Like it or not, money lies at the very core of modern society. When considering financial well-being as the balance point between life’s hurdles or hardships and comfortable adjustment, the importance of money matters is apparent, explains psychologist Dr Erika Hitge. We can look at well-being as a continuum, with flourishing or thriving on the best end, moderate well-being in the centre and languishing on the other end. Hitge says it’s easy to slip towards languishing from the middle end downwards.
A lack of money, or financial “ill-being” may break us apart, whereas financial flourishing and having sufficient money builds us up and allows us to make a difference in this world. The book Investing in others: Prosocial spending for (pro) social change found that in 122 of 136 nations, people were more satisfied with life when they donated money to charity.
But if you can barely meet your own basic needs, life is tough. Money can be both a blessing and a curse. On the other hand, another book (Positive psychology in social change) found that the wealthier people are, the less of an impact increasing wealth has on increasing happiness. This is, except when wealth is spent on others, which increases happiness.
Not being poor is not synonymous with being rich, Hitge explains in her book, Boosting workplace well-being. Money is in a way relative, but it is important how we think about it. If we don’t learn to control our relationship with money, we will forever be fighting against creeping stress, anxiety and even depression if we are not financially well.
Don’t take my word for it. Studies have shown that financial stress is linked to increased rates of depression and anxiety, affecting overall quality of life. The constant worry about debt, job security, or simply making ends meet and feeding our families can cause so much stress that it manifests as physical symptoms, adding more fuel to the depression bonfire.
A review by Thomas Richardson and fellow academics, The relationship between personal unsecured debt and mental and physical health, found that more severe debt was associated with depression, suicide, drug and alcohol dependence, and psychotic disorders. And more financial worries are significantly associated with higher psychological distress we read in National differences in reported subjective well-being: Why do they occur by Ed Diener and fellow academics. Cancer researcher David Servan-Schreiber says, “You can’t be healthy on a sick planet.” He emphasises the need to create a healthy environment and healthy lifestyle to prevent illness and promote well-being. Similarly, you cannot live a wealthy and fulfilling life in a world contaminated by deprivation and poverty.
In South Africa, the effect of financial worries on mental health is deeply felt, as millions of our people face economic challenges daily, struggling to maintain a balance between financial stability and emotional well-being.
The Momentum Unisa Consumer Financial Vulnerability Index in the first quarter of 2023 revealed that consumers’ financial vulnerability remained worse when compared to the same period in 2022. Additionally, the Mental State of the World report found that South Africa scored the lowest average in terms of mental well-being in 2022.
We need to understand the psychology of personal finance and develop a resilient financial mindset. At that interchange, we can begin to tackle the negative effects and pave the way for a healthier relationship with money.
One of the most significant steps towards building a more resilient financial mindset is acknowledging the power our perception holds. How we perceive money and its role in our lives can influence our emotions and actions. By challenging limiting beliefs about money, we can reshape our thoughts and attitudes, and foster a healthier relationship with our finances.
Here are ways in which we can reshape our financial mindset:
- Embrace financial education: Financial literacy is an empowering tool and is the first step towards financial success. It’s up to you to seek out resources and educational opportunities to increase your understanding of personal finance. Learn about budgeting, investing, and the importance of saving. There is a whole world of information at your fingertips. Use it. You can also speak to a financial adviser to guide you on this journey to success. It is a fallacy that only rich people need financial advice, or benefit from it.
- Solidify long-term goals: Instead of dwelling on short-term financial setbacks, shift your focus to long-term goals. Creating a clear financial plan and setting achievable objectives can give you a sense of purpose and direction.
- Practice gratitude and mindfulness: Recognise the positive aspects of your financial situation and avoid comparing yourself to others. Mindfulness can help you make conscious spending choices and avoid impulsive decisions.
- Seek professional support: Financial stress can be overwhelming, and seeking professional help is the smart thing to do. Consult a financial adviser to gain personalised insights and strategies to improve your financial well-being. They can also guide you regarding crippling debt, and how to approach financial challenges.
- Build a supportive network: Discussing financial matters with friends, family, or support groups can help alleviate some of the burdens associated with money worries. Sharing experiences within a supportive network can be incredibly beneficial.
We can’t deny that the relationship between money and mental health is real. Too real for many of us. But we can either get up and tackle it head-on. The choice is always ours to make. It’s essential to remember that we have the power to cultivate a resilient financial mindset. Financial success is not a destination but an ongoing journey.