What you need to know about debt and mental health

Did you know that over 40% of Canadians experience poor mental health as a result of financial troubles?

If you’re worried about money, you’re not alone.

With debt levels rising, more and more people are struggling to cope with the negative impact of trying to make ends meet.

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What you need to know about debt and mental health

One of the most important things to realise when you talk about debt and mental health is that it is often a two-way street.

Being in debt is detrimental for mental health, and suffering from psychological disorders can exacerbate debt problems.

Almost 50% of Canadian adults have experienced sleepless nights due to financial pressures.

If you’re struggling with your mental wellbeing, and you’re in debt, you can find yourself in a vicious cycle, which is very difficult to break.

To escape, it’s crucial to tackle both elements.

Improving your credit score, budgeting, reducing spending and clearing debts will help, but it’s also vital to take steps to protect and nurture your mental health.

In many cases, the debt itself does not cause anxiety or unease.

Most people experience these emotions because they cannot afford to cover their debts.

Having debts of $20,000 will affect two people very differently if one can afford to meet repayments, and the other has no means of paying bills and making a dent in the debt mountain.

Being unable to pay off debts or keep up with bills can affect self-esteem, increase anxiety and make people feel embarrassed and ashamed.

If this scenario sounds familiar to you, it’s critical to understand that you are not the only person in this boat.

All over Canada, people are finding it difficult to manage their finances and find the money needed to run a household and support their families.

Between January 2019 and January 2020, there was an increase of almost 10% in the number of people filing for insolvency.

Promoting mental and financial wellbeing

If you’re in debt, and the amount of money you owe is increasing every day, it can feel like you’re stuck in a deep hole with no way of getting out.

This can have a detrimental effect on your mental health, which, in turn, can lead to more complex debt problems.

The Canadian Mental Health Association outlines six features of good mental wellbeing, including sense of self, a sense of purpose, hope and enjoyment, a sense of belonging, resilience and contribution.

When you look at these six markers, it’s understandable that those in debt often experience a deterioration in their mental health.

If you’ve got bills coming in, and you can’t afford to pay them, this can make you question your sense of purpose, it can zap all enjoyment out of life and it can make you feel like you’re not contributing and that you’re not strong enough to get out and move forward.

The good news is that there is help out there, and you don’t have to go through the process of trying to get out of debt alone.

The key to breaking the cycle lies in promoting both mental and financial wellbeing.

There are several steps you can take to improve mental health and create a more stable, positive financial situation.

These include:


  • Understand that your debt does not define you: many people who are in debt struggle to see past their debt as a reflection or a representation of their character or identity.A debt is something you have. It is not something you become.


  • Taking stock of the situation: it’s common for people who are in debt to hide away from checking balances or statements and to think about money constantly without having a specific focus.If you don’t know how much debt you are in, there’s no point in losing sleep over a scenario that might not even be as bad as you think.

    Take stock of your finances, write everything down and do your sums.

    If your situation is worse than anticipated, don’t panic.

    You’ve taken the first step by fronting up to your debts, and now you can move to the next stage.


  • Set yourself goals: if you feel like you’re on a hiding to nothing, it can be tempting to give up on trying to improve your financial situation, and this could lead to spiralling debts.Setting goals is a great way to motivate yourself to work towards financial targets and to provide a sense of purpose.


  • Seek help: this is the most important step.You might feel like you’re alone, especially if you’re anxious or you have depression, but there is help out there.

    There are multiple ways of dealing with debt, and there are people and organisations that specialise in providing support for those struggling with mental health issues.

    If you reach out, you’ll realise very quickly that there is a way out.

    It’s also helpful to talk.

    Try and open up to a trusted friend or a family member and share your thoughts and concerns.

    Getting things off your chest can help to release tension and anxiety and it can also give you perspective.

    Often, we get trapped in our own thought cycle and we convince ourselves that there’s no escape route.

    By offloading, it’s often possible to rationalise the situation and start looking to the future.


Debt can have a devastating impact on mental health, but psychological issues can also elevate the risk of people getting into debt.

If you’re struggling with money worries, and your mental wellbeing is suffering, it’s crucial to understand that you’re not alone.

Anyone can get into debt, but there is always a way out.

Our team is here to help.

Call us today to speak to one of our friendly advisors.

Information on Consumer Proposals

Consumer Proposals in Canada – An Alternative to Bankruptcy
What is a Consumer Proposal?
How to Amend a Consumer Proposal
What are the Benefits of a Consumer Proposal?
What are the Steps in a Proposal?
Consumer Proposal Eligibility
What Debts Are Erased in a Consumer Proposal?
Is There Life After a Proposal?

Canadian Bankruptcies

How to File for Bankruptcy
What is Bankruptcy?
Bankruptcy FAQs
How Does Bankruptcy Work?
What is the Cost of Bankruptcy in Canada?
How to Rebuild Credit Following Bankruptcy
Personal Bankruptcy in Canada
What Debts are Erased in Bankruptcy?

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