situation with a Licensed Insolvency Trustee at Bankruptcy Canada. As the only government-regulated debt professionals, we provide a full range of debt-relief options, including Consumer Proposals, informal debt settlements, and Bankruptcy.

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