Understanding the Mental Health Impact of Debt


Anyone who has ever held debt can attest to the fact that it’s stressful. In fact, Capital One’s Mind Over Money survey showed that for 45% of Americans, managing debt levels is a significant source of future worry. And financial stress can lead to multiple issues for both your physical and mental health. Here’s what you need to know about the mental health impact of debt and what you can do to reduce the effects.

How debt impacts mental health

Virtually everything we do in life, from getting an education to raising a family, costs money. And it’s no wonder that taking on significant debt just to get by creates an immense amount of stress. In fact, the stress associated with debt can manifest in many ways, including:

  • Physical: Regular and intense financial stress can cause headaches, cardiovascular issues, and sleep disturbances. The Mind Over Money survey reported that 43% of survey respondents felt fatigued because of financial stress, and 42% indicated difficulty concentrating at work.
  • Mental: Stress has been shown to increase instances of anxiety and depression in some individuals. And while it may seem counterintuitive, the burden of debt can cause people to spend more in an effort to alleviate some of the negative feelings of depression or anxiety. Those who are depressed may also lack the motivation to keep track of finances or work toward paying down debt. The mental health impacts of stress can also affect job performance and make it difficult for someone to effectively communicate with others and complete their work.

With all of these physical and mental health impacts of debt, we need to constantly explore new ways to cope with financial stressors.

How to cope with financial stress

If you have debt and are feeling the weight of financial stress, you can take actions that may help:

  • Seek professional help: It’s important to loop in support as soon as you realize you’re experiencing mental health issues from debt. And there are professionals in the financial and mental health spaces ready to help. Consider setting a meeting with a financial planner or counseling service to help you create a debt management strategy. Or you may need to talk to a licensed therapist to discuss coping mechanisms for stress.
  • Create a debt repayment plan: A debt repayment strategy, like the debt snowball method or debt avalanche method, is an essential first step in eliminating your debt and lessening the mental health impacts. You’ll need to outline all of your existing debt, figure out minimum monthly payments, and break down what you can afford to spend on debt repayment. Then, make a commitment to stick to your strategy for a set period. That may mean you need to set up autopay and regular financial reviews to protect against future days where you may not feel like sticking to your plan.
  • Re-consider your spending habits: As you dig your way out of debt, it’s critical to not take on additional debt and get spending under control. That means you’ll need to examine and correct any spending habits that might be keeping you in debt. Consider making small changes like leaving online purchases in your cart overnight, removing saved credit cards from your web browser, or running purchases by a partner or close friend before you buy.

The bottom line

Holding onto debt can create an increase in financial stress and put a strain on your mental health. And the impacts like reduced focus, fatigue, and degraded job performance can cause future damage to your ability to repay debt. If you feel that debt may be negatively impacting your health, be sure to create a sustainable debt repayment plan and get professional help as needed.

Brooke Joly 

Brooke is a freelancer who focuses on the financial wellness and technology sectors. She has a passion for all things wellness and spends her days cooking up healthy recipes, running, and snuggling up with a good book and her fur babies.