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Financial well-being impacts mental health

April 26, 2022
By Bill Howatt

Photo: Johan10/Adobe Stock

Mental fitness is engaging in activities that promote pleasant emotions and build resiliency and emotional well-being.

Mental fitness is dependent on a mindset and daily practices and habits that promote mental (behavioural) health, not on financial well-being.

Research has shown that poor financial health can lead to poor mental health, resulting in poor financial decision-making. Feeling financially unable to weather economic change such as rising housing costs, interest rates, and gas and food prices decreases the probability a person will feel they can enjoy life with less stress.

In December 2021, a Government of Canada survey found that 33 per cent of the population reported being financially secure, 41 per cent somewhat secure, 19 per cent struggling somewhat, and seven per cent struggling a lot.


The conclusion: Mental health and financial health are highly correlated.

This micro-skill focuses on how mental fitness can help people cope with financial challenges and create a mental state that supports and facilitates financial health behaviours.

The December survey showed that income is important, but so are daily financial decisions and behaviours.

Losing sleep

The Financial Planning Standards Council reported in 2018 that about 48 per cent of Canadians lost sleep over financial worries. That was before the pandemic, civil unrest (e.g., truckers protest), and the economic challenges created by the Russian invasion of Ukraine.

In that same year, the average Canadian household owed $1.77 for every dollar made, explaining why 50 per cent of Canadians are concerned about their current debt burden.

Research finds that about 18 per cent of individuals with a mental health challenge have problems such as financial debt and are 3.5 times more likely to have financial health challenges than those with good mental health. It is reasonable to assume that uncertainty and worry about money are higher than in 2018.

Finding financial hope through positive mental health

Getting access to more money is not an option for many. However, improving mental health can assist in making prudent financial decisions. Joyce Marter, the author of A Mental Fitness Program for an Abundant Life, explains that the first step is developing a confident mindset and setting financial boundaries.

Be aware of five factors that influence financial health:

  • financial behaviours (e.g., saving and borrowing)
  • social factors (e.g., age, employment status)
  • psychological factors (e.g., confidence, attitudes toward money)
  • economic factors (e.g., income)
  • financial knowledge and experience (e.g., experience with financial products)

One does not need more money to develop competency in four of the five factors. These can improve financial health and help mental health and vice versa. We can control how we cope with our reality.

Tips for facilitating financial health

One antidote to financial challenges is focusing on daily micro-decisions that provide a sense of control, like going for a 30-minute walk to clear your head.

The following tips are a guide to improving financial health. If you are experiencing overwhelming anxiety, depression, or suicidal thoughts or are concerned about addictive behaviours, get professional help. You do not have to figure this out alone. Leverage your employee and family assistance plan, extended health benefits, medical doctor, provincial mental health agencies, including treatment centres for addictive disorders, CMHA, MHCC, or Wellness Together.

  • Develop a mental fitness plan to help you experience more pleasant emotions like engaging in a life passion or practicing deep breathing to cope with stressful moments. Maintaining Mental Fitness is a community-based resource for mental fitness development.
  • Get sorted. Create a budget and tracking system to monitor how money is coming in and out. The last thing you want to do is have a budget in your head. Put pen to paper and write it out with columns for bills, saving, and discretionary spending.
  • Filter discretionary spending. Bills required to live are priority-one. Priority two is saving for a rainy day. What is left is discretionary spending. Adopting a discretionary spending filter can help control or stop all feel-good spending, like buying items you can’t afford but make you feel better. Set a clear target of what you can afford and develop the mindset and self-discipline to make better decisions and remove unconscious spending.
  • Confront at-risk behaviours. Drinking, smoking, and gambling can become addictive and create unnecessary strain. The ADS-10 non-clinical screening tool can help discover risks. If you are struggling, getting support through mental health resources is often critical to gaining financial control.
  • Get advice. Consult a trained financial planner to help you create a financial plan or budget.
  • Consult experts. Leverage licensed trustee experts from established brands like Grant Thornton to control interest payments and find a path out of debt.

Dr. Bill Howatt is the Ottawa-based president of Howatt HR Consulting.

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