What to Do When Anxiety or Depression Affects Your Finances

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There are steps you can take to put yourself back in control when anxiety or depression derails your finances.

If you're one of the 17.3 million American adults who has experienced a major depressive episode in the past year or one of the 40 million adults with an anxiety disorder, you know how crippling it can feel. Anxiety and/or depression impacts us in myriad ways. It's sometimes difficult to drag ourselves outside the house, get excited about trying something new, or do the things we know we should be doing. It can also impact our finances, including the ability to manage our bank accounts

According to a study by the Money and Mental Health Policy Institute (MMHPI), financial difficulties are both a common cause and consequence of depression. In fact, the study concluded that sufferers often find themselves unable to manage routine tasks such as budgeting. It may be because depression impacts memory and focus and feels so overwhelming that it stunts our ability to plan and make decisions. After all, for someone in the midst of depression, the primary focus is trying to put one foot in front of the other rather than plan for the future.

A vicious cycle

The MMHPI study asked participants if they tend to spend more money when they're depressed, and 93% of them answered yes. Perhaps this spending is inspired by the desire to feel better, even for a moment, or maybe it just doesn't make sense to deprive ourselves when what Thomas Jefferson referred to as "gloom unbrightened" strikes. And so, it's not uncommon for a person who's dealing with depression or anxiety to go into debt, which can make symptoms of depression and anxiety even worse. 

If you've ever been depressed or overcome with anxiety, you know how unhelpful it is to be told to "look on the bright side," or how hollow it feels when someone promises you that things will get better. What you want is practical advice, a way to move toward wholeness. 

Your mental health is your No. 1 concern

No matter what's going on in your life or how many bills you have outstanding, your No. 1 job is to focus on your mental health. Make feeling better part of every day, whether it involves talking to a doctor about medications that can help, seeing a therapist, joining a support group (online if you don't want to leave the house), doing yoga, meditating, or a combination of the above. 

The point is this: Nothing else matters until you're feeling better. Right now, your mind is lying to you about how hopeless it all is. There is always hope, and even if you're inching toward feeling better, you're moving in the right direction. 

Use the numbers

There's a trick that many people with panic disorders are taught when they're in the midst of a panic attack. They're told to count five things they can see, four things they can touch, three things they can hear, two things they can smell, and one thing they can taste. Numbers are a great way to redirect thoughts. And taking control of your spending is one way to make things feel more manageable.

With that in mind, use numbers to play around with your budget. Because we're focusing on the power of numbers here, let's go with the 50-30-20 budgeting model. This is how it works:

  • Grab a pen and pad of paper.
  • Write down how much income you bring in each month.
  • Multiply that number by 50% (.50). For example, if your monthly income is $3,000, it would be $3,000 x .50 = $1,500. $1,500 is the money you should allocate for necessities like rent, utilities, groceries, and other basic bills. 
  • Now, multiply the amount you bring in by 30% (.30). $3,000 x .30 = $900. This is the money you can dedicate to dinners out with friends, new clothes, and other things you want. This category will help you stick to a budget and encourage you to occasionally pamper yourself.
  • Finally, multiply your income by 20% (.20). $3,000 x .20 = $600. This is the money you will use to get out of debt and build an emergency fund.

There is no one-size-fits-all when it comes to budgeting. If the 50-30-20 plan works for you, that's great. If not, you have plenty of other options. 

Tackle your debt

Being in debt can feel overwhelming. Especially if you are struggling with depression. That's why it makes sense to use the budget you made above to start paying down your debt. You don't have to pay everything at once, but even small monthly payments will help you feel more in control. Another important tool is your emergency fund. This gives you a safety net when times are tough and can help ease feelings of panic.

If you are deeply in debt and your credit is shot, don't be afraid to contact your creditors directly. Explain that you know you have fallen behind but would like to fulfill your obligation to them. Ask that they waive late fees, lower your interest rate, or otherwise make it possible for you to pay them back. It's important to note: This is not a good move unless your credit score has already taken a hit because some creditors will report your new payment arrangement to credit bureaus as "late" or "partial payment." 

Anyone can have a tough time keeping up with finances. If you're dealing with anxiety or depression, though, your monthly budget may be the last thing you want to think about. But I'll let you in on a little secret: In addition to being distracted by the numbers involved, working on a monthly budget reminds you that you have power. You have power to put together a budget that works for you, plan for a future you will enjoy, reclaim control of your life. 

You're not alone, and if you need help along the way, there are plenty of people who are there for you. If you need help getting out of debt and staying out of debt, Debtors Anonymous offers meetings, both in person and online.

If you're having suicidal thoughts, contact the National Suicide Prevention Lifeline at 1-800-273-8255 for help from a trained counselor. If you or a loved one are in immediate danger, call 911.

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