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Money & Mental Health: It’s not just in your head

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Updated on:
November 24, 2022

World mental health day takes place every year on October 10th, bringing awareness to the importance of mental health in a society that is increasingly stressed and anxious. Conversations around mental health were still extremely taboo as recently as 70 years ago. Even today some stigma persists, despite the fact that over 50% of people will experience mental health issues at some point in their lives, with one in five people experiencing mental illness every given year*. With the continued increase in cost of living, stress and financial anxiety are experiencing a particular rise. You’re not alone, and there are steps you can take to fight this.

Why does it matter?

Mental health impacts every area of our lives: our emotional wellbeing, our relationships, our energy levels, our ability to go out and experience life, our ability to make good financial decisions, and even our physical health. For example, high levels of stress have been linked to heart disease, headaches, high blood pressure, insomnia, diabetes, skin conditions, asthma, heart attacks, and even strokes** - and sadly, we’re more stressed than ever these days. 

It’s vital to prioritise keeping this stress under control. While of course, we can’t control everything in our lives or just wish the stress away, there are some steps we can take to mitigate it. Just as stress can impact your physical health, your physical health can also impact your stress. 

Where to start?

Getting a nutritious, balanced diet, and plenty of sleep and exercise are essential for keeping both your body and mind healthy. Many studies have been done that show a significant correlation between heavy social media and an increased risk for depression, anxiety, loneliness, self-harm, and even suicidal thoughts***. Spending less time on social media and more time to yourself can be very beneficial - taking a walk, reading a book, or pursuing a creative hobby like writing or painting is a great alternative. Meditation is a stress-buster that’s been gaining popularity in the western world for some time, as an outlet to quiet our hyperactive ruminating minds, and has proven mental and physical benefits. Just 8 weeks of meditation has been proven to lower stress, anxiety, fear, increase grey matter in the brain, improve sleep and memory, just to name a few.

Fight the causes

On top of taking these steps to reduce the stress you feel in your day to day life, minimising the causes of stress cannot be understated. Often, the stress might be caused by something we can’t control, in which case the methods above can help us control our response to the stress. But sometimes, there are steps we can take. 

  • Are you pushing yourself too hard at work? 
  • Have you taken on more than you can chew in your personal life? 
  • Are you putting up with a friend who is constantly negative, and pushing your boundaries? 
  • Are you managing your finances poorly, and worried about the future, but don’t know where to start? 

Let’s talk money

These are all areas where you can decide to make a change. If you do have money stress (and let's be real, in today’s world, who doesn’t), it can be frustrating to be told “well just find a way to make more money!” and “spend less”! This is an idea that often targets the most vulnerable in society who are already working multiple jobs and spending the bare minimum to get by in a world with an increased cost of living. I know you aren’t struggling because of too much avocado toast. 

Nevertheless, there are some simple steps that you can take to improve the situation you’re in now. 

  1. List your incomings and outgoings 

It’s not a fun job, but even just knowing where your money is going can give valuable insights into where you might be spending more than you realise. You don’t have to cut out all your “fun money” - after all, life is for living, and small pleasures are just as important for your mental health as good diet and exercise. 

  1. Check those sneaky subscriptions

Increasing your stress by cutting out all entertainment and living on a single tin of beans per day isn’t helpful - but perhaps there are areas where you can cut back. Instead of Netflix and Disney+, consider alternating the months you use each service, and check that you don’t have any old subscriptions you forgot to cancel. 

  1. Takeaways or cooking at home?

Are you spending a lot on cheap takeaways that might actually be cheaper to make at home? Even if not, understanding how much is going to survival needs vs wants will give valuable insight, and will enable you to figure out how much wiggle room you have, so you will have more control over your finances and will be less blindsided by your outgoings.

  1. Build an emergency savings fund

Next, figure out how much you can afford to put away - even if that’s as little as £2 per week. The goal here isn’t to become a millionaire overnight, but instead, to take small, realistic steps towards healthy financial habits. Over time, it will get easier to know how much you can afford to put away while still being comfortable, and gets easier to increase this. 

Ideally, you want to be spending 50% of your income on needs, 30% on wants, and 20% on savings and investments (this is known as the 50/30/20 rule). 

Don’t worry if you can’t do this right now. It’s ok to build up to it slowly. A third of Brits have less than £600 in savings - so you definitely aren’t alone****. Building an emergency fund is a really great savings goal. It should cover about 3 months of essential expenses (shelter, food, petrol), to have as a backup in case of emergency. Hopefully you never have to use it, but even having one can massively reduce financial stress and pressure, especially in the case of job loss or illness.

Invest what you can

Wombat can make it easier to save by rounding up your spare change. This means that instead of manually sending money to a savings account each week, each time you buy a coffee for £3.20, Wombat will round up the leftover £0.80 for you, and tuck it away for later ie. emergency fund, either as cash, or if you really want to maximise your savings, it can even be invested for you into a stock or theme of your choice. Read more about the difference between a rainy day fund and emergency fund here . Keep in mind that when you invest, your money is at risk, and your investment can go down - but on average, the S&P 500 has made about a 14.7% return per year*****, and is one of the best options to beat inflation and increase your wealth over the long term. Learn more about how Wombat helps you to automate your saving and investing.

Round ups are available with Wombat’s Standard account plan, priced at £1 per month plus 0.10% pa account fee - unlock ISAs, round ups, automated investing, curated stocks and ETFs, and more, today.

Sources:

*https://www.cdc.gov/

**Everson SA, Stress-Induced Blood Pressure Reactivity, 2001

***Primack BA, Shensa A, Sidani JE, Whaite EO, Lin LY, Rosen D, Colditz JB, Radovic A, Miller E. Social Media Use and Perceived Social Isolation Among Young Adults in the U.S. Am J Prev Med. 2017

****https://www.finder.com/uk/saving-statistics

*****https://www.businessinsider.com

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