Tackling Finances for Better Mental Health

I want to make a note at the start here that this is coming from a place of privilege and intended for those who likely are not struggling with true poverty, a known and reliable contributor to poor mental health. For those with truly minimal and unpredictable means, there is a much more complicated story that sadly cannot be simply addressed through some of the strategies and concepts I discuss in this post.

I had a financial awakening about a year ago. My husband and I had been looking to buy a house. In the midst of house-hunting, we also faced an unrelated and unexpected move that left us scrambling to make some big decisions about where to live, in the short term and the long term. Frankly, the stress of it all unraveled both of us. A lot of that stress (in addition to lugging all of our belongings from place to place, with a baby in tow) was centered around money and how making such a big financial decision, e.g., buying a house, would impact our long-term goals. Would it get us closer to living the life we saw for ourselves or would it hinder aspects of that life? There was no straightforward answer and our extreme waffling (while, granted, is probably not abnormal with such a big decision) was a clear signal to us that we needed to take a much harder look at our options.

The whole housing debacle of last year, while harrowing at the time, allowed us to emerge having reevaluated our spending/saving/investing habits, our long-term life goals, and how those are intertwined. We saw with deepened clarity how we could be making incremental and thoughtful behavioral choices that allow our money to serve as a tool in helping us unlock a more sane and meaningful life. We began implementing a host of changes (from how/where we buy groceries to how we cover travel expenses) and have not looked back. 

One year later, we have paid off all of our student loan debt and continue to build a respectable savings. An unexpected side effect of doing this kind of self-reflection is that I've been much more willfully aware of how money impacts mental health, in my own life and for others, most often in the arenas of anxiety and self-worth.

our money stories

Money is a huge stressor for most people, at some point in their lives, if not constantly. For many, it contributes in a meaningful way to anxiety and other mental health issues. Kara Perez, founder of Bravely, an organization that aims to empower women through financial literacy, does a great job of describing financial anxiety and how it's everywhere

You know the feeling...you've put off paying a bill and it creates a faint, but nagging feeling of uneasiness. Or you're reminded of the balance on your student loans or consumer debt and are gripped with a pang of anxiety. Or maybe you've been wanting to save for a down payment on a house, but the goal feels just out of reach. Or maybe you can't stop worrying about whether you'll have enough saved to cover your kids' college tuition or to retire or to cover future medical expenses. 

Dr. Brad Klontz, a financial psychologist, theorizes that there are four basic "money scripts" that are often indicative of unhealthy patterns of spending or anxiety related to saving. These scripts represent the stories we tell ourselves about the role of money in our lives. These include:

  • Money avoidance (you don't want to deal with money or tasks related to learning about or managing money; you may associate money with shallowness)
  • Money worship (you believe money is the key to ultimate happiness and has the magical power to solve all your problems)
  • Money status (your self-worth is wrapped up in money and all the things you can buy to demonstrate your status)
  • Money vigilance (you practice frugality, bordering on neuroticism and worry, and sometimes exhibit secretiveness regarding money)

You can see how none of these is ideal. 

I've had my ups and downs with money. Historically, on the whole, my relationship with money can best be described as: unexamined. For most of my life I fell into the "money avoidance" script camp. That doesn't mean I always had the luxury of ignoring finances. Plenty of times I was barely getting by on a non-profit salary, but was still guilty of mindless spending and foolishly remaining ignorant of ways I could be better with money, while also being low key stressed about money all the time. I can picture myself throwing things in my cart at Target, a shirt on sale (so it’s okay right?), some kitchen gadget, a new notebook--totally driven by feelings of inadequacy or a desire to get closer to some unrealistic vision of how my appearance or home should be, tempted by an appealing store display. I will never get that money back and I shamefully don't even know where half of those items ended up or whether they made any dent in my feelings of lack. Actually, I can tell you confidently that they did not improve my overall wellbeing or sense of self. You know what did? Acknowledging my money story and doing the emotional work of halting money avoidance, which had the added and unexpected bonus of coming to a place of more sustainable self-acceptance.

why we avoid the problem

  • Facing the problem makes us too anxious. Avoidance is so satisfying. It brings instant short-term relief. Please tell me I'm not the only one who has waited months to pay a parking ticket. Don't want to feel trapped or bad about yourself by thinking about your money issues? Ignore them!! Unfortunately, in the same way that avoidance of feared situations reinforces fears and anxiety, turning a blind eye to spending habits or ignoring creeping debt or even simply trying to not to think about worries about future money scenarios, realistic or not, keeps the stress of money alive and thriving.
  • We feel powerless to change anything. When we get caught in the trap of avoidance, we can start to feel helpless. We feel like the problem is too big and we can't make a dent in it. Anyone with student loans in the 5+ figures knows the feeling of resignation to a life with never-diminishing ever-present debt.  
  • Money tends to be a taboo topic. We're often timid in revealing our salaries to others or discussing debt. It feels shameful to talk about money problems. Or if we are frugal and on top of our money game, we worry we'll be judged for that too. 
  • Worrying feels productive. "Surely if I stay up from 1-4am in a state of anxiety about how to pay down a bill or save for retirement I will be closer to a solution or at least have prepared myself in some way for coping with my stress about it. And not worrying just seems irresponsible." Worry is essentially a form of avoidance. 
  • We might not realize we have a problem with money. Sure, maybe you're fortunate to be in a position where you're not living paycheck to paycheck and you can indulge quite regularly. But is that spending a conscious choice? Are the goods or services you're diverting your money towards actually making you happier? It's totally culturally acceptable to spend like you're rich when you're not. This is one of the most dangerous kinds of relationships to have to money because it is so subtle and so normalized, we don't even realize we're robbing ourselves of opportunities to direct our money towards what we actually care about. 

my values or someone else's? 

Money is connected to our values in a big way. How we spend and save and invest our money says a lot about what we value. And most of us have never consciously made these value choices. Our spending typically reflects internalized societal values which, when examined, often aren't actually aligned with our own authentic beliefs. It is worth digging deep and examining what is compelling your purchases, specifically, asking yourself if the purchase is reflective of your own values or someone else's. 

Are you trying to impress others by adhering to societal standards? Standards you may not truly endorse if you stop to think about them? Does your living space need to be in pristine condition because you truly care that much or are you feeling pressured to impress others? Do you actually enjoy going to spin class or would you rather be out hiking or taking walks in your neighborhood? Do you need to switch up your wardrobe every season or are you actually perfectly okay with the clothes you already have in your closet and detest the activity of shopping? Will your child truly benefit from all the after school and summer activities you've signed them up for or are you feeling pressured and fearful that that's what they "should" be doing because parents around you have made that choice? Is buying the 4-bedroom single family home in the suburbs what's really best for you and your family or does buying a house just seem like the next step in your adult life?

There are plenty of wholesome companies, products, and small businesses out there that genuinely value their customers and provide goods and services with integrity. But, none are entirely selfless because at the end of the day, all businesses need to profit! It's not necessarily malicious or manipulative, but companies need to advertise to get your attention and convince you that what they have to offer is something you "need." And so before you hand over your hard-earned cash, make sure you're not being fooled by someone else's desire to take that money from you. 

endeless trade-offs

Examining values can get complicated, because each decision we make almost always involves conflicting or competing values. Maybe your daughter's happiness is a primary value and you want to buy her the new toys that her friends all have, but you also value minimalism and environmentalism, so you don't love the idea of mass produced plastic-based products that only get used for a short period of time and clutter up your home. Or you want to be saving for a future vacation because it's important to you to travel for leisure and personal enrichment, but you also want to stay in shape and are willing to pay a gym membership each month and purchase new activewear on the reg.

Just as we have limited time on this earth and cannot do everything we want to do, most of us have limited financial resources and cannot put our money towards everything we would like to. Each spending choice involves a trade-off and a prioritization of values.

This makes it all the more critical to know what is truly important to you. Knowing your values allows you to make decisions thoughtfully and intentionally, rather than mindlessly and impulsively. 

what are we really buying? IS IT MAKING US HAPPY?

When we make an impulsive purchase (think: shoes on sale, coffee or food made outside the home, makeup and hair products) or sign up for any number of services that are constantly advertised to us (think: meal delivery, cleaning services, streaming platforms), what are we really acquiring? Are we truly making our lives easier or increasing our happiness? In some cases, the answer might very well be yes! Research suggests that spending money to outsource dreaded tasks can lead to increased happiness. But I'd urge you to be judicious with even this type of seemingly justifiable "convenience spending." It can be a slippery slope.

    the magic of insourcing

    Furthermore, a lot of joy can come from insourcing--from making our own food, building our own shelves, sewing our own tote bags, mowing our own lawn, etc. Yes, these things all take time and effort, but insourcing can strengthen our relationships, make us stronger, spark creativity and bring us deep satisfaction (a la the IKEA effect)--all while saving money (for other things that we truly value). 

    I also love financial blogger, Frugalwoods's fantastic point that when we make, fix, or do something ourselves (she applies the concept to buying second hand as well as insourcing), we are able to shrug off the insatiable beast of perfectionism. We take pride in what we've done, maybe even acquiring a new skill along the way, and feel less pressure for the outcome to be to the same standard we would if we'd invested money in it. We can live with a few flaws.

    My imperfect and very well loved hand-made backpack. 

    My imperfect and very well loved hand-made backpack. 

    it is never enough

    To circle back to this question of what kinds of purchases really make us happy, the answer seems to be: very few. We often spend to avoid negative and uncomfortable feelings--boredom, loneliness, self-loathing. A lot of unpleasant feelings can be temporarily lifted by the distratction and adrenaline boost of a purchase. Spending to avoid negative emotions may seem like it can offer an increase in positive feelings, but research shows this is not the case, at least not long term. 

    Part of this has to do with the concept of the hedonic treadmill. The hedonic treadmill, or hedonic adaptation, suggests that we all have a set happiness point that we tend to revert back to. So even after a long sought after career achievement or the loss of a loved one, over time, we arrive back at our set happiness point. This holds all the more true for life's more mundane events, including consumption-based ones. We may think that a new car or a fresh haircut or that same travel mug that a gorgeous person on Instagram uses will improve our lives and increase our happiness. But once we acquire the thing, we inevitably find ourselves just as happy as we were before. And if we've made a purchase in an attempt to avoid an unpleasant feeling, that feeling will resurface. We keep buying more and more in a fruitless pursuit of wholeness when actually, we are perfectly whole as we are. Stepping off the consumption-driven hedonic treadmill allows us to pursue deeper and more sustainable sources of fulfillment. 


    empower yourself by evaluating and goal setting

    We often overlook the role our relationship to money plays in our overall health and happiness--or feel powerless to change it. Just like we don't feel great about ourselves when we mindlessly scarf down too much unhealthy food, unexamined spending habits or lack of clarity around financial goals can deprive us of a sense of control and confidence. So don't underestimate the benefits of taking charge of your financial life to improve your mental health. Financial fitness is pivotally important to your overall wellness and mental health.

    We can't effectively change our habits or relationship to money without having an honest understanding of those habits and relationship. In order to get a better understanding of your financial "health," a good first step is to gather some data. Remember that avoidance fuels anxiety. By ignoring the data, you are cheating yourself of a chance to move through the anxiety, to a place of action and empowerment. 

    • Do a careful and judgment-free audit of your spending and debt

      • Pull up your online banking, your credit card statements, any other records or methods you have of tracking your spending. Now comb through and ask yourself with brutal honesty if each and every purchase brought you genuine happiness or made your life easier. What actually makes the cut? I urge you to use the questions in the next section of this post, "Questions to Ask Yourself Before Every Purchase" to help clarify if each purchase was worth it/if similar purchases are worth making again. 
      • If you have debt you've been ignoring, unpaid bills, other financial obligations that you'd prefer not to think about, take a deep breath and sit with those numbers. 
      • Do you have any savings or investments? Take stock of that information too. 
      • Don't judge yourself. Don't freak out. Don't try to justify and rationalize every purchase. Do your best to be objective. You are gathering data, like a scientist. 
    • Know your values

      • I've been yammering on about values a lot in this post. So what do I mean? I'm going to toss this one back to Kara from Bravely here and her article in which she gives a solid and expanded explanation of the idea of values-based spending and makes my heart flutter by talking about how what we buy matters and has an impact in a global way. 
      • Values are different than goals. Goals are specific and have observable outcomes. Values are more abstract, more like guiding principles. 
    • Set goals

      • There are as many schools of thought about what to do with your money as there are personal finance "experts" out there. It is not my intention to offer you a specific path for goal setting in your unique situation, but to simply to get you thinking about what those goals could be so that you can go from there; do more research and start taking steps that will reduce your stress and anxiety around money's role in your life by gaining clarity on what you really want. Do you want to save for a down payment on a house? Do you want to retire by age 45? Do you want to simply get your monthly spending down to a targeted amount? Do you want to put away money for a trip? Do you want to build a tiny house in the woods? Do you want to make a plan for paying off your student loans? Do you want to add to your collection of antique maps? Do you want to be able to donate a portion of your income to a cause close to your heart? There are no right or wrong answers here, but...
      • Goals should be measurable and specific (i.e., "I want to save $100,000 in the next three years," rather than "I want to increase my savings."). 
      • If the goals are complex or could benefit from stages or multiple steps, break those down too. Map out a plan for how each step will come to fruition and how you will hold yourself accountable. 
    • Take ONE first step towards those goals

      • (I recommend a solid first step is to commit to cutting out some expenses because we all have room for growth in this area.)
      • Write it down. Check it off when it's complete. Feel like a badass for taking action.  
    • Remember that behavioral and mindset changes are ONGOING PROCESSES

      • So do yourself a solid and offer yourself self-compassion when evaluating, goal-setting, and making changes. 

    QUESTIONS TO ASK YOURSELF BEFORE EVERY PURCHASE/when evaluating recurring purchases 

    Give yourself a chance to view each purchase through the lens of your values and chances are you will do way less spending, way more saving, way more patting yourself on the back, and way more personal growth as you continue to get in touch with your authentic self and pursue a life of deep fulfillment and meaning. Is that too grandiose? Maybe...maybe not. Try reflecting on these questions before spending money:

    • Is this something that truly decreases my stress level by removing a problem?
    • Is this purchase likely to bring me (lasting) happiness?
    • Am I trying to distract myself or avoid a feeling? 
    • Am I trying to impress others?/Am I listening to my authentic desires/values?
    • Is this purchase moving me closer to my bigger life goals?
    • Do I need this right now?

    For a brilliant strategy to reduce impulse spending, read more about The 72 Hour Rule from financial blogger, Frugalwoods

    the takeaway

    When we let spending assumptions and behaviors go unchecked/unexamined, we can easily fall into a pattern of avoidance and helplessness in regards to our finances. This can contribute to real mental health struggles. But it doesn't have to!

    Take steps towards financial empowerment to reduce stress by:

    • Auditing your finances with increased scrutiny
    • Setting achievable incremental goals
    • Actively participating in ongoing values-based spending 

    The bottom line here is that material goods very rarely, if ever, contribute to prolonged happiness. Some outsourcing may improve happiness if you can truly afford it and it's actually removing a problem, but insourcing can blossom its own type of satisfaction and happiness and improve relationships (while also saving money). And the bottom bottom line is: BE INTENTIONAL AND MAKE SPENDING AND SAVING CHOICES WITH YOUR VALUES IN MIND.

    When you live life from a place of deep acceptance and embrace that you have enough and you are enough in each moment, suddenly very few purchases seem as necessary.