How Debt and Financial Stress Can Impact Your Mental Health

Quick Answer

Financial stress can lead to poor mental health outcomes and cause problems in other aspects of life. If you’re overwhelmed by debt and financial stress, it’s crucial to address your money problems while also learning how to cope with their mental health impacts. By facing both head-on, you can improve your financial and mental health.

Unhappy woman sitting in front of laptop at kitchen table, stressed about finances.

If the state of your finances is keeping you up at night, you're far from alone. Study after study reveals that money problems aren't just annoying—they cause major stress that, if not dealt with, can lead to serious mental, emotional and physical problems.

Here's what you need to know about the relationship between financial stress and mental health, plus insights on how you can cope during tough times and get back on track.

How Financial Stress Can Impact Your Mental Health

The word "stress" is thrown around quite a lot in modern-day life. You might associate it with a busy job, parenting, health challenges or major life events like a death or divorce. But what happens in your bank accounts can have just as much of an impact on your mental and emotional well-being.

In 2019, a survey by Everyday Health revealed that over half (52%) of Americans regularly felt stressed out by financial issues. This was far more common than the second-highest stressor, jobs and careers (experienced by 35% of respondents).

Pew Research found that the pandemic and resulting financial turmoil caused Americans to experience heightened psychological issues and financial stress. But even as the economy recovered from the pandemic's effects, personal money woes didn't vanish. A 2022 survey by the American Psychological Association found that stress around money and inflation is currently at its highest recorded level since 2015. This increase is primarily due to inflation, leaving Americans fearful about being able to cover everyday expenses, their mortgage, college tuition and retirement.

Experiencing significant money problems and stress can have massive impacts on one's entire life. Financial distress can lead to a variety of emotional and psychological symptoms, according to The Jed Foundation, a mental health nonprofit. These may include substance misuse; difficulty with relationships and social life; damage to self-esteem; and feelings of shame, fear, anger or despair. These can snowball, the organization says, since financial stress can lead to mental health problems that then make it even harder to manage money.

Given how much havoc financial stress can wreak, it's important to address it in a healthy way. Facing your money woes as well as learning how to cope with the emotional and mental strain may help you find more financial stability and inner peace.

6 Ways to Cope With Financial Stress

When you're feeling weighed down by debt and financial stress, you might feel scared and isolated. Here are a variety of strategies to reduce your financial anxiety and make things feel more manageable.

  1. Talk about it. There can be shame around financial problems, especially since talking about money is often taboo in our culture. But you may be surprised by how many other people you know are struggling with the same issues. Consider confiding in some trusted friends or family members that your debt is taking a toll on your mental well-being. You'll probably feel relief in getting it off your chest, and you may find that others can relate.
  2. Get mental health support. It may also be beneficial to start working with a counselor or therapist to address the mental health impacts of debt and financial stress. A professional can give you a safe space to vent and help you get to the root of any self-sabotaging behaviors like emotional spending. While a traditional counselor could be adequate, consider working with a financial therapist—someone who's trained in the intersection of finances and psychology.
  3. Create a budget. One of the best ways to conquer debt and regulate spending is to make a budget. Having a budget allows you to clearly see how much income you have coming in and going out each month, and makes it easier to allocate where your money should be going in order to meet your goals.
  4. Hire a financial expert. If you need expert help addressing money problems, consider hiring a financial planner. These professionals review your situation and goals, then work with you to create a customized path to get you out of debt and help you get on a budget and meet savings goals. If that won't fit into your budget, try contacting a nonprofit credit counseling agency (more on this below).
  5. Explore temporary solutions. While a long-term plan is ideal, you can also try some short-term strategies for morale-boosting quick wins. This could mean taking on part-time work, like dog-walking or delivering food, to earn additional income and get out of debt faster, or perhaps canceling some streaming memberships for some quick savings. You don't need to keep up with these changes forever, but they can give you a sense of progress and, thus, motivation to keep up the good work.
  6. Practice self-care. As you work on improving your financial situation, you can better cope with the stress by practicing healthy forms of self-care. For example, exercise has been proven to lower stress hormones; not only is it good for your body, but it can also lift your mood and improve anxiety and depression. Other tactics include eating healthy foods, spending time with loved ones, laughing, relaxing and meditating.

Other Financial Resources to Consider

Need additional help getting your finances under control? Consider these resources:

  • Credit counseling: Nonprofit credit counseling agencies exist to help consumers through financial tough spots. Certified counselors can review your situation and help you create a budget, debt payoff strategy and more, often for free. If you're burdened by debt, they can also help get you on a debt management plan, in which the counselor negotiates with your creditors to come up with a payment strategy that works for you.
  • Government services: If your situation warrants it and you believe you'll qualify, consider exploring if you can qualify for government-subsidized housing, medical care like Medicaid, and food assistance. Learn more about these and other government programs at
  • Rent relief programs: In addition to federal government rent assistance programs, there are a variety of short-term rent relief programs and grants. These are typically offered by nonprofits, community programs, religious institutions, and local governments, so make sure to explore what's in your area.

The Bottom Line

As you look to improve your financial situation and the anxiety it's causing, be wary of taking on more debt, especially if you will struggle to make payments. That's because having high debt balances and making late payments or missing payments altogether can tank your credit score, possibly causing your situation to become even more dire. If you need to borrow, it's best to avoid risky forms of borrowing like payday loans and auto title loans. If possible, go with safer options like debt consolidation loans or intro 0% APR credit cards, which you can compare for free with Experian CreditMatch™. And take measures that will decrease your financial anxiety and put your mind more at ease, such as sticking to a budget and building an emergency fund to cover unexpected emergencies.