Understanding the Financial Impact of Mental Health and Well-Being

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Financial wellbeing and mental wellbeing are closely connected, with money worries compounding stress levels and leading to conditions like high blood pressure, sleep issues, anxiety or depression.

Mental health conditions can make it harder to make money, leading to debt and poor savings habits. Although health care parity laws exist, the cost of mental health treatment remains an impediment to many people seeking help.


Studies have demonstrated the correlation between mental health and financial well-being. Poor mental health can contribute to financial difficulties, while stress related to poor financial well-being can make it more challenging to maintain good mental health.

Studies have also demonstrated that when people are financially vulnerable, their coping abilities become limited, leading to greater levels of stress and depression that can impact work performance negatively and cause missed work days – increasing costs through lost productivity (one study found that those with fair or poor mental health experienced 12 days of unplanned absences per year versus 2.5 for those with excellent or good mental health).

Though these costs can be substantial, research on the economic effects of mental disorders remains limited due to stigma surrounding mental illness which discourages individuals from seeking help for it.


Uncertainty has a devastating effect on mental health and financial well-being, inducing anxiety, distress and the perception of threats to safety – leading to reduced productivity, unemployment or disability as a result. Access to mental illness treatment may reduce its adverse impacts and improve economic outcomes.

Even with ample evidence that poverty affects mental health, global development assistance for mental health remains at less than one percent of official development assistance – this must change.

Our Financial Health Pulse data show that those both financially vulnerable and coping report significantly lower levels of mental wellbeing compared to those who are financially healthy, underlining the urgent need to explore psychosocial interventions that address uncertainty.


Mental wellbeing and income levels have an indirect correlation, yet it remains unclear whether changes to one’s income have an effect on one’s mental wellbeing. This presents potential reverse causation or selection effects which make assessing interventions for improving wellbeing more challenging than expected. Furthermore, income fluctuations can occur for various reasons (e.g. job loss) which also impact psychological wellbeing.

Mental disorders impose significant indirect costs to both individuals and society through reduced productivity and lost economic output; yet their indirect costs are rarely considered when making funding decisions. Utilizing the value of statistical life (VSL) method, mental disorders are estimated to cause indirect costs that are comparable with somatic diseases.

Therefore, it is vitally important that we comprehend the financial impact of mental health and well-being issues so as to effectively address them. This includes making sure those most susceptible to experiencing mental health decline when facing financial crises receive adequate care and support.

Financial Insecurity

Lack of savings and rising consumer debt are both key contributors to feelings of financial vulnerability. Households with limited liquid savings are less protected against income shocks or sudden expenses, increasing the chance that they’ll experience financial strain during a pandemic.

Changes in financial stress during the COVID-19 pandemic correlated negatively with changes in mental health. High levels of financial vulnerability such as falling incomes, low savings accounts and large debt before the pandemic explain increases in financial stress during it; on the other hand, lower household incomes were linked with decreases in psychological distress levels during it.

Short-term economic insecurity has a negative effect on mental health, with males being particularly susceptible to its negative influence due to caregiving responsibilities, pay gaps and financial stressors like balancing work and home life responsibilities. Furthermore, minority groups may face additional barriers that prevent good income security; such as restricted access to financial services or hesitation about disclosing mental health concerns to essential service providers.

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