Financial Stress Affecting Your Mental Health? Let’s Talk.

South Africans across the board commonly experience financial stress. Worryingly, there’s a proven link between financial stress and mental health – and it’s not a good one. It’s World Mental Health Month, and so we’re placing the spotlight on a topic that deserves greater attention. With spiralling costs caused by the knock-on effect of load shedding, fuel price increases, and an erratic supply of goods and services, it’s no secret that most South Africans are feeling financial pressure. A relative degree of supposed financial security doesn’t insulate you from stress, either. In fact, for business owners, investors, and individuals seeking to optimise their income, the stakes are just as high. However, understanding how to better manage the factors that lead to financial stress can make an enormous difference to your mental health.

What is Financial Stress?

Financial stress and mental health are closely interrelated. Financial stress isn’t just good old-fashioned worry, either. Rather, it’s a pervasive mental state where you’re facing a reality – real or imagined – where you’re steadily growing less and less able to service expenses, pay debts, or save money. Obviously, the stress we feel isn’t necessarily proportionate to what happens to us. Psychologists (and philosophers) assure us that it’s all about our emotional reaction to events, and that we have the power to control that. But when all is said and done, the spectre of financial loss or even ruin is a very real cause for legitimate concern. There are two scenarios here:

• Quantifiable financial difficulty, where you’re battling to pay bills or maintain your standard of living. This is an increasing reality for many people, ranging from increased household expenses to a business owner facing sustainability challenges.
• Subjective perceptions about possible future events or current trends. We’re wired this way – it’s a survival mechanism – but we’re not designed to maintain a physically and mentally damaging “worry state” on an ongoing basis.

So, one of the first steps to better managing your financial stress and mental health is to understand exactly what some of the factors are that affect us so profoundly.

Factors That can Trigger Financial Stress

There are several real-world factors that can cause financial stress. These can range from personal circumstances or beliefs to societal factors and actual financial conditions brought about by business and governmental decisions. Here are just some:

Governmental and Political Policies

What happens when the cost of doing business suddenly escalates? From legislation that affects things like the cost of importing goods, to onerous trading requirements or labour relations issues or fuel prices, there are some elements we can’t control. There may also be political factors that discourage foreign investment – or make it prohibitively expensive, affecting local business that stand to benefit from export opportunities or even online trade.

Economic Growth

A sluggish economy can have a profoundly negative effect on any business. And in South Africa, where industries like mining form the backbone of an economy, shifts in policy or disinvestment decisions can have a knock-on effect on even small business owners and entrepreneurs. For those dependent on month-to-month trade, the financial stress caused by economic uncertainty can be overwhelming.

Market Performance

For both business and private investors, market instability can cause enormous stress. Whether you’re investing in stocks, property, energy markets, or anything else market-driven, there is always an element of speculation which can be highly stressful. And, unless you’re Warren Buffet, keeping calm during a downturn is often easier said than done.

Socio-Economic Status

For those who aren’t investors or entrepreneurs, maintaining a consistent standard of living can be difficult. There are also factors like age, ethnicity, gender, and education to consider – because these can seriously hinder access to even the most fundamental financial resources. Other factors to consider include the level of financial literacy, the lack of good financial habits, or beliefs and personality traits that influence decision making. There are also life-defining events with financial consequences, like having a child, getting married, or retiring.

The Link Between Financial Vulnerability and Mental Health

Studies have shown that people who are financially vulnerable are the most likely to suffer from depression. This is even more prevalent among people who are unemployed, are in a lower income bracket, are unmarried, or are renters. This may seem obvious – because financial lack most definitely causes hardship and uncertainty. But beyond the factual issue of less money and fewer options, people who are under financial stress also suffer from greater subjective doubt, fear, and imagined disaster. In other words, they worry disproportionately more, even given the disparity in income and means. This in turn gives rise to a cycle of stress, indecision, poor decision-making, and very often, the inability to break through into better financial habits or being able to take advantage of opportunities. Even if you’re not stuck in a poverty cycle, one of the best ways to become more objective about your financial situation, and to ensure that your best interests are served, is to obtain advice and support from a qualified financial advisor. By doing so, realistic life financial planning can be undertaken with the reassurance that you’re being assisted by an expert who can offer perspectives and options you may not otherwise have considered.

Practical Steps You Can Take Right Now

Dealing with financial stress and mental health should be a priority. By taking action, and starting where you are with what you have, is one of the best ways to reduce inner turmoil and to make better financial progress. Here are just some of the things you can do:

Begin With Small Actions

Evaluate your current financial position – and seek to identify ways to make improvements, however small they may be.

• Create a budget or reevaluate your current one.
• Check to see if you have unnecessary costs that can be trimmed. Two streaming services? That low-value monthly insurance debit your bank talked you into taking?
• Get quotes for more competitive rates on services, insurance, etc. Here, your financial advisor can also help prepare options for you.
• Look at ways of elevating your current income level. A better paying job, or even a small business or side gig you could start in your spare time.

On their own, these small steps may not seem like much. But added together, compounded over time, they have the potential to profoundly and positively affect your life financial trajectory.

Examine Your Mindset

Epictetus, the great Stoic philosopher, said: “We are not worried by real problems so much as by our imagined anxieties about those problems”. Of course, that doesn’t mean financial problems aren’t real – they most definitely are. But there’s value in taking time out on a regular basis to examine whether your level of anxiety about a financial issue is truly justified. It’s in our human nature to worry excessively about issues that affect our survival or happiness – but it can be debilitating and does nothing to constructively change anything.

Don’t Put Undue Pressure on Yourself

For many people, their sense of self-worth is intertwined with their net worth. As humans, we often evaluate ourselves according to our financial status – but this is harmful and one-sided. Your financial status does not reflect your value as a person. Downscaling is not failure and financial difficulty is not a character defect. Allow yourself to view periodic financial challenges as part of life’s journey – and as you reduce internal judgement or pressure, it actually becomes easier to resolve those challenges.

Ask for Help

Remember, support is always there. If you’re suffering from financial stress and mental health challenges as a result, speak to a mental health professional. Reach out to family and friends who can encourage and support you. Speak to financial advisor and get perspective on financial tools and strategies that may help alleviate financial pressure.

Take Time Out for Self-Care

Make use of healthy coping strategies like working out, meditating, breathwork, or simply pursuing a hobby or activity that brings you joy. Your mental health and physical health are interdependent, and even small changes can do wonders for your peace of mind and reduction of stress.

The Pogir Group: Your Financial Wellness Partner

At The Pogir Group, we’re committed to the financial wellness of those we serve. Our services are highly professional – but we care deeply about the way we do business. Our experienced consultants provide expert advice and guidance that goes far beyond life financial planning. We also specialise in short-term insurance, personal and corporate healthcare solutions, facilitating employee benefit programs, and expertly managing the wealth of our valued clients. We offer more than just financial services – we create peace of mind. Contact us today to arrange a no-obligation consultation. Pogir. Smart, with heart.