Mental health & financial health link

Money isn’t just about maths. It’s personal, emotional, and often deeply tied to your sense of identity and security.

When money feels tight or unpredictable, even the simplest decisions can feel overwhelming or even paralysing. Financial worries can also consume your thoughts and emotions, leaving you with little energy for anything beyond just getting through the day.

On the other hand, when you're struggling mentally, everyday financial tasks like checking your bank balance, paying bills, or planning ahead can feel out of reach or simply senseless. At least until ugly consequences start piling up.

If you often find yourself caught between mental and financial struggles, this guide hopes to offer you insights into how the two are connected and gentle, practical ways to start making changes.

What is financial health?

Your financial health describes your ability to manage money in a way that supports both your day-to-day needs and longer-term stability.

Good financial health means having enough stability to meet your everyday needs, manage unexpected costs, and plan ahead with confidence. It’s not about being wealthy, but it does involve feeling secure, knowing where your money is going, and making informed choices that reflect your priorities. It also means having a bit of a buffer, so financial surprises don’t completely throw you off course.

When your financial health is strong, you’re more likely to:

• Pay your bills on time without panic

• Set aside savings, even in small amounts

• Make decisions based on your needs and values, not just survival

• Plan for personal goals like study, travel, business, or building a buffer for emergencies

How mental health affects money decisions

When you aren’t doing well mentally or emotionally, it can become harder to make good financial choices. For example:

• Low energy or motivation might lead you to avoid paying bills or checking your accounts

• Anxiety can make small financial tasks feel overwhelming, leading to procrastination

• Impulsive decisions, especially during periods of high stress or low mood, might show up as unplanned purchases or risky spending

• Shame or embarrassment can make it harder to ask for help, even when you're struggling

You might find yourself buying things to feel better (often called retail therapy) or using money as a quick escape from uncomfortable emotions. But when the mood lift fades, you're left with regret, added stress, or even debt.

Mental health challenges can also make it difficult to focus on long-term planning. You might feel stuck reacting to problems instead of building your future. Over time, this can damage your self-trust and make you believe that you’re simply incapable of managing your finances well.

How better money habits support your wellbeing

The good news is that healthier financial behaviours don't just help your bank account. They also improve your mental wellbeing by creating structure, reducing stress, and rebuilding trust in yourself.

As you work towards helpful habits like creating a realistic budget, paying attention to emotional spending triggers, building your savings, and prioritising spending based on real needs and values, you are also creating safety and showing yourself that you are capable.

These small wins add up. They help you move from worry to confidence, from survival to planning ahead.

Financial decisions grounded in awareness and genuine self-care make it easier to say yes to what matters and no to what doesn’t. That clarity supports your mental health, especially when things feel uncertain.

Emotional and thought patterns to watch out for

You’re not alone if you’ve noticed that your feelings sometimes drive your money choices. These patterns are common and human, but they also shouldn’t be ignored.

1. Scarcity mindset

If you often feel like there’s never enough, you might be caught in a scarcity mindset. This belief makes it hard to make calm, long-term decisions. Instead, every financial choice feels urgent or risky, often leading to impulsive and often unhealthy choices. This mindset also often fuels anxiety.

2. Impulsive spending or retail therapy

Many people use spending as a quick fix for boredom, loneliness, or stress. It offers a short burst of pleasure or control. But unplanned spending can add financial strain and leave you feeling worse over time.

3. Fear of missing out (FOMO)

Seeing others travel, shop, or renovate their homes, especially on social media, can trigger FOMO or a desire to keep up and prove you’re also successful or worthy. If you’re spending to meet outside expectations, it’s worth checking in: Is this aligned with your goals, or are you just reacting to pressure?

4. Avoidance and isolation

It’s common to avoid finances when they feel overwhelming. But unopened bills, ignored messages from banks, or postponed conversations can lead to more anxiety. Silence often adds to the emotional burden.

How to take care of both your mental and financial health

Recognising that you need some changes is already a good start. Now, actually making these changes won’t always be easy, but just keep moving, even slowly.

1. Set up a simple budget

Start with the basics: what’s coming in, what’s going out, and how much you need to cover essentials like housing, food, transport, and medications.

Don’t overcomplicate this process. You can create a simple budget on a notebook, a spreadsheet, or any other tool you feel most comfortable with. Ideally, this budget should already be set even before your work salary or other income goes into your bank account.

You can also categorise your expenses into straightforward categories like Fixed Costs (essentials), Savings, Debt Payment (if you have outstanding debt), and Guilt-Free Spending. This budget should feel like a guide, not a punishment.

2. Track your emotional spending

Try keeping a “money and mood” diary. Jot down what you spend, how you felt before and after, and what was happening at the time. This helps you spot patterns (like shopping when you're lonely or bored) so you can find other ways to meet those needs.

3. Build a savings habit

Even saving a small amount each month can create a buffer and boost your sense of control. Knowing there’s something set aside, even if it’s just for next month’s bills, can reduce daily stress.

Plus, the more you save, the more it becomes a habit and the more you’ll appreciate the sense of security it brings. You might find yourself excited to set aside savings after a few months of practice!

4. Choose low-cost self-care

Self-care is important, but it doesn’t need to involve spending a lot of anything at all. Going for a walk, calling a friend, cooking something nourishing, or resting without guilt are all meaningful ways to care for yourself.

If you want to spend a little from time to time, that’s okay too. Our guide on “self-care on a budget” can help.

5. Reach out for support

Having financial difficulties leads many to isolate or pretend everything’s okay, but this only worsens the problem. If you have a trusted friend who is doing well financially, it might be worth asking that person for advice.

A financial counsellor, life coach, or therapist can also help.

Final thoughts

Mental and financial health shape each other more than most people realise. When your mental health is struggling, it’s harder to make good money decisions. But when your finances feel chaotic or stretched, your mental wellbeing can suffer too.

The encouraging part is this: consistent money habits can rebuild your confidence, support your wellbeing, and help you feel more secure in your choices. Each time you make a decision that aligns with your needs and values, you strengthen your sense of trust in yourself.