01 May How financial literacy can improve mental health
According to the Sun Life Canadian Health Index, financial stress ranks as the highest stress of the big four stresses – even higher than relationship stress, work stress, and health stress. It is something that affects almost half of Canadians, with no preference between income levels and age groups.
Those who have financial stress are more likely to report poor overall health and experience its negative effects at work and in personal relationships. Arguably even more serious is the spiralling effects created when mental health challenges and financial stress compound together.
So, what’s causing so many of us to have financial stress? A lot of it comes down to having the knowledge and confidence to make smart financial decisions – also known as financial literacy.
According to the Social Research and Demonstration Corporation, people who have higher levels of financial confidence tend to have better results with day-to-day money and debt management than those with low levels of confidence.
As we head into Mental Health Week, held May 2 – 8, 2022 by the Canadian Mental Health Association, now is the perfect time to talk about how financial stress can affect our mental health.
The impact of financial stress
Mental health challenges and financial stress closely affect each other. For those who are already living with mental health challenges such as dementia, depression and anxiety, managing personal finances can be even more difficult. Feelings of fear, anxiety and worry are heightened – leading to a potential increase in mental health conditions that may already be present.
In times of financial strain and heightened unemployment, the stress of navigating government benefits can lead to the development of mental health effects. Finding the motivation to effectively handle financial situations can be tricky for anyone – but especially so for those living with mental health challenges.
In relationships, financial strain can generate feelings of anger and blame, resulting in unhealthy living environments. Work performance may decline, as admitted by almost half of working Canadians suffering from financial stress. The physical body can also suffer, with common financial stress-caused ailments being heart disease, high blood pressure, sleep issues and headaches.
Sources of financial stress
Financial stress can be caused by many things. For one, living beyond your means and using credit cards to pay for things can quickly spiral out of control. In fact, almost a quarter of Canadians carry over credit card debt to the following month. Of those, 39 per cent admit that they may be at risk of keeping up with mortgage and other debt payments if there was a significant rise in interest rates. Having the financial literacy skills to understand the difference between a need and a want can substantially reduce credit card debt.
But poor spending habits and debt are not the only sources of financial stress. Managing household expenses, living paycheque to paycheque and being unable to save for short and long-term goals are also key contributors.
For those who are already struggling with their financial situation, an unexpected expense or life situation – such as a separation from a partner or being admitted into the hospital – can quickly lead to more financial stress and mental health challenges.
By improving financial literacy skills, Canadians can equip themselves with the tools needed to better manage spending and debt, such as a budget.
How to manage financial stress
Oftentimes, receiving professional help is the only way to end the cycle between financial stress and mental health. There are many financial advisors, credit counsellors and financing agencies who are prepared to help, and it’s important to always do your due diligence regarding their legitimacy and cost of service. Many of the same services are also provided for free from banking and credit institutions.
Fortunately, not all help needs to come at a cost. Attending free financial literacy workshops such as Money Matters can drastically improve financial literacy and allow participants to take control of their finances.
Money Matters is a free introductory financial literacy program for adult learners supported by founding sponsor TD Bank Group through The Ready Commitment. Workshops cover a variety of topics including spending plans, banking basics, borrowing and ways to save. Workbooks are written at a grade four to six reading level, making even the most complex financial topics more accessible.