Mental Health & Money: 10 Wellness Tools To Help You Improve Your Finances

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Is there a link between money and mental health? Yes, it turns out that money and mental health are closely connected. Depression and other mental health conditions can impact one’s ability to earn money, get along with others, and manage activities of daily living.

Not only can mental health affect your finances, but money (or the lack of it) impacts mental health and wellbeing, too. The connection between mental health and money can lead to a downward spiral of job loss, debt, and long-term financial and emotional instability.

Although mental illness is not caused by a lack of money, financial instability can put someone with tenuous mental health over the edge. Income inequality has been shown to be a contributing factor for higher levels of anxiety, depression, substance abuse and even suicide.

Everyone could use a little help from time to time. For something as closely connected as mental health and money, having the right tools can help to prevent bigger problems. On an individual level, wellness tools can be used to strengthen the interplay between money and mental health for a better outcome.

Working on your mental health can help improve your finances. Here are ten of the best ways to do that:

1. Use Budgeting Tools To Keep Finances In Check

One of the best ways to get a handle on your money is to track it for a little while to see where it’s going. Keep a spending diary where you can record cash purchases for 30 days. Review bank and credit card statements for the same period.

Tracking your spending for a month can be eye opening. By doing this, you will begin to see clear spending categories. You may decide to make some spending changes to help reduce financial stress.

To make those changes, you will need to create a budget. Don’t worry if you’ve never made a budget before. A budget is simply a way of planning ahead of time how you will spend your money.

Be sure to plan to set aside money for self-care! One of the benefits of budgeting is knowing when it’s OK to treat yourself without fear of overspending. In fact, including a wellness category in your budget is a positive mental health practice.

Paper & Pencil Budgets Work Just Fine

Once you’ve gathered your spending data, enter your income and expenses the old-fashioned way on a piece of paper.

First, make a column listing your monthly income from all sources. Second, create another column listing all expenses. Finally, add a third column with monthly dollar amounts for each expense. If you have a yearly bill (such as your annual car registration), simply divide it by 12 to get the monthly amount.

Add up all your income. Subtract all of your expenses. If you don’t have enough money to cover all of your planned expenses, you may have to postpone a purchase. If your budget includes just basic necessities, try to make up the difference by earning some extra money.

The idea is to make sure your income meets or exceeds your expenses. Keep tracking your spending for a few more months. Compare your actual spending to your budget at the end of each month and make changes to your budget as needed.

Once you have a handle on your spending, consider tracking your saving rate.

Online Budgeting Apps Make Tracking Money Easier

There are a number of online budgeting tools that make tracking your money even easier. If you have Excel, you can create a spreadsheet on your computer to quickly update your budget each month.

Another option is to use an online budgeting site or budgeting app like YNAB (You Need A Budget), Personal Capital, or Mint. There are many more. Many offer both free and paid versions. The beauty is that online budgeting tools and apps can be linked to your banking, credit card, and investment accounts for automatic tracking.

Personal Capital and EveryDollar are the only two online budgeting tools I have tried. Personal Capital has helpful budgeting features and investment planning tools I like, due to my focus on catching up retirement savings after a late start.

Automate Your Finances For Reduced Stress

One of the best things I did to reduce money stress was to automate my bills. I no longer have to worry about forgetting to pay a bill because everything gets paid on time, automatically. No more late fees!

Automation can help you save money in other ways, too.  Some companies offer a discount for automated billing. Set up monthly autopayments for your rent or mortgage, utilities, garbage, insurance, cell phone, etc.

2. Get (Unbiased) Financial Advice

Just the thought of learning how to budget and manage your money can be stressful. It becomes overwhelming when you are in crisis mode due to debt or job loss. For those who are nearing retirement age but behind in retirement savings, or for those who struggle in low-paying jobs, it can feel hopeless.

The good news is there are people and resources that can help, including financial advisors, non-profit organizations, books, blogs, and podcasts.

Financial Advisors: Pros & Cons

Pros of using a financial advisor include having someone who can answer your money questions and support you in identifying your money goals. Once your goals are set, a financial advisor can educate you on the best options for achieving them.

Cons include high fees, additional hidden costs if not using a fee-only advisor, and the risk of taking a hands-off approach to your money. After all, no one is going to care as much about your financial situation as you will. Stay involved so you can understand exactly where your money is going.

Where To Find Low-Cost & Free Financial Advice

Fee-Only Financial Advisors

Financial advisors don’t work for free. They earn income through either 100% commission, a combination of commissions and fees, or through a fee-only structure.

Advisors earn commissions on the financial products they recommend, or they may charge a percentage of your total assets under management. Over time, that can add up to a lot of money, especially when you are investing money over many years for retirement.

However, fee-only financial advisors just charge an hourly fee or a flat rate for their services. Look for an advisor who also acts as a fiduciary, meaning someone who will work in your best interest (not theirs). Find a fee-only financial advisor near you through the National Association of Personal Financial Advisors (NAPFA).

Non-Profit Consumer Credit Organizations

Non-profit consumer credit organizations are agencies that help people learn about budgeting, credit, and debt management. The Consumer Credit Counseling Service (CCCS) is one example. The CCCS promotes financial literacy through online personal finance classes and other resources. Free budget worksheets and financial calculators are also available on their website.

Books, Blogs & Podcasts

There are many books, blogs and podcasts available to help you learn more about personal finance, creating a budget, getting out of debt, and saving for the future. You don’t even have to spend money for these resources. You can check out books from the library for free. Computers and wifi are also available at the library if you don’t have a way to access blogs or podcasts at home.

If you are behind in saving for retirement, it is not too late to catch up! Be sure to read the 3 Best FIRE Books That Will Inspire Late Savers.

Obstacles To Following Financial Advice (Even When You Want To)

There are many obstacles that might prevent someone from improving their financial situation. A simple lack of financial literacy is a big one. We don’t learn about budgeting, the dangers of debt, or how to invest and save for retirement as a standard part of education.

Imposter syndrome may also play a role in preventing us from investing. We don’t feel qualified to look after our own money and the entire process becomes overwhelming. This can increase anxiety to the point that no action is taken.

As we’ve discussed, financial problems go beyond money at times. For example, difficulties with money can be rooted in addictions or mental health issues.

Mental Health & Money Stigma

We have been conditioned to believe it’s not OK to talk about money or mental health. Problems with either one are viewed as personal failures and contribute to a sense of shame. Yet, there are systemic barriers like implicit bias and the racial wealth gap that make it much harder to get ahead financially.

3. Practice Harm Reduction

For over 20 years, I’ve worked in the mental health field. It’s where I first heard about harm reduction techniques. The concept originated with substance and alcohol treatment programs as a way to encourage healthier behaviors.

For example, needle exchange programs try to prevent the spread of HIV by providing clean needles to IV drug users. Harm reduction techniques help reduce risk, even when someone is not not ready to completely stop using substances.

Today, harm deduction techniques can be used to help manage the unintended negative consequences connected with many behaviors and decisions that impact our money.

During the COVID-19 pandemic, people began stockpiling groceries, much of it perishable food. This anxiety-driven panic buying had a number of adverse effects, including overspending, wasted food, overconsumption and weight gain.

Instead of stockpiling perishable food, a harm reduction approach might include purchasing non-perishable, inexpensive healthy food such rice, beans and other stables. It could include purchasing inexpensive seeds and planting a vegetable garden. Or even starting a kitchen garden by growing nutritious sprouts for pennies!

When it comes to mental health and money, harm reduction techniques can help us move toward emotional and financial wellness.

Spending Priorities

Harm reduction techniques and budgeting both help you to examine spending and begin to make healthier choices. You begin to set spending priorities based on what is important to you, rather than spending impulsively.

Value based spending is another way to describe this. With value based spending, you may spend more money on something you value. At the same time, you stop spending money on things you don’t care about. When you establish spending priorities (through your budget), you are saying “This is important to me.”

Setting spending priorities allows you to be more mindful with your money, without going into debt.

The Stress of Debt

Years ago, my husband and I had crushing debt. It was a stressful time. We made many mistakes with our money, but we were not alone. Even today, it’s estimated that about 80% of Americans are in debt. Experian, one of the top three credit reporting agencies, noted the average credit card debt in the U.S. during 2021 was $5,525.

With the added stress of the pandemic, increased unemployment, and rising inflation, the negative impact of debt only makes things worse. High interest debt and the stress of unpaid bills can lead to immobilizing feelings of depression and anxiety.

It’s a tough cycle to get out of. Whether you cut back spending or work more hours to increase your income (or both), getting out of debt is hard. There is no shame in asking for help. Don’t wait to talk to someone who can help you create a plan for getting out of debt.

Psychologically, the debt snowball is the best method for getting out of debt. It is motivating because you get quick wins right from the start. There is a sense of emotional satisfaction that comes with crossing those small debts off your list.

Build An Emergency Fund

Unexpected expenses always seem to pop up at the worst times. By building an emergency fund, you will be able better prepared to deal with surprises. An emergency fund is an essential tool to keep you from going into debt. It also helps you to respond to a financial crisis more effectively. Your car breaks down? Tap the emergency fund instead of the credit card.

The standard advice is to keep 3 to 6 months of expenses in an emergency fund. Your emergency fund should be easy to access. It won’t earn much interest in a traditional savings or checking account, but it will be there when you need it. Having an emergency fund provides peace of mind.

4. Meditation

Raise your awareness through meditation! Although meditation can’t eliminate debt, it can help us become more aware of how we deal with money.

Developing a consistent meditation practice over time allows us to step back and reflect before reacting to a financial crisis or mental health stressor.

5. Exercise

Benefits Of Exercise On Mental Health

There are so many benefits to regular exercise, including a greater sense of well-being. Although we call it working out, exercise is really an investment in mental wellness. Exercise reduces stress, boosts overall mood, and improves sleep. By releasing endorphins, exercise helps lower symptoms of anxiety and depression.

Exercise can serve as a healthy distraction to help you avoid other maladaptive coping strategies like retail therapy. The after-effect of exercise feels much better than opening a credit card bill a month after a spending spree that only lifted your spirits temporarily.

Free & Low-Cost Ways To Stay Fit

You don’t have to spend a lot of money to stay fit. In fact, you may even save money by exercising! If you are able to keep your body at a consistent weight, you won’t have to keep buying new clothes every time your weight goes up or down.

Walking and hiking are my favorite ways to exercise on a budget. You can do it just about anywhere and being outside feels a little bit safer than being inside a gym during COVID. However, there are all kinds of fitness classes available for free on YouTube that you can enjoy in the privacy of your own home.

6. Nourishment

In the past few years, the relationship between food and emotional health has gotten more attention. The old adage, “you are what you eat” becomes even more meaningful when looking at mental health.

What To Eat

We are faced with countless food choices. Eating a whole food, plant rich diet that is high in fiber is best. When we eat nourishing, fiber-rich food, we are also feeding our gut bacteria. Friendly bacteria in the gut play an important role in the production of neurotransmitters, which are chemicals that send messages to the brain and affect mood.

For example, when dopamine is released in the brain, you feel good. Serotonin helps stabilize moods. In his book, Grain Brain: The Surprising Truth About Wheat, Carbs, and Sugar – Your Brain’s Silent Killers, Dr. David Perlmutter calls neurotransmitters our primary mood and brain regulators. However, when blood sugar rises, neurotransmitter levels drop.

Keeping the principles of harm reduction in mind, know that you don’t have to throw out your favorite junk foods all at once. Instead, try adding in more and more of the healthy stuff. Soon your taste buds will change and you will begin to crave those leafy greens!

To get started, choose beans, whole grains, fresh fruits, leafy greens, and vegetables. Foods that are high in magnesium, vitamin D and folate (a B vitamin) can naturally boost dopamine and serotonin levels. Fresh produce is very affordable when it’s in season. Bulk staple foods like brown rice, lentils, dried beans are cheap and available all the time.

Foods To Avoid

According to Sutter Health, California’s second largest health care system, consuming fewer processed foods can improve emotional health. A diet high in sugar and other processed food leads to inflammation. Simple carbs (like sugar and products made with white flour) interfere with the friendly bacteria in our gut. Chronic inflammation contributes to mood disorders, including anxiety and depression. 

Processed and packaged foods are expensive. Sadly, most of what you are paying for is the packaging! Avoiding processed foods benefits your mental health and keeps more money in your wallet.

Keep It Simple

It’s possible to get all the nutrition you need by focusing on simple meals made from whole foods. Even if you eat the same thing every day, like Lilian Karabaic of Oh, My Dollar! As Lilian notes on her site, keeping it simple can free up your your mental space. It will also save money. Her easy homemade vegan breakfast tacos cost just 60 cents per day.

Meal Kits

If you have a little more money to spend, try a meal kit service. Meal kits help reduce the mundane decisions of daily life such as what to cook. Having a pre-planned meal with all the ingredients delivered to your door can be a form of self-care. Meal kits save time and money compared to eating out.

Free Food Resources

When money is tight, the food budget is the first to get cut. If you are living on a very low income, you may qualify for food assistance programs. Formerly called food stamps, the Supplemental Nutrition Assistance Program (SNAP) can help. Today, SNAP benefits are accessed through EBT cards. Shop and pay for healthy foods at the grocery store with a swipe of the card!

There are many more food assistance resources available, from other government programs to local food banks. An online application will get you started. Also, be sure to search online for food banks near you. Many churches and other local organizations distribute free food, including fresh food from the USDA and community gardens.

In her book, Maid: Hard Work, Low Pay, and a Mother’s Will to Survive, Stephanie Land wrote about the emotional trauma she experienced when trying to access government assistance. She also addressed the embarrassing treatment she endured when using benefits to purchase healthy food for herself and her daughter. Although you may still encounter some stigma when attempting to access free food, the use of EBT cards have helped normalize transactions.

7. Sleep

You can survive without food for several weeks, but you can’t get by without sleep. After only 24 hours of sleeplessness, thinking becomes impaired. It becomes harder to concentrate and make decisions. Sleep deprivation contributes to poor judgment, which can impact how you spend money.

Like the relationship between mental health and money, sleep and mental health are closely intertwined. A mental health condition like depression or anxiety can affect sleep patterns. Extended periods of poor sleep also can affect mental health – making existing symptoms more difficult to manage.

The stress of debt and other money problems can definitely keep you up at night! Using techniques like set bedtimes, exercise, and meditation can help. Other tools include relaxation apps like Headspace and Calm to help you get to sleep.

8. Mental Health Apps Can Support Your Money Goals, Too

Although smartphones are very distracting, there are a number of apps that can make it easier to track and manage our lives. This is true for our money, with online banking and budgeting apps like Personal Capital. It’s also fitting that mental health apps are available to help us track and manage our mental health.

Use of mental health tracking apps can help improve mental wellness, which in turn can help keep you manage your money more effectively. There are many apps available, but here are a few examples:

Anxiety

The Mindshift app uses Cognitive Behavioral Therapy (CBT) techniques to help you challenge negative thoughts and reframe them to help reduce anxiety. CBT techniques can also be useful for those who are stressed about a lack retirement savings after a late start. It will help turn around thought like “It’s too late” or “I’ll never catch up” to “I can boost retirement savings now for a healthy nest egg.”

Bipolar Disorder

If you need help tracking the symptoms of bipolar disorder, check out the eMoods Classic app. This app was created to help people who have bipolar disorder, anxiety, or depression note medication and mood changes.

PTSD

The PTSD Coach features screening and symptom tracking tools, along with self-help strategies for dealing with stress and anger. It’s been downloaded over 500,000 times! There is even a companion app to help family members.

9. Get Paid To Track Your Mood – Join A Mental Health Study

Dartmouth College, a prestigious university located in Hanover, New Hampshire, is looking for people to join a 3-month research study on depression. The study is open to U.S. adults who are currently experiencing and seeking treatment for depression.

Those who qualify to join the study must agree to download an app on their smartphone, wear a provided smartwatch, and track symptoms through brief daily surveys. Participants will be compensated up to $487 for this 90-day study.

Learn more about Dartmouth’s Tracking Depression Study and how you can potentially earn up to $487.

10. Seek Help From A Mental Health Professional

When is it time to seek help from a mental health practitioner? If you are no longer able to cope with problems, including money problems, it can help to talk with a counselor or a therapist. Dramatic changes in mood, eating and sleeping patterns are also signs that professional help might be needed.

If symptoms of anxiety or depression are severe or last more than two weeks, check in with someone. Reach out to a national crisis hotline if you need extra support. Your doctor can also refer you to a mental health professional.

Why Is Making The Connection Between Mental Health & Money Important?

Our mental health plays a role in how successful we are at managing all aspects of our lives, including money. As one of the biggest stressors for many, money (or the lack of it) can impact our emotions and mental wellness.

Summary

It’s never too late to focus on improving mental health and money management. They are so closely related, that working on one often helps the other. The use of these 10 wellness tools can make it even easier.

Still struggling to catch up retirement savings and feeling stressed about a late start? Many of these wellness tools can help with that, too. If you’d like more ideas for creative ways to boost retirement savings, sign up in the box below!