How Does Mental Health Affect How People Manage Their Money?

There are many medical conditions that can impact a person’s ability to responsibly manage their personal finances! Although the above only mentions mental health issues, medical issues in general can lead to debilitating financial issues and often times compound to form additional mental health issues.

Bipolar disorder and depression in particular can have a profound impact on a consumer’s ability to manage money. The lows and highs of bipolar disorder often lead many to binge shop (neglecting their budget entirely) due to feelings of euphoria and depression. The imbalance in brain chemistry leads these individuals in a hyper sensitive state which often means they are extremely vulnerable to the endorphins that are released from purchasing goods/services.

To make matters worse, many of these individuals are usually on medication that may impair their ability to retain short term memories. This often leads to duplicate purchases and more irregular financial behavior!

Financial trauma also plays a part in all of this! Financial trauma is most often caused by significant capital losses, loss of income, catastrophic life events, etc. Individuals who suffer from a form of financial trauma are typically more “afraid” and “fearful” to make good financial decisions and improve upon their habits. The reason is that their “amygdala” literally prevents them from taking potential positive risks, i.e.: investing for the future, investing in real estate, etc. This is just simply how our brains are wired. “Losing a lot of money” will have a much more significant impact to your amygdala than “making a lot of money” on an investment.

Treatment options: Most often the best form of treatment is simply to reach out to a mental health provider via your care provider! You don’t necessarily have to see a financial therapist! The underlying cause of these issues is usually the mental health issues. So, if you fix that root cause of the problem (mental health issues) the rest will likely fit into place!