ARTICLE

How financial stress impacts our health

30 May 2023 dot 3 min read
Financial stress can have a significant impact on our physical and mental health, creating a three-way link that affects our overall sense of wellness. Studies have highlighted a series of cycles surrounding these three factors that, if not slowed or broken, can cause our wellbeing to spiral downwards.
 
While it may be difficult to see a direct link between, for example, financial stress and poor physical health, these cycles show just how easily one can impact the other. This article explores why understanding these physical, mental and financial health cycles is so essential to our overall wellbeing.

Financial stress and physical health

Have you ever made a questionable decision when under stress that you later regretted? Sent an email before properly reading it over because you had a mountain of other work to do? Or got booked for speeding because you were running late?
 
Similarly, financial stress has been associated with high-risk behaviours and impaired decision-making. When we’re worried about money, it can negatively affect the decisions we make in everyday life. While some decisions made under stress can have minor consequences, others can lead to injury and poor physical health.
 
Stress itself, including financial stress, can manifest in physical ways in the form of exhaustion, muscle tension, body aches and insomnia. The effect of financial stress can also stretch across a broad range of more serious physical health conditions. 
Studies have highlighted that the healthier a respondent’s financial affairs were, the better their overall health was. 1

Financial stress and mental health

Financial stress is also associated with poor mental health. Worrying about paying bills and supporting a family, plus concern for the future and retirement, can lead to psychological conditions like anxiety and depression.
 
Some may also view financial status as an indicator of individual success. This can ultimately reduce a person’s feeling of worth when comparing their own financial situation with that of others. If someone feels like they don’t earn enough money in comparison to their friends or family members, they may experience a downward spiral in their mental state. If not treated in a timely manner, financial and mental health challenges can build up and worsen over time.
Analysis of HILDA (Household, Income and Labour Dynamics in Australia) data shows 14% of Australian adults experienced both financial hardship and mental health symptoms at any time over the five years from 2014 to 2019.2

The three-way cycle – physical, mental and financial health

When physical or mental health take a turn for the worse, it can be expensive to treat. The cost of treatment can create or increase financial stress, particularly if a person’s finances weren’t in great shape to begin with.  
 
Financial stress may also force people to delay receiving care for a medical condition due to out-of-pocket costs. Delaying treatment can lead to physical and mental conditions becoming more severe over time, which can snowball into more complex and expensive treatment being needed – leading to even greater anxiety about financial, physical and mental wellbeing.
 
As time goes on, for some the physical-mental-financial health cycle can become difficult to break.

How to break the cycle

Thankfully, there are a number of practical things you can do to break the financial stress cycle and get back on track, even during times when cost of living pressures are high. The best way to break the cycle is to tackle it at the source – by getting your finances to a place where you feel comfortable and confident. The following steps can help you achieve this:
 
  • Regaining control with a budget – see exactly how and where you are spending your money to ensure you are doing so wisely and spreading it across expenses, savings and super.
  • Sorting your super – search for missing super and potentially save money by consolidating multiple funds and checking that you’re not overpaying in fees.
  • Get professional advice – you can take steps to improve your financial situation at any time in your life. A financial planner is like a coach who can guide you with advice that’s tailored to your goals and needs. If you’re experiencing financial stress, there are free financial counselling services available via the Moneysmart website.
The important thing is to take the first step to break the financial stress cycle. From there, you can get back on track to better financial and overall health and wellbeing.
 
AIA Financial Wellbeing offers affordable, straightforward advice that looks at all aspects of your life holistically, understanding how they mutually impact one another and creating a plan that helps you make the most of your life and your money.
 
Find out how easy it is to get advice with AIA Financial Wellbeing
References:

1  Easterlin RA. Life cycle happiness and its sources. Intersections of psychology, economics, and demography. Journal of Economic Psychology (2006), 27(4), pp463-482. Netemeyer RG et al. How Am I Doing? Perceived Financial Well-Being, Its Potential Antecedents, and Its Relation to Overall Well-Being. Journal of Consumer Research (2018), 45(1), pp68-89.
 
2 Beyond Blue (2022) Money and Mental Health Social Research Report – Executive Summary; bey2191_fwresearch_ execsummary_a4_final.pdf (beyondblue.org.au).
Disclaimer:
Copyright © 2023 AIA Financial Services Pty Limited (ABN 68 008 540 252, AFSL 231109), trading as AIA Financial Wellbeing. All rights reserved. This information is current at the date of this publication and is subject to change. This provides general information only, without taking into account factors like the objectives, financial situation, needs or personal circumstances of any individual and is not intended to be financial, legal, tax, health, medical, nutritional or other advice. Before acting on the information in this publication, individuals should consider its appropriateness having regard to such factors.

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