One trigger for mental health issues that is well-known, though, is financial stress. If you think your bank balance could be affecting your well-being, you’re not alone! Let’s dive into the link between money and mental health and look at some coping mechanisms for when your finances overwhelm you.

Can Financial Stress Affect Mental Health?

Over 1.5 million people in England are currently experiencing problems with both debt and mental health. It’s incredibly common for the two to be interlinked, with money issues often leading to a decline in mental wellbeing.

The burden of financial strain is tough on the mind, with many triggers causing increased stress, anxiety, and feelings of depression. For example, some people may find receiving letters causes them severe anxiety as they dread finding financial statements or debt collection reminders. Others may find that viewing their spending or bank balance creates feelings of depression. Almost 40% of people between 40 and 50 lose sleep over finances, which can lead to a whole host of mental health problems, and many people feel isolated when they can’t participate in social events due to a lack of money.

All of these are examples of financial stress affecting well-being, but they’re just a handful. There are countless other ways that people find their money impacts their mental health, creating a whole host of problems.

But what about the other way around? It’s clear that financial stress can impact mental health, but can mental health impact financial stress?

Mental Health Issues Can Cause Financial Stress

Unfortunately, the pattern does go both ways. Those suffering from mental health issues can often lose track of and become overwhelmed by their financial situation. A lack of good stress management caused by their mental health leads to a range of financial triggers creating huge emotional responses. So, a vicious cycle begins: your mental health makes you unable to deal with your finances, which increases your financial stress, which creates more mental health problems.

For example, people who suffer from depression often struggle to find the motivation to deal with their finances. Those with anxiety may see their finances as a trigger, whilst those with mania may find themselves making impulsive decisions about spending that they later regret. The fact that people with mental health problems are three and a half times more likely to be in debt than those without shows just how debilitating these issues can be.

Why Does Mental Health Lead To More Debt?

When looking at the link between money and mental health, you can’t ignore the impact that well-being can have on finances. The gap between earnings for those with mental health problems and those without is large, and sometimes people with depression, PTSD, anxiety etc. simply can’t work.

When they don’t have the income to sustain a safe, healthy life, their financial situation becomes worse. Again, this becomes a vicious cycle that’s incredibly hard to break out of, with many ending up in deep financial trouble.

Understand Your Responses To Finances

Fortunately, there is plenty of hope for people suffering from mental health and financial stress. By understanding your own emotional relationship with money, you can better grasp what’s going on. Do you:

• Feel overwhelmed looking at your bank balance?
• Avoid opening letters or answering phone calls to do with your finances?
• Impulsively spend money and later regret it?
• Feel ashamed of your financial situation but struggle to ask for help?

Feelings of guilt, stress, anxiety, fear and fatigue are all signs that your financial situation could be affecting your mental health - or the other way around. Once you identify that you might have an issue, you can start to take steps to address it. Let’s take a look at some of these now.

1. Speak To Someone You Trust

As with so many mental health concerns, speaking to someone is vital. Make sure you confide in someone you trust, explaining how your financial situation impacts your mental health. They can then help you to find financial support, go through your finances with you, or simply be someone who can listen when your money is getting you down.

2. Speak To A Financial Advisor

Financial advisors are the superhumans of the money world! By teaching you how to manage your money, sorting your finances, and helping you get out of financial trouble, they can relieve your stress and get you back on your feet.

3. Address Your Mental Health

If your mental health is taking a toll on your finances, you must address the cause before the consequence. Reach out to a GP or therapist who can begin the process of improving your mental health. Stress management could also aid in controlling your emotional responses, taking the pain away from dealing with your finances.

Final Words

The link between money and mental health is clear, but it doesn’t mean that you have to suffer. By finding support using the methods in this article, you can take control of your bank balance and your mind, turning money into something you feel confident in dealing with.

The Organisation for Economic Cooperation and Development published its Economic Outlook on Wednesday, which warned that the COVID-19 pandemic is likely to cause a recession greater than any seen outside of wartime for the past 100 years.

Lockdowns and travel restrictions imposed to minimise the spread of coronavirus have resulted in a severe decline in business activity. Global supply chains have halted, and many unable to work have been left in dire financial straits. “The recovery will be slow and the crisis will have long-lasting effects,” the report predicted, and it will disproportionately affect “the most vulnerable people.”

Put simply: “Economic impacts are dire everywhere” – though the impact for some countries will be greater than most.

Of developed nations, the OECD predicted that the UK is likely to be hardest hit by the economic fallout of the pandemic, with an expected 11.5% drop in GDP. “As a service-based economy, the United Kingdom is heavily affected by the crisis,” the think-tank explained, noting that the country’s trade, tourism, real estate and hospitality sectors are the most likely to face damage.

The OECD also predicted a greater economic slump for the UK in the event of a second wave of “rapid contagion”, with a 14% potential fall in GDP.

South Korea is predicted to be the most resilient of nations mentioned, with an expected economic contraction of 1.2% -- and only 2.5% in the event of a second wave.

As a whole, the world economy faces an average estimated downturn of 6% in 2020, under the OECD’s forecasts.

Official figures released by China on Friday have shown a decrease of 6.8% in the country’s GDP between January and March.

This marks the first economic contraction that China has experienced since Beijing started releasing quarterly GDP figures in 1992. Some observers estimate that this is the country’s first period of negative growth in over four decades, pointing to the downturn of 1976 that marked the end of the Cultural Revolution.

The fall has been predicted for some time, though the figures released have been more dire than most expected; analysts at Reuter’s predicted a decline of only 6.5%.

Other data released painted an equally negative picture. Retail sales, fixed asset investment and industrial output have all seen significant declines.

These changes are an effect of the COVID-19 epidemic, which originated in the Chinese city of Wuhan. While China announced on April 6^th that it had it had experienced no new coronavirus deaths for a full day, it has since revised the number of recorded deaths upwards by 50%.

China is now taking steps towards restarting its economy, ending quarantine measures and reopening its factories. However, the global fall in demand for its goods is unlikely to see a reversal so quickly.

The contraction in China’s economy is also likely to have an impact across the rest of Asia as Chinese stimulus spending is reduced.

The International Monetary Fund has warned that the world economy faces a recession that could be as damaging as the Great Depression of the 1930s.

Beijing recently retaliated the US’ extensive list of around 1,300 Chinese products it intends to slap a 25% tariff on.

The White House claims the intentions surrounding these tariffs are to counter the ‘unfair practices’ surrounding Chinese intellectual property rights.

In response, China has escalated the trade war to an extent none expected, targeting over 40% of US-China exports.

However, the question is, will these tariffs, from either side, affect the backbone of their nation’s economy? What else might be impacted in the long term? This week’s Your Thoughts hears from the experts.

Roy Williams, Managing Director, Vendigital:

In order to mitigate the impact of tariffs and maintain profitability, it is essential that businesses with global supply chains give thought to restructuring their operational footprint and where possible, pursue other market or supply chain opportunities.

With China warning that it is ready to “fight to the end” in any trade war with the US, UK businesses should be in preparing for a worst-case scenario. In addition to China’s threat to tax US agricultural products, such as soybeans being imported into the country, the EU has warned that it may be forced to introduce tariffs on iconic American brands from US swing states, such as oranges, Harley Davidsons and Levi jeans.

In order to minimise risk and supply chain disruption, businesses that trade with the US should give careful thought to contingency plans. For example, importers of US products or raw materials should review supply chain agility and may wish to consider switching to alternative suppliers in parts of the world where there is less risk of punitive tariffs.

On the other hand, for exporters from the UK looking to reduce the impact of tariffs, it will be important to focus on the cost base of the business and consider diversifying the customer base in order to pursue new market opportunities. To a certain extent, this is likely to depend on whether businesses are supplying a commodity item, in which case the buyer will be able to switch to the most cost-effective source. If a buyer does not switch it may indicate they have fewer supply options than the supplier may have thought.

Businesses with products involving high levels of intellectual property and high costs to change are likely to hold onto their export contracts. However, they could face negotiation pressure from their customers. They should also bear in mind that barriers to change will be lost over time and customers can in almost all cases find alternatives, so preparation is key.

Access to reliable business management data can also play an important role in mitigating risk; helping firms to identify strategic cost-modelling opportunities and react swiftly to any new tariffs imposed. In this way, enabling businesses to access real-time data can help them to continue to trade internationally, whilst keeping all cost variables top of mind.

While a trade war would undoubtedly introduce challenges for businesses with global supply networks, it could nevertheless present opportunities for those that are well prepared. For example, with prices of Chinese steel likely to fall dramatically, UK importers of steel could consider striking a strong deal before retaliatory trade measures are introduced.

George S. Yip, Professor of Marketing and Strategy, Imperial College Business School, and Co-Author of China’s Next Strategic Advantage: From Imitation to Innovation:

The US has had huge trade imbalances with China for years. So why retaliate now? Yes, President Trump is a new player with strong views. But it is no coincidence that the US is finally waking up to the fact that China is starting to catch up with it in technology. This catch up has many causes:

• The huge investment by the Chinese government in fundamental and applied science and technology. For example, China now has the world’s largest supercomputers and its many declared science objectives include dark matter, artificial life, and nanoscience.
• The return to China of Western trained scientists, lured by both government incentives and economic opportunities. For example, Royole, a Chinese world leader in flexible display was started by Bill Liu, a Stanford PhD in electrical engineering, who chose to return to China to set up his new company partly because of the massive presence of automakers, a primary customer group.
• Chinese companies have learned from their Western joint venture partners, partly because of the enforced transfer of intellectual property to which President Trump is objecting. The sky is literally now the limit for China, having launched a mid-sized passenger jet to compete with Airbus and Boeing.
• China’s huge home market as well as its enormous exports now support investment in R&D that can be rapidly monetised via commercial products. Even Japan, in its heyday, failed in its attempt to challenge Airbus and Boeing.
• Chinese companies are now using their financial power to acquire Western companies for their technology. For example, in 2016, Midea acquired Kuka, one of Germany’s leading robotics companies, much to the anguish of the German government. The economic ideology of most Western governments means that Western technological crown jewels are mostly unprotected from foreign acquisition.

So, it is no surprise that the US tariffs apply mostly to technology-based Chinese exports such as medical devices and aircraft parts. In contrast, China is retaliating with tariffs primarily on US food products. While such tariffs will hurt politically, they will not hurt strategically.

Rebecca O’Keeffe, Head of Investment, interactive investor:

President Xi’s speech overnight appears to have struck the right tone, providing some relief for investors who have been buffeted by the recent war of words between Trump and China over trade. While there was already an overwhelming sense that Chinese officials were keen to achieve a negotiated settlement before the proposed tariffs do any lasting damage to either the Chinese or US economies, today’s speech was the clearest indication yet that China is prepared to take concrete steps to address some of Trump’s chief criticisms. The big question is whether President Trump will now take the olive branch offered by Xi’s conciliatory approach and dial down the rhetoric from his side too.

Corporate profits have taken a back seat to trade tensions and increased volatility over the past few weeks, but as the US earnings season starts in earnest this week, they will take on huge significance. Equities received a huge boost when the US tax reform bill was signed into law in December and investors will want to see that this is feeding through to the bottom line to justify their continued faith. A good earnings season would do a lot to regain some equilibrium and provide some much-needed relief and calm for beleaguered investors.

Richard Asquith, VP Indirect Tax, Avalara:

Last week’s Chinese tariff escalation response to the earlier US import tariffs threat was far stronger than many would have expected. It now looks likely that the world’s two most powerful countries, and engines of global growth, will enter a tariff war by June.

China’s retaliatory tariff threat last week is targeting products which account for about 40% of US exports to China. However, the US had only singled out Chinese goods accounting for 10% of trade. This makes the next move by the US potentially highly self-harming since, if it matches China, it will mean big US import cost rises on foods and other key Chinese goods. It will also mean less vital technology access for China.

The Chinese have also shrewdly singled out goods produced in the Republican party’s heartland constituencies. This will close the US government’s options on further measures. The Chinese have also refused to enter into consolation talks in the next few weeks until the US withdraws its initial tariff threats. This type of climb-down is unlikely to be forthcoming from the current US administration.

Whatever the outcome, China is now seeking to paint itself as the champion of globalisation and liberalisation of markets. It has already offered lower import tariffs on cars, taking the sting out of US claims of unfair protections to the domestic Chinese car producers.

This all means that we are in a stand-off, and the proposed tariffs from both sides are locked in for introduction in the next two months. This could be hugely damaging for a global economy recovery that is, after many years turgid performance, looking very positive. Global stock markets are already in flight at the prospect of no quick resolution and the fear of a reprise of the calamitous 1930s Smoot–Hawley Tariff Bill escalation.

We now have to see which side will blink first.

We would also love to hear more of Your Thoughts on this, so feel free to comment below and tell us what you think!