The Impact of Financial Stress on Mental Health

The Invisible Heavy Load: Impact of Financial Stress on Mental Health

Julie walked home from work, following her usual routine of checking the mailbox before going inside. As she opened it, a stack of bills and blue envelopes spilled out, landing on the ground in front of her.

“Oh no, not more bills,” she sighed, feeling a mixture of emotions frustration, sadness, and desperation—quickly flooding her mind. The sight of those envelopes was just another reminder of the financial stress she was constantly dealing with. In the Netherlands, anyone who has encountered those blue envelopes from the tax office knows exactly the heavy weight they carry.

The past few years have been challenging. The global pandemic threw the world into chaos, and although life seems to be gradually returning to normal, the economic fallout continues to be felt. Inflation, disruptions in supply chains, rising energy prices driven by geopolitical tensions, and shortages of raw materials are just a few of the ongoing issues. As a result, prices have risen significantly, and the threat of a recession looms on the horizon.

Julie is not alone in her struggles. Recent statistics from the National Money Worries Monitor in the Netherlands revealed that financial stress has become widespread. Almost half of the Dutch population surveyed—more specifically 48%—indicated deep concern about energy bills. Healthcare costs were the next biggest worry, with 36% of the population expressing concerns about the price of medicine, medical treatment, and insurance. Basic household expenses, including food and drinks, have also been causing anxiety among at least 27% of the population.

Like many others, Julie found herself in the grip of financial stress. As months passed, it began taking a toll on her mental health.

The Vicious Cycle of Financial Stress

Financial stress, a major life stressor, often creates a vicious cycle that deeply impacts mental health. Prolonged financial stress has been linked to a range of mental health issues, including depression, anxiety, panic attacks, suicidal thoughts, lowered self-esteem, disrupted sleep, and an increased risk of substance abuse. Over time, the strain of worrying about everyday financial needs also puts pressure on relationships, adding yet another layer of distress.

As mental health deteriorates, managing finances becomes even more challenging. It becomes harder to focus, and the energy needed to tackle the growing pile of bills shrinks, leading to further mood declines. These challenges in handling finances may then lead to additional financial problems, further disrupting mental health. This creates a continuous downward spiral where both financial stability and mental well-being equally persist.

Tracking and Managing Financial Stress

Returning to Julie, as she walked into her living room, she angrily threw all the bills and envelopes onto the coffee table. She began to cry. Minutes later, she paused, wiped her tears, and with strong, unbreakable determination, resolved to make a change. Unsure of where to begin but inspired by the Chinese proverb, “The man who removes a mountain begins by carrying away small stones,” Julie embarked on a six-month journey to improve her financial situation by taking the following steps:

1. Addressing Anxiety First to Take Control of Her Emotions

• Sought Professional Guidance: Julie consulted a counsellor who helped her develop strategies for managing debt, creating a budget, and planning for the future.
• Focused on Self-Care: She committed to a healthier lifestyle by adopting a Mediterranean diet and exercising at least three times a week.
• Practised Relaxation Techniques: Julie explored various relaxation methods such as meditation, deep breathing exercises, muscle relaxation, and mindfulness to manage stress effectively.
• Cultivated a Positive Mindset: To counteract her initial negativity, Julie worked on developing a solution-oriented mindset, focusing on what she could control rather than feeling helpless. She also learned to challenge “catastrophic scenarios” in her mind and focus on factual information.
• Reconnected Socially: Recognising her tendency to isolate herself, Julie made a conscious effort to reconnect with supportive and uplifting friends.
• Communicated More Openly: She became more open about her financial worries, sharing them with friends to gain new perspectives and alleviate some of her stress.

2. Implementing Practical Financial Strategies to Gain a Clearer Perspective and Improve Financial Stability

• Reduced Unnecessary Expenses: Julie cut back on non-essential spending, cancelled unused subscriptions, avoided luxury purchases, and identified her triggers for impulsive buys, leading to significant savings over time.
• Tracked Spending: She meticulously tracked all expenditures to better understand her financial habits.
• Automated Payments: Julie set up automatic payments for bills immediately after receiving her salary and arranged for a percentage of her earnings to be transferred directly into savings.
• Set a Realistic Budget: She established a strict but achievable weekly budget to control her spending.
• Explored Investment Opportunities: Once she managed to reduce her debt, Julie cautiously explored investment options, taking care to navigate the uncertain economic climate wisely.

Turning the Vicious Cycle Around

As the months went by, Julie began to feel a renewed sense of control over her life. With her financial stress now more manageable, she noticed a boost in her confidence. This positive shift helped break the cycle of worsening mental health, leading to a significant improvement in her well-being. Julie felt calmer, less anxious, and finally started enjoying better sleep.

When friends asked about her remarkable transformation, Julie couldn’t help but smile. She had come to realise that even small changes can have a profound impact. Simple adjustments, such as adopting healthier eating habits, boosted her energy levels, enabling her to engage in regular exercise. This, in turn, provided a much-needed outlet for stress reduction. These seemingly minor changes were crucial to her turnaround. They gave Julie the clarity and strength necessary to confront her financial challenges directly.

It became clear to her that breaking any vicious cycle often starts with making small yet meaningful adjustments. With a cheeky wink, she told her friend, “You know, someone once said… the man who removes a mountain begins by carrying away small stones.”

As she said this, she finally acknowledged, with confidence, that within just six short months, she had been the one to move and conquer a massive mountain. «

”Financial stress, a major life stressor, often creates a vicious cycle that deeply impacts mental health.“

About the author

Katarina Gaborova is founder of K.G Psychological Services, in the Hague, Netherlands. She works as a registered NIP psychologist and a Certified Gottman Therapist (CGT) for couples. In her practice she uses eclectic approach to therapy, combining CBT (Cognitive Behavioural Therapy), Voice dialogue, EMDR (Eye movement desensitization and reprocessing), NLP (Neurolinguistic programming), BWRT (Brain working recursive therapy). She regularly delivers mental health training workshops related to topics like burnout, stress reduction, mindfulness, how to deal with change and others. She is the author of V!VA: Tools for well-being and See Bee Tee.

As originally published in the ACCESS Magazine.

For information about mental health in the Netherlands please click here.