Debt and depression are often linked, but with the right strategies it's possible to manage both. Here's some advice on managing depression and finances.
When talking about mental health and financial issues, the conversation often leads to a "chicken or the egg" dilemma.
Do people with depression, anxiety, or other mental health disorders disproportionately fall into debt and financial disrepair, or do money problems lead to poor mental health?
The truth is, these problems can't really be tackled separately. It might seem like your anxieties should fade if you don't have to worry about money, or that your financial worries wouldn't seem so bad if you had a healthier outlook, but the two are inextricably linked. If you want to be healthier financially and mentally, you need to embrace a holistic approach.
That's what I did when depression and anxiety hit me like a ton of bricks in my early 20s. It wasn't easy, but eventually I was able to crawl out of the dark hole I had fallen into -- both in my bank account and inside my head. Here's how you can do the same.
Avoid negative coping techniques
Mental health issues and money often create a negative feedback loop. If you're anxious about your job, you might go to the mall for some retail therapy. After spending a lot of money, you might find yourself feeling anxious about your finances. You may try to cope with that by going out to eat and having a few too many drinks, only to wake up the next day regretting the decision. Are you starting to see the pattern?
Right after I graduated from college, I became depressed. I was living in a town of 30,000 people, far away from my family, friends, and boyfriend. I moved there for a job I didn't even enjoy, and I felt disconnected and alone. In college, anytime I was upset or bored, I would go shopping to relieve the stress.
But now I was earning a journalist's meager salary and couldn't afford to do that. That's when I realized how much I had relied on retail therapy to manage my emotions.
"According to Klontz and Klontz (2009), when individuals are stressed and feel anxiety, fear, or shame, they feel off-balance and the human brain will attempt to repair or rebalance it by seeking out substances or behaviors, which may include food, nicotine, alcohol or a wide range of other human behaviors, including financial behaviors," said a report from Kansas State University.
Research from the Clinical Psychology Review shows mental illness is more common among people who have debt, even revealing a high link between suicide and debt. Once I started focusing on paying off my student loans and building a comfortable savings fund, things began making sense. My depression and anxiety didn't disappear, but I started to see how my decisions could make it better or worse. I finally felt in control.
Instead of shopping, I started making collages, blogging and other low-cost activities. I discovered how good the DVD selection was at my local library, and I invited friends over to watch Sherlock on Netflix. It wasn't easy to stay disciplined, but every responsible decision left me feeling calmer and more optimistic.
On top of that, I started going to therapy and talking about my relationship with money (amongst other, more personal topics). Eventually, I was able to see the thought patterns that led me astray and encouraged me to think negatively. I still struggle with depression and anxiety, but now I have the tools to fight back.
Find a healthier approach
Managing depression or anxiety is difficult on top of the rest of your everyday worries. If you're having trouble staying on top of bills and other financial responsibilities, here are some strategies to simplify things while you get your life in order.
Set up autopay
Remembering to pay your bills is tricky, especially when they're due on different days. Set up autopay so you won't have to think about your water bill while you're recovering from a panic attack. It can take one or two billing cycles for the autopay to kick in, so double check those due dates for the first month or so.
Create an easy budget
Many financial experts recommend accounting for every dollar you spend, but that level of organization is difficult when you're depressed or anxious. Create a budget that's simple for you to stick to.
One popular technique is the 50/30/20 rule, where you set aside 50 percent of your income toward needs, 30 percent toward wants, and 20 percent toward savings and debt payoff.
This system is far easier to manage, which also makes sticking with it easier.
Hire an expert
Financial therapist, Amanda Clayman, says depression and anxiety can affect how rationally or irrationally we view money. If you're anxious, you might be more paranoid about your finances. If you're depressed, you might see saving for retirement as futile because you have little hope for the future.
Those psychological frameworks can color what action you take regarding your finances. A financial planner can help sort through your bills, income and debt to give you clear look at the best path forward.
Take it slow
If you're dealing with mental illness and are trying to take charge of your money, it's best to start slow. "If somebody isn't in regular contact with their money, any new information they get raises their emotional activation level," Clayman said. Instead, focus on taking one small step at a time. One day you could look up all your account numbers and login information. The next day you can start to compile data about your spending habits. Take breaks when you need to. Managing your money is a marathon, so don't burn out trying to sprint the first mile.
Avoid scams and quick fixes
Because personal finance is harder for those with anxiety or depression, those struggling are more likely to look for an easy way out. "They are more prone to fall for debt management schemes or debt restructuring promises that seem like they'll solve a problem," Clayman said.
Thankfully, some nonprofits actually want to help people in this situation. But they're outnumbered by scam artists and swindlers. Be wary of anyone offering credit restoration or similar services. They might be charging you money for services they can't actually deliver.
Remember
Debt and depression can go hand-in-hand, but there are ways to overcome both. Figuring out which healthy financial habit works best for you is the key to lessening your financial (and general) anxiety.
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