financial stress essay

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Understanding financial stress

Effects of financial stress on your health, tip 1: talk to someone, tip 2: take inventory of your finances, tip 3: make a plan—and stick to it, tip 4: create a monthly budget, tip 5: manage your overall stress, coping with financial stress.

Feeling overwhelmed by money worries? Whatever your circumstances, there are ways to get through these tough economic times, ease stress and anxiety, and regain control of your finances.

If you’re worried about money, you’re not alone. Many of us, from all over the world and from all walks of life, are having to deal with financial stress and uncertainty at this difficult time. Whether your problems stem from a loss of work, escalating debt, unexpected expenses, or a combination of factors, financial worry is one of the most common stressors in modern life. Even before the global coronavirus pandemic and resulting economic fallout, an American Psychological Association (APA) study found that 72% of Americans feel stressed about money at least some of the time. The recent economic difficulties mean that even more of us are now facing financial struggles and hardship.

Like any source of overwhelming stress, financial problems can take a huge toll on your mental and physical health, your relationships, and your overall quality of life. Feeling beaten down by money worries can adversely impact your sleep, self-esteem, and energy levels. It can leave you feeling angry, ashamed, or fearful, fuel tension and arguments with those closest to you, exacerbate pain and mood swings, and even increase your risk of depression and anxiety. You may resort to unhealthy coping mechanisms, such as drinking, abusing drugs, or gambling to try to escape your worries. In the worst circumstances, financial stress can even prompt suicidal thoughts or actions. But no matter how hopeless your situation seems, there is help available. By tackling your money problems head on, you can find a way through the financial quagmire, ease your stress levels, and regain control of your finances—and your life.

While we all know deep down there are many more important things in life than money, when you’re struggling financially fear and stress can take over your world. It can damage your self-esteem, make you feel flawed, and fill you with a sense of despair. When financial stress becomes overwhelming, your mind, body, and social life can pay a heavy price.

[Read: Stress Symptoms, Signs, and Causes]

Financial stress can lead to:

Insomnia or other sleep difficulties. Nothing will keep you tossing and turning at night more than worrying about unpaid bills or a loss of income.

Weight gain (or loss). Stress can disrupt your appetite, causing you to anxiously overeat or skip meals to save money.

Depression. Living under the cloud of money problems can leave anyone feeling down, hopeless, and struggling to concentrate or make decisions. According to a study at the University of Nottingham in the UK, people who struggle with debt are more than twice as likely to suffer from depression .

Anxiety. Money can be a safety net; without it, you may feel vulnerable and anxious. And all the worrying about unpaid bills or loss of income can trigger anxiety symptoms such as a pounding heartbeat, sweating, shaking, or even panic attacks.

Relationship difficulties. Money is often cited as the most common issue couples argue about. Left unchecked, financial stress can make you angry and irritable, cause a loss of interest in sex, and wear away at the foundations of even the strongest relationships .

Social withdrawal. Financial worries can clip your wings and cause you to withdraw from friends, curtail your social life, and retreat into your shell—which will only make your stress worse.

Physical ailments such as headaches, gastrointestinal problems, diabetes, high blood pressure , and heart disease. In countries without free healthcare, money worries may also cause you to delay or skip seeing a doctor for fear of incurring additional expenses.

Unhealthy coping methods , such as drinking too much , abusing prescription or illegal drugs, gambling, or overeating. Money worries can even lead to self-harm or thoughts of suicide.

If you are feeling suicidal…

Your money problems may seem overwhelming and permanent right now. But with time, things will get better and your outlook will change, especially if you get help. There are many people who want to support you during this difficult time, so please reach out!

Read Are You Feeling Suicidal? , call 1-800-273-TALK in the U.S., or find a helpline in your country at IASP or Suicide.org .

The vicious cycle of poor financial health and poor mental health

A number of studies have demonstrated a cyclical link between financial worries and mental health problems such as depression, anxiety, and substance abuse.

Financial problems adversely impact your mental health. The stress of debt or other financial issues leaves you feeling depressed or anxious.

The decline in your mental health makes it harder to manage money. You may find it harder to concentrate or lack the energy to tackle a mounting pile of bills. Or you may lose income by taking time off work due to anxiety or depression.

These difficulties managing money lead to more financial problems and worsening mental health problems, and so on. You become trapped in a downward spiral of increasing money problems and declining mental health.

No matter how bleak your situation may seem at the moment, there is a way out. These strategies can help you to break the cycle, ease the stress of money problems, and find stability again.

When you’re facing money problems, there’s often a strong temptation to bottle everything up and try to go it alone. Many of us even consider money a taboo subject, one not to be discussed with others. You may feel awkward about disclosing the amount you earn or spend, feel shame about any financial mistakes you’ve made, or embarrassed about not being able to provide for your family. But bottling things up will only make your financial stress worse. In the current economy, where many people are struggling through no fault of their own, you’ll likely find others are far more understanding of your problems.

[Read: Social Support for Stress Relief]

Not only is talking face-to-face with a trusted friend or loved one a proven means of stress relief, but speaking openly about your financial problems can also help you put things in perspective. Keeping money worries to yourself only amplifies them until they seem insurmountable. The simple act of expressing your problems to someone you trust can make them seem far less intimidating.

• The person you talk to doesn’t have to be able to fix your problems or offer financial help.
• To ease your burden, they just need to be willing to talk things out without judging or criticizing.
• Be honest about what you’re going through and the emotions you’re experiencing.
• Talking over your worries can help you make sense of what you’re facing and your friend or loved one may even be able to come up with solutions that you hadn’t thought of alone.

Getting professional advice

Depending on where you live, there are a number of organizations that offer free counseling on dealing with financial problems, whether it’s managing debt, creating and sticking to a budget, finding work, communicating with creditors, or claiming benefits or financial assistance. (See the “Get more help” section below for links).

Whether or not you have a friend or loved one to talk to for emotional support, getting practical advice from an expert is always a good idea. Reaching out is not a sign of weakness and it doesn’t mean that you’ve somehow failed as a provider, parent, or spouse. It just means that you’re wise enough to recognize your financial situation is causing you stress and needs addressing.

Speak to a Licensed Therapist

BetterHelp is an online therapy service that matches you to licensed, accredited therapists who can help with depression, anxiety, relationships, and more. Take the assessment and get matched with a therapist in as little as 48 hours.

Opening up to your family

Financial problems tend to impact the whole family and enlisting your loved ones’ support can be crucial in turning things around. Even if you take pride in being self-sufficient, keep your family up to date on your financial situation and how they can help you save money.

Let them express their concerns. Your loved ones are probably worried—about both you and the financial stability of your family unit. Listen to their concerns and allow them to offer suggestions on how to resolve the financial problems you’re facing.

Make time for (inexpensive) family fun. Set aside regular time where you can enjoy each other’s company, let off steam, and forget about your financial worries. Walking in the park, playing games, or exercising together doesn’t have to cost money but it can help ease stress and keep the whole family positive.

If you’re struggling to make ends meet, you may think you can ease your stress by leaving bills unopened, avoiding phone calls from creditors, or ignoring bank and credit card statements. But denying the reality of your situation will only make things worse in the long run. The first step to devising a plan to solve your money problems is to detail your income, debt, and spending over the course of at least one month.

A number of websites and smartphone apps can help you keep track of your finances moving forward or you can work backwards by gathering receipts and examining bank and credit card statements. Obviously, some money difficulties are easier to solve than others, but by taking inventory of your finances you’ll have a much clearer idea of where you stand. And as daunting or painful as the process may seem, tracking your finances in detail can also help you start to regain a much-needed sense of control over your situation.

Include every source of income. In addition to any salary, include bonuses, benefits, alimony, child support, or any interest you receive.

Keep track of ALL your spending. When you’re faced with a pile of past-due bills and mounting debt, buying a coffee on the way to work may seem like an irrelevant expense. But seemingly small expenses can mount up over time, so keep track of everything. Understanding exactly how you spend your money is key to budgeting and devising a plan to address your financial problems.

List your debts. Include past-due bills, late fees, and list minimum payments due as well as any money you owe to family or friends.

Identify spending patterns and triggers. Does boredom or a stressful day at work cause you to head to the mall or start online shopping? When the kids are acting out, do you keep them quiet with expensive restaurant or takeout meals, rather than cooking at home ? Once you’re aware of your triggers you can find healthier ways of coping with them than resorting to “retail therapy”.

Look to make small changes. Spending money on things like a morning newspaper, lunchtime sandwich, or break-time cigarettes can add up to a significant monthly outlay. While it may be unreasonable to deny yourself every small pleasure, cutting down on nonessential spending and finding small ways to reduce your daily expenditure can really help to free up extra cash to pay off bills.

Eliminate impulse spending. Ever seen something online or in a shop window that you just had to buy? Impulsive buying can wreck your budget and max out your credit cards. To break the habit, try making a rule that you’ll wait a week before making any new purchase.

Go easy on yourself. As you review your debt and spending habits, remember that anyone can get into financial difficulties, especially at times like this . Don’t use this as an excuse to punish yourself for any perceived financial mistakes. Give yourself a break and focus on the aspects you can control as you look to move forward.

When your financial problems go beyond money

Sometimes, the causes for your financial difficulties may lie elsewhere. For example, money troubles can stem from problem gambling , fraud abuse , or a mental health issue, such as overspending during a bipolar manic episode .

To prevent the same financial problems recurring, it’s imperative you address both the underlying issue and the money troubles it’s created in your life.

Just as financial stress can be caused by a wide range of different money problems, so there are an equally wide range of possible solutions. The plan to address your specific problem could be to live within a tighter budget, lower the interest rate on your credit card debt, curb your online spending, seek government benefits, declare bankruptcy, or to find a new job or additional source of income.

If you’ve taken inventory of your financial situation, eliminated discretionary and impulse spending, and your outgoings still exceed your income, there are essentially three choices open to you: increase your income, lower your spending, or both. How you go about achieving any of those goals will require making a plan and following through on it.

• Identify your financial problem. Having taken inventory, you should be able to clearly identify the financial problem you’re facing. It may be that you have too much credit card debt, not enough income, or you overspend on unnecessary purchases when you feel stressed or anxious. Or perhaps, it’s a combination of problems. Make a separate plan for each one.
• Devise a solution. Brainstorm ideas with your family or a trusted friend, or consult a free financial counseling service. You may decide that talking to credit card companies and requesting a lower interest rate would help solve your problem. Or maybe you need to restructure your debt, eliminate your car payment, downsize your home, or talk to your boss about working overtime.
• Put your plan into action. Be specific about how you can follow through on the solutions you’ve devised. Perhaps that means cutting up credit cards, networking for a new job , registering at a local food bank, or selling things on eBay to pay off bills, for example.
• Monitor your progress. As we’ve all experienced recently, events that impact your financial health can happen quickly, so it’s important to regularly review your plan. Are some aspects working better than others? Do changes in interest rates, your monthly expenses, or your hourly wage, for example, mean you should revise your plan?
• Don’t get derailed by setbacks. We’re all human and no matter how tight your plan, you may stray from your goal or something unexpected could happen to derail you. Don’t beat yourself up, but get back on track as soon as possible.

The more detailed you can make your plan, the less powerless you’ll feel over your financial situation.

Whatever your plan to relieve your financial problems, setting and following a monthly budget can help keep you on track and regain your sense of control.

• Include everyday expenses in your budget, such as groceries and the cost of traveling to work, as well as monthly rent, mortgage, and utility bills.
• For items that you pay annually, such as car insurance or property tax, divide them by 12 so you can set aside money each month.
• If possible, try to factor in unexpected expenses, such as a medical co-pay or prescription charge if you fall sick, or the cost of home or car repairs.
• Set up automatic payments wherever possible to help ensure bills are paid on time and you avoid late payments and interest rate hikes.
• Prioritize your spending. If you’re having trouble covering your expenses each month, it can help to prioritize where your money goes first. For example, feeding and housing yourself and your family and keeping the power on are necessities. Paying your credit card isn’t—even if you’re behind on your payments and have debt collection companies harassing you.
• Keep looking for ways to save money. Most of us can find something in our budget that we can eliminate to help make ends meet. Regularly review your budget and look for ways to trim expenses.
• Enlist support from your spouse, partner, or kids. Make sure everyone in your household is pulling in the same direction and understands the financial goals you’re working towards.

Resolving financial problems tends to involve small steps that reap rewards over time. In the current economic climate, it’s unlikely your financial difficulties will disappear overnight. But that doesn’t mean you can’t take steps right away to ease your stress levels and find the energy and peace of mind to better deal with challenges in the long-term.

[Read: Stress Management]

Get moving. Even a little regular exercise can help ease stress, boost your mood and energy, and improve your self-esteem. Aim for 30 minutes on most days, broken up into short 10-minute bursts if that’s easier.

Practice a relaxation technique. Take time to relax each day and give your mind a break from the constant worrying. Meditating , breathing exercises, or other relaxation techniques are excellent ways to relieve stress and restore some balance to your life.

Don’t skimp on sleep. Feeling tired will only increase your stress and negative thought patterns. Finding ways to improve your sleep during this difficult time will help both your mind and body.

Boost your self-esteem. Rightly or wrongly, experiencing financial problems can cause you to feel like a failure and impact your self-esteem. But there are plenty of other, more rewarding ways to improve your sense of self-worth. Even when you’re struggling yourself, helping others by volunteering can increase your confidence and ease stress, anger, and anxiety—not to mention aid a worthy cause. Or you could spend time in nature, learn a new skill, or enjoy the company of people who appreciate you for who you are, rather than for your bank balance.

Eat healthy food. A healthy diet rich in fruit, vegetables, and omega-3s can help support your mood and improve your energy and outlook. And you don’t have to spend a fortune; there are ways to eat well on a budget .

Be grateful for the good things in your life. When you’re plagued by money worries and financial uncertainty , it’s easy to focus all your attention on the negatives. While you don’t have to ignore reality and pretend everything’s fine, you can take a moment to appreciate a close relationship, the beauty of a sunset, or the love of a pet, for example. It can give your mind a break from the constant worrying, help boost your mood, and ease your stress.

Find financial resources

Find  U.S. Government Services and Information  including  How to Get Out of Debt ,  Unemployment Help , and  Getting Help with Living Expenses . Or call 1-844-872-4681. (USA gov)

Get help with debt and housing problems from  Citizens Advice , contact a free debt service at  National Debtline  or  Stepchange , or seek free financial advice from the government’s  Money Advice Service .

Find  Government Services , get free  Financial Counselling  or call the  National Debt Helpline  at 1800 007 007.

Find government services and information for  Managing Debt  and  Benefits .

More Information

• Managing Job Loss and Financial Stress - Helping yourself and your family cope with stress and financial worries following job loss. (University of Hawaii)
• Managing Debt - Steps you can take to deal with debt. (Federal Trade Commission)
• Managing money and budgeting - Tips for creating a family budget. (raisingchildren.net.au)
• Make a Budget - Simple worksheet to help you create a budget. (Federal Trade Commission)
• Money Stress Weighing on Americans’ Health - Details of the 2015 Stress in America: Paying with Our Health survey from the American Psychological Association. (APA)
• Trauma- and Stressor-Related Disorders. (2013). In Diagnostic and Statistical Manual of Mental Disorders . American Psychiatric Association. Link
• Inc, Gallup. “The U.S. Healthcare Cost Crisis.” Gallup.com. Accessed November 16, 2021. Link
• Anderson, Norman B, Cynthia D Belar, Steven J Breckler, Katherine C Nordal, David W Ballard, Lynn F Bufka, Luana Bossolo, Sophie Bethune, Angel Brownawell, and Katelynn Wiggins. Stress in America: Paying with our Health. “AMERICAN PSYCHOLOGICAL ASSOCIATION,” n.d., 23. Link
• Ramsey Solutions. “Money, Marriage, and Communication.” Accessed November 16, 2021. Link
• “At What Costs? Student Loan Debt, Debt Stress, and Racially/Ethnically Diverse College Students’ Perceived Health. – PsycNET.” Accessed November 16, 2021. Link
• Richardson, Thomas, Peter Elliott, and Ronald Roberts. “The Relationship between Personal Unsecured Debt and Mental and Physical Health: A Systematic Review and Meta-Analysis.” Clinical Psychology Review 33, no. 8 (December 1, 2013): 1148–62. Link
• Warth, Jacqueline, Marie-Therese Puth, Judith Tillmann, Johannes Porz, Ulrike Zier, Klaus Weckbecker, and Eva Münster. “Over-Indebtedness and Its Association with Sleep and Sleep Medication Use.” BMC Public Health 19, no. 1 (July 17, 2019): 957. Link
• Saleh, Dalia, Nathalie Camart, Fouad Sbeira, and Lucia Romo. “Can We Learn to Manage Stress? A Randomized Controlled Trial Carried out on University Students.” PLOS ONE 13, no. 9 (September 5, 2018): e0200997. Link
• “Stress, Social Support, and the Buffering Hypothesis. – PsycNET.” Accessed November 15, 2021. Link
• Salmon, P. “Effects of Physical Exercise on Anxiety, Depression, and Sensitivity to Stress: A Unifying Theory.” Clinical Psychology Review 21, no. 1 (February 2001): 33–61. Link
• Toussaint, Loren, Quang Anh Nguyen, Claire Roettger, Kiara Dixon, Martin Offenbächer, Niko Kohls, Jameson Hirsch, and Fuschia Sirois. “Effectiveness of Progressive Muscle Relaxation, Deep Breathing, and Guided Imagery in Promoting Psychological and Physiological States of Relaxation.” Evidence-Based Complementary and Alternative Medicine 2021 (July 3, 2021): e5924040. Link

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How financial stress can affect your mental health and 5 things that can help

Associate Professor, School of Psychological Science, and Director, Emotional Wellbeing Lab, The University of Western Australia

Disclosure statement

Kristin Naragon-Gainey receives funding from the National Institutes of Health.

University of Western Australia provides funding as a founding partner of The Conversation AU.

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Financial stress is affecting us in many different ways. Some people are struggling to pay bills, feed the family, or maintain a place to live. Others are meeting their basic needs but are dipping into their savings for extras.

Financial stress is increasing and, understandably, is causing some distress. In recent months, Lifeline has seen a rise in the number of calls about financial difficulties.

But understanding and finding ways to reduce our financial stress – and its emotional impact on us – can help make this challenging time a bit easier.

Read more: What's taking the biggest toll on our mental health? Disconnection, financial stress and long waits for care

What is financial stress?

If you’re finding it difficult to meet your current expenses or are worried about your current or future finances, you’re under financial stress . Like other types of stress, financial stress has two components:

objective financial difficulty, where you don’t have enough funds to cover necessary expenses or debts

subjective perceptions about your current or future finances, leading to worry and distress.

These two are related. But someone can have trouble meeting their expenses, view this as acceptable, and not be overly worried. Alternatively, someone may be reasonably financially secure but still feel quite stressed about their finances.

Read more: Stress is a health hazard. But a supportive circle of friends can help undo the damaging effects on your DNA

Why are we feeling it?

There is a broad range of factors that can influence your current level of financial stress. These include contextual and personal ones.

Contextual factors are societal-level influences on the current financial landscape. These include rates of economic growth, market performance, governmental and political policy, and distribution of wealth. These factors may vary across cultures and countries.

Personal factors contributing to stress are unique to each person. For example, demographic characteristics such as age, gender, education and ethnic group may influence someone’s access to financial resources.

Other personal factors that can affect financial stress are financial literacy and practices, personality traits that influence behaviour and perceptions, and major life events with financial implications (such as marriage, having a child, or retiring).

Read more: Centrelink debt debacle is bad policy for mental health

The health impacts can be severe

High levels of financial stress can impact people’s wellbeing, raising levels of psychological distress, anxiety and depression.

A review found clear evidence for a link between financial stress and depression, and that the risk for depression was greatest for people on low incomes.

A large survey of adults in the United States also found that greater financial worries were associated with more psychological distress. This was especially the case for people who were unmarried, unemployed, had lower income levels and who were renters.

So people who are more vulnerable financially – in an objective sense – are also most likely to experience negative psychological effects from financial stress.

However, the perception of your financial situation matters here too. In one study of older adults, including Australians, it was not just someone’s financial situation that was linked to their wellbeing, but also how satisfied people were with their wealth.

Severe financial stressors, such as being forced to sell your home if unable to meet mortgage payments, can affect both psychological and physical health.

Read more: 'We lost the house, we lost everything': what dealing with financial stress looks like

What can I do about it?

While we can’t change the broader financial landscape or some aspects of our financial situation, there are some simple ways to help reduce financial stress and its impacts.

1. Take small steps

Try to identify elements of your finances you can improve and act on some of them, even if they are small steps. This may include creating and following a budget, cutting some extra costs, applying for available financial assistance, getting quotes for more affordable utilities or insurance, or contemplating a career change. Even little changes can improve your financial state over time. Taking action in a difficult situation can improve wellbeing by giving you a greater sense of agency.

2. Check your take on the situation

Examine your perspective. Are you often seeing the negative aspects of your situation but ignoring the positive ones? Are you worrying a lot about very unlikely catastrophes far off in the future? It’s worth checking whether your perceptions about your financial situation are accurate and balanced.

3. Don’t be too hard on yourself

Your financial state does not reflect your value as a person, and over-identifying with your financial status can lead to further stress. Financial difficulties are the result of many factors, only some of which are under your control. Reminding yourself that your finances do not define you as a person can reduce feelings of sadness, shame or guilt.

4. Take care of yourself

It’s draining dealing with ongoing financial stress. So focus on self-care and coping strategies that have helped you with past stressors. This may mean taking some time out to relax, deep breathing or meditation, talking with others and doing some things for fun. Giving yourself permission to take this time can improve your mood, perspective and wellbeing.

5. Ask for help

If you are struggling financially or psychologically, seek help. This may take the form of financial advice or assistance to reduce financial difficulties. If you notice yourself feeling persistently down, anxious, or hopeless, reach out to friends or family and get help from a mental health professional.

If this article has raised issues for you, or if you’re concerned about someone you know, call Lifeline on 13 11 14.

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Financial Stress: How to Cope

Elizabeth Scott, PhD is an author, workshop leader, educator, and award-winning blogger on stress management, positive psychology, relationships, and emotional wellbeing.

Amy Morin, LCSW, is a psychotherapist and international bestselling author. Her books, including "13 Things Mentally Strong People Don't Do," have been translated into more than 40 languages. Her TEDx talk,  "The Secret of Becoming Mentally Strong," is one of the most viewed talks of all time.

Verywell / Laura Porter

Understanding Financial Stress

Impact on your health, tips for coping, overcoming financial stress.

If you're worried about money, you're not alone. Money is a common source of stress for American adults. In fact, according to the American Psychological Association (APA), 72% of adults report feeling stressed about money, whether it's worrying about paying rent or feeling bogged down by debt. This is pretty significant given financial stress is linked to so many health issues.

Press Play for Advice On Dealing With Money Issues

This episode of The Verywell Mind Podcast shares what to do when financial stress is impacting your mental health. Click below to listen now.

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Financial stress is emotional tension that is specifically related to money. Anyone can experience financial stress, but financial stress may occur more often in households with low incomes. Stress can result from not making enough money to meet your needs such as paying rent, paying the bills, and buying groceries.

People with less income might experience additional stress due to their jobs. Their jobs might lack flexibility when it comes to taking time off. They might work in unsafe environments , but they are afraid to leave because they won't be able to support themselves financially while they look for another job.

People with low incomes may not have access to resources to manage their financial stress, either, such as health insurance to receive mental health treatment .

Most people stress about money from time to time. But financial stress can become problematic if it disrupts your everyday life. For instance, you might find you can't focus on or enjoy other parts of your life because your money-related stress is causing you to worry so much.

If your financial stress is severe, you will experience negative effects on your mental health and potentially even your physical health. Financial stress can lead to anxiety , depression , behavioral changes like withdrawing from social activities, or physical symptoms like stomachaches or headaches.

If you experience any side effects related to your financial stress, be sure to talk to a healthcare professional.

Although any stress can take a toll on your health, stress related to financial issues can be especially toxic. Financial stress can lead to:

• Delayed health care : With less money in the budget, people who are already under financial stress tend to cut corners in areas they shouldn't, like health care. According to Gallup's annual Health and Healthcare poll , 29% of American adults held off seeking medical care in 2018 because of cost. Though this tactic may seem like a good way to keep costs down, delaying medical care can actually lead to worse health outcomes and higher costs, both of which can lead to more stress.
• Poor mental health : In many instances, the link between mental and financial health is cyclical—poor financial health can lead to poor mental health, which leads to increasingly poor financial health, and so on. For years, studies have shown that people in debt have higher rates of mental health issues like depression and anxiety than those who are debt-free.
• Poor physical health : Ongoing stress about money has been linked to headaches, stomachaches, migraines, heart disease, diabetes, sleep problems, and more. When we are constantly stressed, our bodies don't have time to recover. Our immune systems are left susceptible to illnesses—this includes colds and viruses. If you already have a chronic medical condition, you may experience flare-ups of your symptoms.
• Unhealthy coping behaviors : Financial stress can cause you to engage in a variety of unhealthy behaviors, from overeating to alcohol and drug use . According to an APA survey published in 2014, 33% of Americans reported eating unhealthy foods or eating too much to deal with stress.

Learning to cope with financial stress and effectively manage your financial situation can help you feel more in control of your life, reduce your stress, and build a more secure future. Try some of the following tips to get started:

• Create extra sources of income . If you're feeling stressed about finances, you likely already feel you need more money in your budget. But knowing how to increase your financial holdings without creating significant stress for yourself can be tricky, too. Thankfully, there are several ways to boost your income and relieve your stress.
• Declutter your budget . Since life is rarely constant, regular budget checkups are essential to improving your financial health. Take control of your finances by setting aside some time to schedule, organize, and declutter all of the money coming in and out of your bank account. The more control you have, the less stress you will feel.
• Don't forget general stress management . As you work on improving your financial situation, you can reduce stress by practicing stress-reducing techniques and making other changes to create a low-stress lifestyle. Eating a nutritious diet , getting enough sleep every night, and doing some form of physical exercise are linked with reducing stress levels. You can also try mindfulness techniques like deep breathing and yoga to ease any anxiety.
• Understand the debt cycle . Understanding debt is the first step to getting yourself out of it. One study found that you may be able to pay off your debt more quickly by paying off one account at a time and by starting with your lowest debts first. Do your research and pay attention to interests rates. It's advisable to first pay off the debt that has the largest interest rate to avoid paying higher costs over time.

It might be impossible to fix your financial problems overnight, but you can start planning for success right away. Remember, the stress you experience isn't only a result of your financial situation—you can ease some of your anxiety by taking care of yourself.

Take Stock of Your Finances

Make a list of the financial struggles that most concern you. Take baby steps to tackle each problem one by one so you don't overwhelm yourself.

Write down what you can start doing today or this week that can get you on track to financial stability. Try making a budget plan, only spending on necessities for a week or a month.

You can also try tracking your spending. Keep a daily or weekly list of what you spend money on, and see where you can spend less.

You might seek professional assistance to help you with your finances. For instance, you can research student loan forgiveness programs and income-based repayment programs that may create more manageable payments for your debt.

If you can't pay your bills, try calling your bank, utility company, or credit card company to explain your situation—oftentimes, they can set up a payment plan that works for you.

Reach Out for Support

Try reaching out for support from your family and friends to help reduce stress. You might try attending a support group for people who are struggling with financial stress, too. Remember, you're not alone. You can develop a system of trusted friends and family to help you stay optimistic about your finances.

In some cases, you may even choose to seek professional help from a mental health care provider. All options for support are valid.

Engage in Self-Care

Maintaining a healthy lifestyle is important to help you manage stress. Try to exercise for 30 minutes a day—move your body in whatever way feels good for you. This improves your mental and physical health. Walking is a great way to get a workout in and relieve stress at the same time.

Make time to relax . Though your financial stress can overwhelm you, remember that there are resources to help you manage your stress and your finances. Take time to unwind, meditate , enjoy a fun activity , and connect with others.

Links and Resources

• Ask a Therapist: How Do I Tackle my Debt and My Anxiety
• How Your Money Affects Your Mental Health
• 4 Simple Ways to Relieve Money Stress

Tran AGTT, Mintert JS, Llamas JD, Lam CK. At what costs? Student loan debt, debt stress, and racially/ethnically diverse college students’ perceived health . Cultur Divers Ethnic Minor Psychol . 2018;24(4):459-469. doi:10.1037/cdp0000207

American Psychological Association. Speaking of psychology: The stress of money .

Kraft AD, Quimbo SA, Solon O, Shimkhada R, Florentino J, Peabody JW. The health and cost impact of care delay and the experimental impact of insurance on reducing delays . J Pediatr . 2009;155(2):281-285.e1. doi:10.1016/j.jpeds.2009.02.035

Richardson T, Elliott P, Roberts R. The relationship between personal unsecured debt and mental and physical health: A systematic review and meta-analysis . Clinical Psychology Review. 2013;33(8):1148-1162. doi:10.1016/j.cpr.2013.08.009

Warth J, Puth M-T, Tillmann J, et al. Over-indebtedness and its association with sleep and sleep medication use . BMC Public Health . 2019;19(1):957. doi:10.1186/s12889-019-7231-1

Stress in America: Paying With Our Health . American Psychological Association..

Briguglio M, Vitale JA, Galentino R, et al. Healthy eating, physical activity, and sleep hygiene (HEPAS) as the winning triad for sustaining physical and mental health in patients at risk for or with neuropsychiatric disorders: Considerations for clinical practice .  Neuropsychiatr Dis Treat . 2020;16:55-70. doi:10.2147/NDT.S229206

Zaccaro A, Piarulli A, Laurino M, et al. How breath-control can change your life: A systematic review on psycho-physiological correlates of slow breathing .  Front Hum Neurosci . 2018;12:353. doi:10.3389/fnhum.2018.00353

Harvard Business Review. Research: The best strategy for paying off credit card debt .

American Psychological Association. Dealing with financial stress .

Han A, Kim J, Kim J. A study of leisure walking intensity levels on mental health and health perception of older adults . Gerontology and Geriatric Medicine. 2021. doi:10.1177/2333721421999316

American Psychological Association. Stress in America: Paying with our health .

Richardson T, Elliott P, Roberts R. The relationship between personal unsecured debt and mental and physical health: a systematic review and meta-analysis . Clin Psychol Rev . 2013;33(8):1148-1162. doi:10.1016/j.cpr.2013.08.009

Saad L. Delaying care a healthcare strategy for three in 10 Americans .

By Elizabeth Scott, PhD Elizabeth Scott, PhD is an author, workshop leader, educator, and award-winning blogger on stress management, positive psychology, relationships, and emotional wellbeing.

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How To Deal With Financial Stress

Things that cause financial stress, effects of financial stress, get more financial tips, you're not alone.

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Financial stress is extremely common. According to an American Psychological Association (APA) study, even before the pandemic, over 70% of Americans reported concern about money. And, while a majority of Americans express concerns about their financial health,  BIPOC Americans face disproportionately more financial challenges than their white counterparts. Because financial health is so deeply tied to our ability to meet core survival needs, worrying about money can have a significant impact on our mental and emotional wellbeing. Read on for more about the causes of financial stress and how you can take action to minimize and hopefully eliminate it.

There are many causes of financial stress. Sometimes it’s likely to be short term — such as when we lose a job or have unexpected but fleeting expenses. In these cases, a new job and some attentive budgeting can relieve the concern. Sometimes the stress is more chronic and rooted in deep structural inequities — such as the growing number of individuals and families who struggle to make ends meet even while working.

No matter what causes it, the stress of not knowing whether we can meet financial obligations, for ourselves and sometimes for others, can really take a toll on our mental health. And while money troubles or financial stress affects everyone, it may be especially challenging for young people who have less experience than older populations with managing finances. Although, it should be noted that often older people don’t have the physical, mental, or experiential capacity to work, while healthy young people typically have years of possible training and new skills acquisition ahead of them to help turn the tide.

Financial stress and mental health challenges can be mutually reinforcing. Like all stress, if left unaddressed, it can snowball into something bigger. Financial stress can damage mental health, and in turn, negative mental health can make it more challenging to manage our finances. When we’re under a lot of financial stress, we may experience emotional or physical symptoms like:

• Damage to self-esteem, shame, anger, fear, or despair
• Trouble sleeping, low energy or change in weight
• Trouble maintaining relationships or keeping an active social life
• Substance misuse
• Suicidal thoughts and behaviors

Suicide is an extreme response to financial stress and is always the result of a multifaceted array of factors, but financial stress is sometimes a contributor. More common effects of financial stress are depression and anxiety — especially in cases where there’s no clear solution to financial challenges. The most important thing is to identify the source of the stress and to move into problem solving mode whenever possible. Wanting to avoid the stress by avoiding the issue is understandable, but rarely works to actually alleviate the issue. And, in the case of financial stress, avoidance can make the situation much worse. Instead, it’s much more helpful to move into active problem solving mode and use whatever resources you have available. Here are some tips on how to get started:

Stay Connected to Friends and Family

When we’re struggling financially it’s tempting to want to pull away and minimize the challenge. Not having money to spend on socializing and/or feeling shame or embarrassment about our situation can make even admitting that we need help challenging. Our best resource, however,  is other people. Sometimes, just having others around to provide emotional support can help us feel less alone. In other situations, friends and family might be able to help provide tactical and practical real-world advice or help you problem-solve, especially if they’ve been in a similar situation before. Remember that financial stress is common, so it’s highly likely that someone in your circle has experienced a similar situation before and will have ideas or at least short term assistance to offer.

Get Professional Financial Advice or Support

When you’re faced with chronic or structural challenges, it’s useful to know that there are organizations that provide free financial advice and other services. One that we know is the Foundation for Financial Planning . You can reach out to your personal bank for help as well. Many banks offer free counseling and financial advice; they’re a good resource because it’s in their best interest to help you. Of course, books are another great resource, and most libraries have a ton of information on financial planning. You can also Google “best books for financial advice” and see what comes up. And, as always, if you really need assistance immediately, there are government programs and benefits available. See if you qualify .

Track and Manage Your Finances

One of the best tools for reducing spending, and knowing where you spend money is by tracking and budgeting where you money goes. It’s always surprising where we spend money  and most people don’t realize how much they spend on certain things. Here are a few ways to track and manage your finances:

• Download a financial tracking app, open up a spreadsheet, or just keep track on your phone. Whatever makes sense for you.
• Set a spending budget and stick with it. You can do this by setting a daily, weekly, or monthly budget. Some people like to break a budget down into categories while others might prefer having an overall monthly budget to stay within. Play around and see what works best for you. Be ambitious in cutting your spending, but also be realistic. Remember, change won’t happen overnight but if you stick with it, you will see improvements over time.
• If you need to save or make monthly payments, you can often arrange to have funds automatically debited from your account and moved into a savings account or applied to a bill as soon as you’re paid. Not including these automatic and immediate debits in your monthly budgeting for other expenses can make it much easier to save and pay bills.
• Set up a system or structure that makes it easy for you to stick to your budget, and keep in mind that there’s no one-size-fits-all. For some, it may be easier to track spending and stick to a budget by using a debit card and checking online statements regularly. For others, it may be easier to limit yourself to just using cash.
• Identify triggers for impulse purchases. You’d be surprised how easy it is to pick up small things you don’t need, so ensuring you’ve budgeted for it, and tracked it will really help curtail that unnecessary spending.
• Recognize the impact of small changes. Deciding to set a new spending budget can be intimidating, especially when you only think about it in terms of making big changes. But small changes, like removing a single online subscription, can really add up over time.

Managing The Stress of the Financial Crises

How to Deal With Money Anxiety by Building Financial Wellness

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A qualitative examination of the impacts of financial stress on college students’ well-being: Insights from a large, private institution

This qualitative research aims to provide deeper insight into college students’ experiences by examining the impact of financial stress on their well-being.

Four focus groups were conducted at a large, private, urban university in the United States over the course of 1 month, each lasting approximately 1 h. Facilitators used a structured moderator guide to maintain consistency. Four focus groups were conducted and a total of 30 students participated. Students were primarily Asian (66.7%) and White (30.0%), and a majority were female (86.7%). Student participants were 43.3% undergraduate and 56.6% graduate. Transcripts were analyzed in Atlas.ti 8 software using line-by-line open coding guided by the principles of qualitative content analysis. An inductive approach was utilized to code the data. Emergent categories and concepts were then organized hierarchically into themes and subthemes.

Two overarching themes emerged from the focus group analysis. In these students’ perspectives, financial stress impedes their ability to succeed academically. Another major theme is the impact of finances on students’ social lives. Students experiencing financial stress find it challenging to navigate relationships with wealthier peers, often leading to feelings of isolation and embarrassment.

Conclusion:

Given the reported negative impact on students’ well-being, further research is needed to determine methods for mitigating financial stress.

Introduction

The cost of attending college in the United States has increased by 31% over the last decade, demonstrating a substantial shift in the financial commitment associated with pursuing higher education. 1 Research suggests this rising cost may be cause for concern. According to the 2018 Healthy Minds Survey, US college students report their current financial situation as “stressful” (35%), “often stressful” (24%), “rarely stressful” (20%), “always stressful” (14%), and “never stressful” (7%). 2 Similarly, data from the National College Health Assessment 3 demonstrates that 75% of US students experienced moderate to high financial distress in the past 12 months.

There are many potential sources of financial stress for college students. A large number of students report being concerned about the amount of student loans they have taken out and their ability to repay these post graduation. 4 In addition to loans related to the cost of tuition and class supplies, many students also require cost-of-living loans because of their inability to work full time while pursuing an education. 5 Furthermore, many students are financially independent for the first time, resulting in an especially stressful time for them. 6 In fact, many university students struggle to meet basic needs while in school. Data collected by the Hope Center 7 on students at over 100 American colleges show that almost half of the students (45%) experienced food insecurity in the past 30 days and 17% experienced homelessness in the past year.

Research has demonstrated a link between financial stress and poorer mental health outcomes; for example, worry over finances has been correlated with mental illnesses like depression and anxiety. 8 , 9 Similar studies have also reported an association between financial stress and general poor mental health. 10 – 12 A literature review published by McCloud and Bann 13 purported students’ perceived financial stress is correlated with negative mental health outcomes. However, the link between financial stress and debt was not substantiated, suggesting perceived stress may be a more influential factor in mental health than the amount of debt accrued. 12 , 14 As McCloud and Bann 13 report, much of the existing literature utilizes cross-sectional study design, making it difficult to determine longitudinal impact of financial stress on mental health outcomes and demonstrating the need for more research to determine the relationship between these two factors.

In addition to challenges in students’ mental health, there is a link between financial stress and academic success, especially when it comes to student attrition. Studies have shown that students who experience higher levels of financial stress are more likely to discontinue their schooling than more financially secure peers. 15 , 16 In addition, data from the National College Health Assessment indicate that almost a quarter of students (24%) reported that finances negatively impacted performance in a class. 3 This may be due to having to work more hours to pay bills or for living expenses, which subsequently reduces the number of hours that can be committed to studying. 17 This could also be attributable to higher levels of stress or anxiety having a direct effect on academic performance, among other factors. 18

Given the importance of academics and well-being for college students, and the high prevalence of student financial stress, the goal of this study is to better understand the factors driving relationships between these constructs. Recent explorations of college student financial stress have provided valuable insights on this topic, including the impacts of financial stress on academic performance and social functioning. 11 , 16 , 19 However, a majority of this emerging research uses quantitative methodology, which cannot provide the nuance of qualitative research. There have been qualitative studies on university student stressors in general, 20 or on the impact of financial stress on more specific outcomes, but to our knowledge, there have not been qualitative data published on the richness of student experiences of financial stress and its relationship to well-being. Therefore, the aim of this research was to better understand the mechanisms, using a qualitative methodology, for the impact of financial stress on college student academic success and well-being. The hope is that this research can be used to uncover findings that university administrators can utilize to better support students. Although there is some variation in the terminology referring to the subjective experience of feeling distressed, worried, or concerned about one’s financial situation, 11 – 13 we refer to this broadly as “financial stress.”

Participants

A qualitative approach was utilized to gain a deeper understanding into the lived experiences of students with financial stress. Four focus groups were conducted at a large, private, urban university in the United States in September 2019. The student body, comprising 50,000 students, was approximately half undergraduate and half graduate students. About one quarter were international students, primarily from countries in Asia. Public data on family income was not available; however, the university reported that 22% of incoming first-year students were the first in their family to attend college and 18% of undergraduate students were recipients of Pell Grant US federal aid provided to low-income students. 21 Purposive sampling was used to recruit student participants who met the following criteria. First, participants had to be currently enrolled in an on-campus academic program at the university. Second, participants had to qualify by completing an online screener, which demonstrated an experience of current financial stress. This was measured using the question, “How would you describe your financial situation right now?” This one-item measure was chosen to align with national surveys investigating college student well-being. 2 , 22 Participants answered on a 5-point Likert-type scale from “never stressful” to “always stressful.” Those who selected “sometimes stressful,” “often stressful,” and “always stressful” (115 students) were invited to participate in one of the focus group sessions. Those who selected “never stressful” or “rarely stressful” (21 students) were not invited to participate.

Participants were recruited through distribution of a digital flyer in campus newsletters and student-facing social media accounts. Participants were also recruited from an email database of students who had previously indicated interest in focus group participation. Participants were offered a US$15 gift card upon completion of the focus group. This study was approved by the Institutional Review Board at this university. Participants were given information about the study and written informed consent was obtained via an online form prior to the focus groups.

Focus groups

Focus groups were facilitated by student Community Health Organizers. The role of the Community Health Organizers is to gather student input via peer focus groups and work closely with cross-departmental committees to shape programming, services, and policies centered on well-being. As student researchers, those who hold the Community Health Organizers roles are particularly invested in well-being and each brings their individual biases as a researcher. The Community Health Organizers completed a 2-day intensive training, which included instruction on qualitative data collection and analysis. Students learned how to organize and conduct focus groups, including recruitment strategies, techniques for facilitating diverse perspectives, and methods for recognizing personal bias in coding and analysis. The fall 2019 cohort of Community Health Organizers comprised seven students, both undergraduate and graduate, and included both male and female students.

The focus groups took place in various buildings on campus over the course of 1 month, each lasting approximately 1 h. At each focus group, two Community Health Organizers were present. One Community Health Organizer served as the primary facilitator and one served as note-taker. There was no one else present during the focus groups besides the participants and Community Health Organizers. Focus group participants did not have any prior relationship with the Community Health Organizers. To maintain consistency, students used a structured moderator guide to facilitate the focus groups ( Table 1 ). The moderator guide was tested internally with the research team prior to the focus groups. Participant demographics were also collected. The recommended sample size for focus group discussions is 5–8 people per group and a minimum of four groups to achieve code saturation. 23 The research team held four focus groups to meet this recommendation.

Focus group moderator guide key questions.

All focus groups were audio recorded and files were transcribed verbatim. Transcripts were not returned to participants for comment or correction. Transcripts were analyzed in Atlas.ti 8 software using line-by-line open coding guided by the principles of qualitative content analysis. An inductive approach was utilized to code the data. Each transcript was independently coded by two raters. After each round of independent coding, raters compared codes to discuss discrepancies and reach consensus. Emergent categories and concepts were then organized hierarchically into themes and subthemes. 24 The final coding scheme and all transcripts were reviewed by the investigative team to ensure that they accurately captured the topics that were discussed in the focus groups. Participants did not provide feedback on the findings.

A total of 30 students participated in four focus groups (5–9 students per group). A total of 21 additional students met the eligibility criteria and signed up to attend a focus group, but did not show up on the day of the focus groups. Reasons for dropping out are unknown. Of the 30 participants, students were primarily Asian (66.7%) and White (30.0%), and a majority were female (86.7%; Table 2 ). Student participants were 43.3% undergraduate and 56.6% graduate. Participants were about evenly split into domestic (56.7%) and international (43.3%) students. Similarly, about half (46.7%) were first-generation students and 40.0% of students were receiving financial aid. Participants’ annual family income varied, with 16.7% of participants reporting less than US$25,000 and 13.3% of participants reporting greater than US$100,000 annual family income. To protect participants’ anonymity, information on academic program, age, disability status, grade point average (GPA), and employment status was not gathered.

Demographic characteristics of student focus group participants.

Two overarching themes emerged from the focus group analysis. First, students felt the effects of financial stress play out significantly in their academic lives. In these students’ perspectives, their financial status impedes their ability to succeed academically. Another major theme is the impact of finances on students’ social lives. As subsequent data show, students experiencing financial stress find it challenging to navigate relationships with wealthier peers, often leading to feelings of isolation and embarrassment.

Academic consequences

Inability to purchase textbooks.

To explore academic challenges associated with financial stress, facilitators asked participants, “When it’s hard to pay for things you need or want, how does that affect you academically?” The high cost of textbooks and other online materials was named frequently as a stressor for students. Course materials contributed to “constant worry” about finances, particularly at the beginning of each semester. One student reported avoiding certain classes because they could not afford the required materials. Others feared if they were unable to pay for course materials, their grades would suffer. It was difficult for many students to decide whether to purchase expensive textbooks or pay for other necessary expenses like rent or even “very basic amenities.” When faced with this challenging decision, most students opted to pay for necessities. Without access to course materials, students developed resourceful methods for staying afloat. To avoid purchasing expensive textbooks, one student asked classmates to borrow books so they could take photos of the pages. Another student mentioned purchasing outdated versions of textbooks. While some of the content was similar, there were instances where the old editions did not suffice. The student gave an example where they could not complete practice problems the professor assigned, causing them to fall behind in class.

Prioritizing work over studies

Another common theme among students was the difficult decision to prioritize on- or off-campus jobs over their academics. Students often mentioned how their studies suffered because they had to continue working to earn money. One participant described the challenge of balancing work and academics during exams. The student wanted to take time off to focus on their studies, but had to work instead to maintain basic living expenses. Another expressed a similar sentiment, adding they felt jealous of other students who did not have to work, saying:

. . . you get things wrong or maybe you didn’t so well on this test, but you’re like, “Oh, I had to work a lot last week.” And then you feel bad, some of these other kids in my class who clearly have a lot of money, you know that they didn’t have to work and they could just spend time studying, and that’s also something that I think has hurt me and has hurt my grades. [Undergraduate]

Stress as a distraction from academics

Many discussed how constant stress over finances distracted from their academics. Students mentioned the inability to focus on their studies when their thoughts are constantly preoccupied with expenses. One student explained,

. . . in the back of my mind it’s like, “Oh this payment is coming,” or like, “I have to pay this,” or like, “This is the amount I have in my bank account, oh my god.” These thoughts are constantly in my head, and they prevent me from fully focusing at what’s in front of me and doing as well as, the best I can in my classes. [Undergraduate]

Students perceived this stressor as unique to those experiencing financial stress. They often characterized their constant worry as “unfair” when comparing their situation to students of more means.

Unable to further career goals

In all focus groups, students cited their jobs as an impediment to furthering their career goals. Students felt their jobs were necessary to earn money, but prevented them from pursuing other opportunities. Many identified their jobs as “just something to pay the bills” and “not a value add for my career.” Students expressed desire to take on extracurricular projects or jobs that would advance career goals, as opposed to working solely to earn money.

Many students reported they could not afford to participate in career-enhancing extracurriculars. These extracurriculars were characterized as having “amazing opportunities” for gaining valuable experience outside the classroom. However, many extracurriculars at the university include membership fees or event expenses for which these students could not pay. For example, one student mentioned their disappointment in missing a service trip, which included travel and mentorship by university staff. Two students perceived financial stress as a barrier to networking opportunities, with one expressing dismay at the expensive dues of a professional fraternity. Another described the university as “all about connections.” Wealthy students were seen as already having connections, thus more easily transitioning to a fulfilling job after graduation. Students who were “on the poorer end” had to work even harder to establish professional contacts.

Social consequences

In addition to academic strains, students felt the effects of financial stress strongly in their social lives, which further impacted their sense of belonging and well-being.

Social comparison

Students frequently compared financial status with those of their peers, finding they had to work harder than other students to achieve the same goals. Many made statements like “they’re able to do things easily” and “everybody else has an easier time,” perceiving other students to be at an advantage due to their socioeconomic status. A few students explicitly mentioned the school’s reputation as a school for the wealthy and privileged, describing the university as “for really rich people and legacies” and “where all the wealthy people are.” Constant social comparison to wealthier peers caused these students to feel ostracized and not fully part of the university community.

Class separation and its consequences

As a result of perpetual social comparison, students felt a clear class separation between the “haves” and the “have nots.” In all four focus groups, participants mentioned a clear social divide at the school based on financial status. One student said,

I feel like all the really, really rich kids tend to just migrate towards each other, and there is this circle, or this little bubble of wealth, and it’s kind of impossible to penetrate into it, unless you can afford to do spring break in Cabo. [Undergraduate]

Due to the clear distinction in financial status, many students felt excluded from certain social experiences. Students mentioned their inability to participate in informal social gatherings, like going on trips with friends. These students were typically invited to participate by their friends, but had to decline because they could not afford to go. Some students were upfront with their friends, citing their inability to pay. However, many felt uncomfortable discussing their lack of finances and fabricated other excuses.

In addition to informal gatherings, others cited exclusion from “official” university social experiences, such as student organizations, Greek life, and football games. Students wanted to participate, but could not justify the associated costs. One student poignantly described the feeling of missing out on these experiences:

. . . the social factor is such a big part of what makes the [school] experience, so I feel like I really missed out on a big portion of that, so if I graduate, and I were to talk to another [school] graduate, I feel like we wouldn't be able to connect on a really big portion of what's supposed to be a mutual experience. [Undergraduate]

Feeling self-conscious/embarrassed/ashamed

Many students expressed feelings of embarrassment or shame as a result of their financial status. One said, “for the lack of a better word, I would say it feels just bad . . . you feel kind of like a loner at times.” Some were afraid of being perceived as “cheap” for their unwillingness to spend money for social outings. Others described specific instances where they felt targeted for their financial status. One student suspected they were rejected from a professional organization because they had to “cobble together some stuff . . . at Goodwill” for the final round interview. The student said they were not explicitly denied based on their financial status, but it left them with a sinking feeling that their suit from Goodwill had played a part. Another reported an instance where they were confronted by a friend who demanded to know why the student was always trying to “take benefits from other people.” One student cited an experience where she was the target of gossip in her residence hall because she had complained about the cost of doing laundry.

Navigating the divide

To remain friends with wealthier students, students with financial stress adopted a variety of methods for participating in social outings. Some took on the responsibility of orchestrating plans so they could afford to participate. For example, one student described how they are “strategic about it,” suggesting low-cost restaurants and asking friends to go on a hike instead of paying for an expensive event ticket. However, in most cases, students with financial stress end up skipping these social outings altogether. Unable to participate, students reported feelings of disappointment and alienation. One student dejectedly characterized themselves as the friend that “ruins everything.”

Bonding with other low-income students

While some friendships with peers were described as hard to maintain, many students formed close relationships with others experiencing financial stress. One student found that these relationships were easier because “it feels like you’re not alone in this.” Other students echoed this sentiment, adding that these friendships provide “a nice community where I feel I fit in.” Together, these students found free events on campus to attend. They also described swapping stories about their financial stress, using humor to cope with tough financial situations. Two students said they developed friendships through the first-generation student union, an on-campus space for scholarship recipients. This student union was described as “a more welcoming space” than other venues on campus and an easy way for students to find like-minded peers.

Data from these focus groups illustrate that students experience the effects of financial stress in their academic studies and in their social lives. Financial stress may be a barrier to achieving academic success, as it prevented students from purchasing textbooks, caused them to prioritize jobs over coursework, and stood in the way of furthering career goals. Financial stress was also tied to students’ social lives. Students often made social comparisons to peers, perceiving others as having more disposable income. This constant comparison resulted in feelings of shame and frustration. These students also described how those with financial stress encounter a vastly different college experience, as they struggled to maintain friendships with wealthier peers and felt unable to participate in social events. Interestingly, 13% of participants identified their annual family income as greater than US$100,000. This may suggest financial stress is not necessarily exclusive to low-income students, and middle-class students may also be experiencing similar challenges. Alternately, financial stress may be driven by students’ comparison to wealthy peers, rather than their financial status. Future research could seek to better understand the prevalence of these academic and social consequences.

The insights gathered from these focus groups support previous findings on the impact of financial stress on college students. Joo et al. 16 found financially stressed students reported poorer academic performance than their peers. Bennett et al. 17 echoed these findings, demonstrating students with financial stress spend more time at work, resulting in significantly lower course grades. Student perspectives from these qualitative findings produced similar themes, detailing how work responsibilities can be a barrier for academic achievement. These findings also point to possible long-term effects of financial stress years after college, with students describing their inability to strengthen their career capital in comparison to their peers. Longitudinal research has shown financial stress can cause students to drop out of college; 25 however, for those who persist, future research could explore whether financial stress is a determining factor in students’ post-graduation career prospects.

Data from our study also support findings that the inability to participate in activities with peers is one of the most salient financial stressors for students. 26 As demonstrated by students’ firsthand experiences, their inability to participate in either on-campus events or more informal social gatherings led to feelings of embarrassment, shame, and frustration. These adverse effects on peer-to-peer relationships are striking, as social support is one of the strongest predictors of one’s well-being. 27 As demonstrated in previous research, students experiencing financial stress report poorer subjective well-being. 6 Future research could more deeply explore whether financial stress impacts the relationship between social support and overall well-being.

As evidenced by students’ rich perspectives, it may be difficult for students to receive the full benefits of a college education when their social and academic lives are impeded by financial stress. To address these negative outcomes, university administrators who develop policy and allocate resources will need to consider both the downstream effects of financial stress as well as its root causes. Further research is needed to determine the most effective interventions for mitigating financial stress in a university setting. However, the preliminary evidence from this qualitative research suggests there are a few key areas for administrators to consider. First, academic programs can allocate budget dollars to cover the cost of textbooks or require professors to offer low- or no-cost options. This could ensure all students, regardless of financial status, have adequate access to course materials. Universities can also review available student jobs and incentivize departments to develop job opportunities more in line with students’ career goals. This could satisfy both students’ need to earn money and their desire to gain a valuable experience related to their career aspirations. Colleges may want to consider a policy in which all student worker jobs offer a set amount of paid time off to use in conjunction with major exams, reducing the burden on students who feel they must prioritize work over academics.

While there is no simple solution for addressing the social challenges of a diverse socioeconomic student body, there are ways in which universities can begin to address these issues. University-sponsored events, especially those tied to the “core” experience of the school, could be offered free of cost. 11 For example, colleges with large sports programs can either make tickets free of charge or significantly subsidize the cost. This could relieve the pressure on students who worry they cannot afford such expenses. In addition, universities who provide funding to student organizations could consider only allocating funding to groups who offer low-cost events or scholarships for low-income students. This policy may incentivize student organizations to remove the financial barriers to membership, allowing more students to find belonging with their peers. Finally, university policy-makers can take steps to normalize diversity in socioeconomic status. 26 This could be implemented by mandating training on diversity, equity, and inclusion for the entire university community. Efforts can also be made in official university communications to students. Any message coming from a university leader or academic department could aim to better reflect the experiences of a diverse student body, with particular attention toward socioeconomic status. To tackle the root cause of financial stress, universities could lower the total cost of attendance, including tuition, room and board, and fees. 17 Alternately, colleges can increase the amount of available scholarship funds and communicate these funding opportunities widely to students.

Limitations

This study was conducted in one large, private university in the United States. This institution has a large percentage of international students, which may not be comparable to peer institutions. Student participants did not wholly reflect the diversity of the campus’s student body, with a majority of participants identifying as female and Asian. Participants were screened using a limited, subjective one-item measure to describe their financial stress, which makes it difficult to quantify the heterogeneity of financial stress experienced. This institution does not publish annual family income data; thus, participants’ socioeconomic status cannot be compared to the student body as a whole. In addition, students experiencing financial difficulty may have been more likely to participate in the focus groups due to the financial incentive provided. As this study sought to examine the impact of financial stress rather than its causes, participant data such as age, GPA, subject of study, and employment were not collected. Future research is needed to explore how these factors may impact financial stress.

This analysis provides insights on the impact of financial stress on students’ well-being at a large, private university. Students with financial stress primarily reported challenges with their academic studies and social lives. Considering the rising cost of pursuing higher education in the United States, future research should continue to investigate the impacts of financial stress on college students and aim to identify promising policies and practices to reduce financial stress among students.

Acknowledgments

The authors would like to thank the whole research team for supporting this work. This research was not supported through grant funding. Results from this research have not been published elsewhere.

Declaration of conflicting interests: The author(s) declared no potential conflicts of interest with respect to the research, authorship, and/or publication of this article.

Ethical approval: This study was determined to be exempt from 45 CFR 46 by the University of Southern California Institutional Review Board (Study ID: UP-19-00499) and thus was not subject to requirements for continuing review.

Funding: The author(s) received no financial support for the research, authorship, and/or publication of this article.

Informed consent: Written informed consent was obtained from all subjects before the study.

The Economics of Financial Stress

We study the psychological costs of financial constraints and their economic consequences. Using a representative survey of U.S. households, we document the prevalence of financial stress in U.S. households and a strong relationship between financial stress and measures of financial constraints. We incorporate financial stress into an otherwise standard dynamic model of consumption and labor supply. We emphasize two key results. First, both financial stress itself and naivete about financial stress are important components of a psychology-based theory of the poverty trap. Sophisticates, instead, save extra to escape high-stress states because they understand that doing so alleviates the economic consequences of financial stress. Second, the financial stress channel dampens or reverses the counterfactual large negative wealth effect on labor earnings because relieving stress frees up cognitive resources for productive work. Financial stress also has macroeconomic implications on wealth inequality and fiscal multipliers.

For helpful comments and suggestions, we are grateful to Marios Angeletos, Abhijit Banerjee, Nicholas Barberis, David Berger, Tito Boeri, Leonardo Bursztyn, James Choi, Stefano Dellavigna, Eliana La Ferrara, Pierre-Olivier Gourinchas, Joel Flynn, Jonathon Hazell, Supreet Kaur, Yueran Ma, Anandi Mani, Gonzalo Maturana, Peter Maxted, Tim Mcquade, Sendhil Mullainathan, Emi Nakamura, Gautam Rao, Dmitry Taubinsky, Neil Thakral (discussant), Ricardo Perez-Truglia, Gautam Rao, Christopher Roth, Karthik Sastry, Jon Steinsson, Frank Schilbach, Benjamin Schoefer, and seminar participants at Behavioral Economics Annual Meeting, NBER Behavioral Finance Meeting, Bocconi, CKGSB, Miami Behavioral Finance Conference, TSE, Stanford, SED, UC Berkeley, UC Davis, Biennial Consumer Finance and Macroeconomics Conference, Psychology and Economics of Poverty Annual Convening, and the 16th CSEF-IGIER Symposium on Economics and Institutions. The survey was approved by UC Berkeley IRB 2021-11-14868. We thank Zhuoran Lyu, Jack Mannion, Emily Martell, Bruno Smaniotto, and Laura Waring for excellent research assistance and the BB90 fund for financial support. The views expressed herein are those of the authors and do not necessarily reflect the views of the National Bureau of Economic Research.

Gorodnichenko thanks BB90 fund for financial support.

MARC RIS BibTeΧ

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• May 25, 2023

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How to Navigate the Financial Stress of COVID-19

Expert guidance on navigating the financial stress of covid-19..

Posted April 19, 2020 | Reviewed by Kaja Perina

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For many of us, the challenges of COVID-19 have had more than just an impact on our physical and mental health, but also a significant impact financially. Given the unprecedented event we are currently dealing with, several questions may arise about financial security. Knowing how to navigate the challenges at hand will relieve stress and ensure we build inner resilience .

Preliminary findings from a current survey on stress and resilience in the face of COVID-19 (sample of 276 respondents) indicate that an estimated 88% of respondents felt nervous and stressed in the past month; 95% have expressed worry about the ongoing impacts of COVID-19; and 88% of respondents indicated that they are very worried about the economy.

Given the current uncertainty and not knowing what the near- and long-term future holds for us as it relates to the financial impact of COVID-19, I asked Joel Thomas , CEO of SPIN Global and disaster resilience expert, to share his expertise on how to navigate the financial unknown with COVID-19.

1. What are people’s biggest financial fears at this stage?

There are three main drivers of financial fear that I have observed.

• Loss of wages is never a welcome disruption, as it elicits basic fear of need for provisions. This has been exacerbated by the fact that the impetus for these losses is an uncontrollable exogenous shock, eliciting fear and a sense of the lack of control over these circumstances.
• Second, the tyranny of urgent needs and expenses haunts people. In other words, which bills need to be paid now, which groceries need to be purchased, and which debts need to be kept current? Decisions about what is essential and nonessential, and whether accounts payable can be delayed - these all incur stress. COVID-19 has caused the primary source of income for many to cease, while the outflowing stream of expenses has not.
• Last, there is the fear of the unknown financial outlook. This is informed by the current health and economic crises. How long will COVID-19 last? When will I be able to get back to work from furlough, find a new job, work at full pay again? And, will there even be a job to return to?

2. What are some strategies to survive this pandemic from a financial standpoint?

Now is a time to hustle. Bartering just became chic. According to a recent FEMA national household survey, prior to COVID-19, most Americans did not have $500 on hand to withstand a disruption before turning to borrow money.

It’s not a time to panic , but it is a time to be pragmatic. If you are out of money and have no job, lost a job but have money on hand, or have been furloughed or working on a reduced schedule, I would advise cutting all non-essential expenses immediately. Call those you owe money and request a payment plan, deferred payment, or debt forgiveness . 17 million people filed for unemployment in the last few weeks, and everyone will be looking for jobs. You are your own biggest asset. It is time to prepare to compete and work your networks looking for any and all work, even if it is not something you have prior experience doing. No job is too menial in these times.

If you have a job and have money on hand or have a job and are cash poor, now is a time to carefully assess your financial health, and I would recommend meeting with a financial advisor. Consider how you can limit your risk exposure, make smart investments, give generously to those in need. U.S. Congress passed a $2.2 trillion stimulus that will provide cash payments to Americans in need which will help, but it will not make people whole who have lost jobs, and it is going to take several weeks and months for most people to have in hand. So do not become complacent and rely on the government alone to save you. The government provisions should be viewed as “stop-gap” provisions that partially fill a need. Financial survival for this pandemic is dependent upon your ability to get your expenses under control while finding ways to earn and steward at least enough income to survive.

3. What can individuals who might be faced with unemployment do at this stage?

First, I would recommend that you file an unemployment claim with the Department of Labor, and then follow the advice I gave in question 2. There are a number of government programs that provide medical care, food assistance, housing, and other forms of temporary care. Now is a time to investigate your options, and apply for assistance as needed. Now is not a time to let pride get in the way of doing what you need to do to be able to survive. There was a time early in my adult life when I was volunteering full time and participated in Medicaid. It can be humbling, but know that this season shall pass, and those programs exist for the sole purpose of temporarily helping people navigate through difficult seasons. Last, I would recommend in special cases developing a crowdsource campaign such as GoFundMe to raise money from family and friends to support specific needs that you may have. These types of platforms have been highly successful but do not guarantee success.

4. What should small business owners do to receive assistance?

U.S. Congress passed the most aggressive economic injury loan assistance program in the history of the country. Small business owners can apply for a disaster loan from the Small Business Administration. Also, many states have grant programs, such as Maryland which offers up to $10,000 cash grant. Contact your state for guidance and other programs for which your business might be eligible to participate. Another option is to sell shares in your company to an investor or raise capital through a crowdfund. This is a good way to avoid debt, but it comes at a cost of equity in your business. Last, your business can run a massive effort to pre-sell future purchases, gift cards, and special deals now that patrons can redeem at a later time.

5. Any additional advice to people impacted by this pandemic?

I was recently on a phone call with New York City Mayor Mike Bloomberg and former President George W. Bush. The President said it best when he said that now is a time to demonstrate an abundance of empathy to first responders, health care workers, and those on the front lines of the health crisis. We all have the ability to demonstrate acts of kindness to humanity, and that doesn’t cost any money, just a piece of your time and heart. It is also a time to be hopeful, as we will emerge stronger from this crisis.

Regardt (Reggie) Ferreira, Ph.D. , is the Director of Tulane University’s Disaster Resilience Leadership Academy and Associate Professor of Social Work at Tulane University.

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A year into the pandemic, long-term financial impact weighs heavily on many americans, roughly half of non-retired adults say the economic consequences of the coronavirus outbreak will make it harder for them to achieve their financial goals.

Pew Research Center conducted this study to better understand Americans’ financial outlooks and how their personal financial situations have changed amid the coronavirus outbreak. For this analysis, we surveyed 10,334 U.S. adults in January 2021. Everyone who took part is a member of the Center’s American Trends Panel (ATP), an online survey panel that is recruited through national, random sampling of residential addresses. This way, nearly all U.S. adults have a chance of selection. The survey is weighted to be representative of the U.S. adult population by gender, race, ethnicity, partisan affiliation, education and other categories. Read more about the  ATP’s methodology .

Here are the  questions  used for this report, along with responses, and its  methodology . 

References to those who have experienced job or wage loss include those who say they or someone in their household has been laid off (including temporarily) or furloughed or taken a pay cut since the coronavirus outbreak began in February 2020.

References to White, Black and Asian adults include only those who are not Hispanic and identify as only one race. Hispanics are of any race.

All references to party affiliation include those who lean toward that party. Republicans include those who identify as Republicans and those who say they lean toward the Republican Party. Democrats include those who identify as Democrats and those who say they lean toward the Democratic Party.

References to college graduates or people with a college degree comprise those with a bachelor’s degree or more. “Some college” includes those with an associate degree and those who attended college but did not obtain a degree.

“Middle income” is defined here as two-thirds to double the median annual family income for panelists on the American Trends Panel. “Lower income” falls below that range; “upper income” falls above it. See the  methodology  for more details.

References to disabled adults include those who say a disability or handicap keeps them from fully participating in work, school, housework or other activities. 

About a year since the  coronavirus recession  began, there are some  signs of improvement  in the U.S. labor market, and Americans are feeling somewhat better about their personal finances than they were early in the pandemic. Still, about half of non-retired adults say the economic impact of the  coronavirus outbreak  will make it harder for them to achieve their long-term financial goals, according to a new Pew Research Center survey. Among those who say their financial situation has gotten worse during the pandemic, 44% think it will take them three years or more to get back to where they were a year ago – including about one-in-ten who don’t think their finances will ever recover.  

The  economic fallout from COVID-19  continues to hit some segments of the population harder than others. Lower-income adults, as well as Hispanic and Asian Americans and adults younger than 30, are among the most likely to say they or someone in their household has lost a job or taken a pay cut since the outbreak began in February 2020. 1 Among those who’ve had these experiences, lower-income and Black adults are particularly likely to say they have taken on debt or put off paying their bills in order to cover lost wages or salary. 

Related:   Unemployed Americans are feeling the emotional strain of job loss; most have considered changing occupations

Adults with upper incomes have fared better. About four-in-ten (39%) say their family’s financial situation has improved compared with a year ago; 32% of those with middle incomes and just 22% of lower-income adults say the same. Upper-income adults are also more likely than those with middle or lower incomes to say they have been spending less and saving more money since the coronavirus outbreak began. (Family incomes are based on 2019 earnings.)

Overall, 53% of U.S. adults now rate their personal financial situation as excellent or good, up from  47% in April 2020 , when the U.S. economy was in a virtual freefall. More than eight-in-ten upper-income adults (86%) and 58% of those with middle incomes say their finances are in excellent or good shape, as do about six-in-ten or more adults with at least a four-year college degree, White and Asian adults, men, and adults ages 65 and older. In contrast, about three-quarters of lower-income adults (74%) and majorities of Black and Hispanic adults and those with a high school diploma or less education say their personal finances are in only fair or poor shape.  

Upper-income and middle-income adults, who saw declines in their personal financial ratings from  August 2019 to April 2020 , are now about as likely as they were before the coronavirus outbreak to say their personal finances are in excellent or good shape. Personal financial ratings have been more stable among lower-income adults. 

Looking ahead, about half of non-retired adults (51%) say the economic impact of the coronavirus outbreak will make achieving their long-term financial goals harder. Just 7% say the economic impact of the pandemic will make it easier and 41% say it’ll be neither easier nor harder for them to achieve their financial goals in the long run. Among those in households that experienced job or wage loss since the outbreak began, 62% say the economic impact of the pandemic will make it harder for them to achieve their financial goals, compared with four-in-ten of those who haven’t had these experiences. 

The nationally representative survey of 10,334 U.S. adults was conducted Jan. 19-24, 2021, using the Center’s  American Trends Panel . 2 Among the other key findings:

The way Americans are planning to use payments from the coronavirus aid package varies considerably by income.  Among those who have received or expect to receive a payment from the federal government as part of the aid package, 66% of lower-income adults say they are most likely to use the majority of the money to pay bills or for something essential they or their family need; smaller shares of those with middle (49%) and upper (30%) incomes plan to use the money this way. About a third of those with upper incomes (35%) say they will likely put the money into savings.

There’s no clear consensus among Americans on who should be responsible for making sure people can meet their basic economic needs during the pandemic.  Some 45% say the federal government should have the greatest responsibility, while a third point to people themselves or their families. Smaller shares say state or local governments (12%), charitable organizations (2%) or another source (6%) should have the greatest responsibility to do this. These views vary widely across party lines. About six-in-ten Democrats and Democratic leaners (61%) say the federal government should be mostly responsible for making sure people can meet their basic economic needs during the coronavirus outbreak, compared with 28% of Republicans and those who lean to the GOP. In turn, 51% of Republicans (vs. 18% of Democrats) say people themselves or their families should have this responsibility. 

Financial concerns are less pressing than earlier in the pandemic, but many Americans remain worried about meeting some basic needs.  About three-in-ten U.S. adults say they worry every day or almost every day about the amount of debt they have (30%) and their ability to save for retirement (29%). Roughly a quarter say they frequently worry about paying their bills (27%) and the cost of health care for them and their family (27%), and about one-in-five say they worry at least almost every day about paying their rent or mortgage (19%) or being able to buy enough food (18%). These concerns are felt more acutely by lower-income adults, as well as by those in households that have experienced job loss or pay cuts during the pandemic. Black and Hispanic adults are more likely than White adults to say they worry about each of these every day or almost every day.   

About four-in-ten Americans (42%) say they have been spending less money than usual since the pandemic began, and that is especially the case among upper-income adults.  Some 53% of Americans with upper incomes say they’ve been spending less money, compared with 43% of those with middle incomes and 34% of those with lower incomes. Among those who say they have been spending less money, majorities with upper and middle incomes say this is mainly because their daily activities have changed due to coronavirus-related restrictions (86% and 70%, respectively). Among those with lower incomes, more say they’re spending less because they are worried about personal finances (55%) than because their daily activities have changed (44%).

About half of workers who personally lost wages during the pandemic (49%) are still earning less money than before the coronavirus outbreak started.  This is particularly the case among older workers: 58% of employed adults ages 50 and older who experienced a pay cut since the outbreak began say they’re earning less money than before, compared with 45% of those younger than 50. One-in-five in the younger group (vs. 6% of those 50 and older) say they are now earning more than they did before the pandemic began, while about a third in each group say they are earning about the same as before.

Personal financial ratings vary widely across racial, ethnic and socioeconomic groups

A narrow majority of U.S. adults (53%) now describe their personal financial situation as excellent or good, up from 47% in  April 2020 . The share saying their finances are in only fair or poor shape now stands at 46%, compared with 52% earlier in the pandemic. 

About six-in-ten White (60%) and Asian adults (58%) currently say their personal financial situation is in excellent or good shape. In contrast, a majority of Black (66%) and Hispanic (59%) Americans say their finances are in only fair or poor shape. 

Personal financial ratings also vary considerably by gender, educational attainment and income levels, as was the case early in the pandemic. A majority of men (58%) rate their personal financial situation as excellent or good; 49% of women do so. About seven-in-ten adults with at least a bachelor’s degree (72%) say their personal finances are in excellent or good shape, compared with 48% of those with some college and 41% of adults with a high school diploma or less education. 

Income differences are particularly pronounced, with a gap of 60 percentage points between the shares of upper-income (86%) and lower-income (26%) adults who rate their financial situation as excellent or good. About six-in-ten adults with middle incomes (58%) say their finances are in excellent or good shape. Family incomes are based on 2019 earnings. 

People who report having a disability (63%) are more likely than those who do not have a disability (42%) to describe their personal financial situation as only fair or poor. This difference remains after taking into account that disabled adults are more likely to have lower incomes than those who are not disabled (82% of lower-income adults with a disability vs. 69% of those who don’t have a disability offer negative assessments of their personal finances). 

More Americans say their personal financial situation has improved in the last year than say it has gotten worse

Despite the  economic downturn  caused by the coronavirus outbreak, about half of U.S. adults (49%) say their family’s financial situation is about the same as it was a year ago; three-in-ten say it has improved, and 21% say it is now worse than it was a year ago. 

Upper-income adults are more likely than other income groups to have seen an improvement in their finances: 39% say their family’s financial situation is now better, compared with 32% of those with middle incomes and an even smaller share of lower-income adults (22%). About three-in-ten adults with lower incomes (31%) say their family’s situation has worsened (vs. 18% of adults with middle incomes and 11% of those with upper incomes). 

These assessments vary by educational attainment and other demographic characteristics. Some 36% of adults with a bachelor’s degree or more education say their family’s financial situation is now better than it was a year ago; 29% of those with some college and a quarter of those with a high school diploma or less education say the same. 

About a third of men (35%) say their family’s financial situation has improved, while a smaller share of women (25%) say the same. In turn, women are more likely than men to say their family’s financial situation is about the same as it was last year (53% vs. 46%). 

About a quarter of Black (25%), Hispanic (27%) and Asian (24%) adults say their family’s situation is worse now than it was a year ago; a smaller share of White adults (17%) say this. White adults are more likely than those from other groups to say their financial situation is largely unchanged. (Differences in the shares across racial and ethnic groups saying their financial situation is now better are not statistically significant.) 

More than half of Americans who say their family’s financial situation is worse than it was a year ago (55%) expect their finances to recover within two years, with 12% saying they expect it will take less than a year for their financial situation to get back to where it was a year ago. About a quarter (26%) think it will take three to five years and 6% say it will be between six and ten years before their family’s financial situation is back to where it was a year ago. About one-in-ten adults who say their family’s financial situation has worsened (12%) say it will never get back to where it was. These answers vary little, if at all, across demographic groups. 

A plurality of lower-income adults are saving less during the pandemic

Many Americans were already struggling to save money before the coronavirus outbreak hit. Some 29% of adults overall say they are not usually able to put any money in savings. This is far more common among lower-income adults, 47% of whom say they are usually not able to save (vs. 25% of middle-income adults and just 8% of upper-income adults). About four-in-ten Black adults (38%) say they are usually not able to save, compared with 31% of Hispanic, 27% of White and 19% of Asian adults.

Among those who  are  typically able to put some money into savings, 45% say they are still saving about the same amount as they were before the pandemic, while 31% say they are saving less than usual and 23% say they are saving more.

Lower-income adults who usually put money into savings are far more likely than those in other income tiers to say they are now saving less than usual: 47% of lower-income adults say this, compared with 31% of those with middle incomes and 17% of those with upper incomes. By comparison, most middle-income and upper-income adults say they are saving about the same or even more than they were before the pandemic. Among those with middle incomes, 46% say they are saving the same and 22% are saving more than before. Even higher shares of those with upper incomes say this: half are saving about the same and 32% are saving more than before the pandemic.  

Among those who are usually able to put money into savings, 44% of Black adults and 42% of Hispanics say they are saving less than they were before the pandemic, compared with 30% of Asian Americans and 26% of White adults. About half of White adults (49%) have continued putting the same amount into savings – higher than the share of Black (33%) and Hispanic (35%) adults who say the same.

Spending is down compared with before the pandemic for many Americans, but mostly because of a change in daily activities rather than concern about finances

About four-in-ten Americans (42%) say they have been spending less money than usual since the coronavirus outbreak began, and a similar share (39%) say they have been spending about the same; 19% say their spending has increased.

Upper-income adults (53%) are more likely than those with middle (43%) or lower incomes (34%) to say they have been spending less money since the pandemic began. About a quarter of those with lower incomes (26%) say they have been spending more, compared with 17% of middle-income adults and 11% of upper-income adults.

Two-thirds of those who are spending less say this is due to their daily activities changing because of coronavirus-related restrictions rather than worries about their personal finances (32%). 

This is overwhelmingly the case among upper-income adults who are spending less, 86% of whom say it’s because of their activities changing. Seven-in-ten middle-income adults in this situation say the same. But among lower-income adults who have reduced their spending, more say it’s because they are worried about their personal finances (55%) rather than their daily activities changing (44%).

A majority of lower-income adults who are not retired say the pandemic will make it harder for them to achieve their long-term financial goals

Aside from how long they think it will take them to get back to where they were a year ago, many Americans say the economic impact of the coronavirus will have long-term repercussions for their financial future. About half of U.S. adults who are not retired (51%) say that, in the long run, the economic impact of the coronavirus outbreak will make it at least somewhat harder for them to achieve their financial goals, with 16% saying it will make it a lot harder; 7% say the economic impact of the pandemic will make it a lot or somewhat easier for them to achieve their financial goals and 41% say it will be neither easier nor harder. 

Lower-income adults are particularly likely to see the economic impact of the coronavirus outbreak as a potential impediment to reaching their long-term financial goals. About six-in-ten non-retired adults in this group (58%) say that, in the long run, the pandemic will make it harder for them to achieve these goals, including a quarter who say it will make it a lot harder. Half of those with middle incomes and 41% with upper incomes say the pandemic will make it harder for them to reach their financial goals in the long run. 

Long-term assessments are especially grim among those who say their finances have taken a hit in the last year. Fully three-quarters of non-retired adults who say their financial situation is now worse than it was a year ago believe the economic impact of the coronavirus outbreak will make it harder for them to achieve their financial goals in the long run. That’s in contrast to 35% of those who say their financial situation is better compared with a year ago and 50% of those who say it is about the same. 

Many older Americans whose employment was affected during the coronavirus outbreak say they have or may have to delay their retirement

About a quarter of U.S. adults ages 50 and older who have not yet retired (24%) expect the coronavirus outbreak to affect their ability to retire. This includes 7% who say they have already delayed their retirement and an additional 17% think they might have to delay it.

Those who have personally been laid off or taken a pay cut since the pandemic began in February 2020 (27% of all adults 50 and older who are not retired) are much more likely to say they expect their retirement to be affected. More than four-in-ten (46%) say they either have already delayed or think they may have to delay their retirement because of the coronavirus outbreak, compared with just 16% who have not experienced a job loss or pay cut.

The shares of non-retired adults ages 50 and older who have delayed or expect to delay their retirement because of the coronavirus outbreak do not vary considerably across income levels or other demographic groups, including gender and educational attainment. 

More than four-in-ten U.S. adults say they or someone in their household has lost a job or wages since the beginning of the coronavirus outbreak

A third of U.S. adults say they or someone in their household has been laid off or lost a job (including being furloughed and temporarily laid off) since the coronavirus outbreak began in February 2020, and 31% say they or someone in their household has taken a cut in pay due to reduced hours or demand for their work during this period. Overall, 44% say their household has experienced at least one of these since the pandemic began. 

Experiences with job and wage loss during the pandemic have not been felt equally across demographic groups. Hispanic (58%) and Asian (54%) adults are more likely than White (40%) or Black (41%) adults to say they or someone in their household has either lost a job or taken a pay cut or both since the outbreak began in February 2020. And while a majority of adults younger than 30 (61%) say they or someone in their household has had these experiences, about half of adults ages 30 to 49 (51%) and smaller shares of those ages 50 to 64 (41%) and 65 and older (21%) say the same. 

About half of lower-income adults (49%) say their household has experienced job or wage loss since the coronavirus outbreak began in February 2020, as do 45% of middle-income adults. A far smaller – though substantial – share of upper-income adults (33%) say their household has had one or both of these experiences. 

Many workers who lost wages during the pandemic are still earning less than they were before the coronavirus outbreak started. Among those who were working before the pandemic started and who personally experienced a pay cut since February 2020, about half (49%) say they are now earning less money than they did before the pandemic; 16% are now earning more money and 34% say they are earning about the same as before. This is consistent across most demographic groups, but employed adults ages 50 and older who experienced a pay cut since the outbreak began are more likely than those younger than 50 to say they’re earning less money than they did before (58% vs. 45%), while those in the younger group are more likely to say they’re earning more than they did before the pandemic (20% vs. 6%). 

Lower-income workers are more likely than those with middle or upper incomes to have taken unpaid time off

In addition to being more likely than those with higher incomes to have experienced job or wage loss since February 2020, lower-income adults are also more likely to have taken unpaid time off from work for personal, family or medical reasons during this time. About a third of lower-income workers (32%) say they’ve had to do this during this period, compared with 19% of middle-income workers and 10% of those with upper incomes. According to previous research, workers on the lower ends of the wage distribution are less likely than those at the upper ends to have  access to paid sick leave . 

Three-in-ten lower-income workers say they have earned more money by working more overtime or longer hours since the coronavirus outbreak began; 24% of middle-income workers and 15% of those with upper incomes say this has happened. And about three-in-ten workers across income tiers say they have gotten a pay raise or a higher-paying job during this time. 

Workers younger than 30 are far more likely than older workers to say they have gotten a pay raise or a higher-paying job since the coronavirus outbreak began (47% vs. 30% of workers ages 30 to 49, 21% of those ages 50 to 64 and 16% of those ages 65 and older). Younger workers are also more likely than older adults to say they have earned more money by working more overtime or longer hours and to say they have taken unpaid time off work for personal, family or medical reasons. 

The survey also finds that, among employed adults, men are somewhat more likely than women to say they have gotten a pay raise or a higher-paying job since the beginning of the coronavirus outbreak (32% vs. 28%). In turn, a larger share of employed women than men say they have taken unpaid time off work for personal, family or medical reasons since the beginning of the pandemic (23% vs. 16%).

About three-in-ten Americans often worry about their debt and saving for retirement, but these concerns were higher in April

Roughly three-in-ten adults say they worry every day or almost every day about the amount of debt they have (30%) and being able to save enough for their retirement (29%). About a quarter worry about paying their bills and the cost of health care for them and their family (27% each). About one-in-five often worry about paying their rent or mortgage (19%) or being able to buy enough food for them and their family (18%). Some 16% of workers say they frequently worry that they will lose their job or take a pay cut due to reduced hours or demand for their work. About four-in-ten or more adults say they worry about each of these at least sometimes. 

These concerns were more pressing earlier in the coronavirus outbreak than they are now. Higher shares in  April 2020 said that they frequently worried about saving enough for retirement (38%), paying their bills (38%) or debt (36%), the cost of health care for them and their family (35%), taking a pay cut (29% of employed adults) and losing their job (23% of employed adults). (The items on paying rent or a mortgage and being able to buy enough food were not asked in April.) The decrease in concern since April was evident across income levels.

Lower-income adults are far more likely to worry often about each of these than middle- and upper-income adults. For example, 44% of those with lower incomes say they worry about paying their bills daily or almost daily, compared with 23% of middle-income adults and only 9% of those with upper incomes. And while about a third of lower-income adults say they worry about paying their rent or mortgage (34%) or being able to buy enough food (32%) daily or almost daily, 15% or less among middle-income and upper-income adults express similar concerns. 

Adults living in households that have experienced job loss or a pay cut during the pandemic are more likely than those in households that have not to say they often worry about each of these concerns. For example, those who had their household’s job or pay affected are about twice as likely to say they worry daily or almost daily about being able to buy enough food for them and their families as those who were not affected (25% vs. 12%).

Black and Hispanic Americans (who have lower incomes on average than White Americans) are more likely than White adults to frequently have these worries. Meanwhile, Asian Americans are about equally as likely as White adults to say they often worry about their debt, saving for their retirement, the cost of health care, paying their bills and losing their job. However, they are more likely than White adults to say they worry about paying their rent or mortgage, being able to buy enough food and taking a cut in pay.

Adults 65 and older tend to be less worried about each of these concerns than their younger counterparts. In fact, the burden of some of these worries falls most heavily on those in the 30- to 49-year-old age group. For example, 25% of this group says they worry frequently about paying their rent or mortgage, compared with 20% of those ages 18 to 29, 19% of those 50 to 64 and 8% of those 65 and older.

Americans with disabilities – that is, those who say a disability or handicap keeps them from fully participating in work, school, housework or other activities – are also more likely than those without disabilities to say they often worry about each concern. For example, 36% of disabled Americans (who tend to have lower incomes than those without disabilities) say they often worry about the cost of health care for them and their family, while 25% of those without disabilities say the same.

About half of lower-income adults in households that have lost income during the pandemic have taken on debt to help make ends meet

The survey also asked those who are in a household in which someone has been laid off or taken a pay cut since the pandemic began how they covered those lost wages or salaries. Cutting back on spending topped the list, with 71% saying they did this to help make up for their lost wages. Using savings was another common strategy, with about half of those who experienced a loss of wages saying they did this (52% say they used savings they had set aside for something else, and the same share say they used emergency savings). Smaller shares said they took on debt (38%), did side jobs or temporary work outside of their regular job (37%), received unemployment benefits (32%), borrowed money from family or friends (30%), put off paying bills (30%) or went on public assistance other than unemployment benefits (15%).

Lower-income adults whose households have experienced job or wage loss since the pandemic began are more likely than upper-income adults to say they have taken each of these steps. In fact, many in this group have taken consequential measures, such as borrowing money from family or friends (50%), taking on debt (48%) and putting off paying bills (42%).

Among upper-income adults whose household experienced a loss of income, 55% say they cut back on spending as a way to compensate. Much smaller shares (about a third or less) say they have taken each of the other measures asked about in the survey. Few said they have had to take the types of consequential measures that many lower-income adults rely on, such as taking on debt (17% of upper-income adults), putting off paying bills (13%) or borrowing from friends or family (7%).

Among households experiencing loss of income, reports of using unemployment benefits are more common among those who say they or someone in their household lost a job (permanently or temporarily). 3 Overall, 39% of those who lost a job or had someone in their household who did say they received unemployment benefits, compared with 11% of those in households that experienced a pay cut but no job loss (even while many people who had their hours cut  during the pandemic are eligible ). Lower-, middle- and upper-income adults who experienced job loss are about equally likely to say they received this type of benefit.

About two-in-ten of those from households that experienced a job loss (19%) say they went on public assistance other than unemployment benefits, compared with 5% of those who experienced a pay cut but no job loss. Among the households who experienced job loss, 33% of lower-income adults say they went on this kind of public assistance, compared with 13% of middle-income adults and just 2% of upper-income adults.

Most lower-income adults who expect a stimulus payment say they will use it to pay for bills or essentials

As the economic effects of the coronavirus pandemic continued in late 2020, Congress passed a  second stimulus bill  to help ease the financial hardships many Americans have faced. About half of U.S. adults who have received or expect to receive a payment from the federal government as part of the stimulus package (52%) say they will use a majority of these funds to pay bills or for something essential they or their family needs. Another 22% say they will save it; 16% say they will use it to pay off debt; and 10% say they will use it for something else, including for something non-essential they or their family wants, charitable donations, helping friends and family, supporting local businesses, or some combination. 

The way Americans are planning to use payments from the second coronavirus aid package parallel what those who received or expected to receive a payment early in the pandemic said about  how they planned to use those funds . 

Lower-income adults are the most likely to say they will use a majority of the money to pay for bills or for something essential among those expecting a payment in each income group; 66% say this, compared with 49% of middle-income adults and 30% of those with upper incomes. About a third of adults with upper incomes (35%) say they expect to save most of it; 24% of those with middle incomes and 12% of lower-income adults say the same.

Plans for the stimulus payments vary across racial and ethnic groups and educational attainment. About six-in-ten Black and Hispanic adults (61% each) say they will use a majority of the money to pay for bills or essentials, compared with 48% of White adults and 51% of Asian adults. White and Asian adults are more likely than Black and Hispanic adults to say they will save it (24% and 28% vs. 16% and 15% respectively). Six-in-ten adults with a high school diploma or less education say they will use a majority of the money to pay for bills or essentials; 53% of those with some college, and 40% with a bachelor’s degree or more education say the same.  

About four-in-ten Americans say the federal government’s aid package will help them and their household at least a fair amount

Overall, about four-in-ten adults (41%) say the aid package passed by the federal government in December 2020 would help them and their household a great deal or a fair amount. Majorities say the aid package will help small businesses (54%), large businesses (57%), and unemployed people (61%) at least a fair amount. This is a notable shift in confidence from  early in the pandemic  when about seven-in-ten or more Americans said the aid package passed in March would help large and small businesses and unemployed people; 46% said the earlier aid package would help them and their household.

A majority of adults with lower incomes (56%) say the aid package will help them and their household at least a fair amount, with 28% saying it would help them  a great deal . This compares to 41% of middle-income adults and 17% of those with upper incomes who say it will help them at least a fair amount. 

Among other key demographic groups, adults under age 30, Black and Hispanic adults, and those without a college degree are among the most likely to say the aid package will help them and their household at least a fair amount. Over half of Black and Hispanic adults say the aid package will help them and their households (58% and 56% respectively) at least a fair amount, with significant shares saying it will help them  a great deal  (31% and 28% respectively). Smaller shares of White (35%) and Asian adults (43%) say it will help them a great deal or a fair amount. 

Half of adults under age 30 say the federal aid package will help them and their households at least a fair amount; 43% of those ages 30 to 49, 39% of those ages 50 to 64, and 33% of adults ages 65 and older say the same. Adults with a high school diploma or less education are more likely to say the federal aid package will help them and their households at least a fair amount (50%) than those with some college experience (42%) and those with a bachelor’s degree or more education (31%). 

No clear consensus on who should have the greatest responsibility for making sure people can meet their basic economic needs during the coronavirus outbreak

When asked who should have the greatest responsibility for making sure people can meet their basic economic needs during the coronavirus outbreak, 45% point to the federal government, while a third say people themselves or their families should have the greatest responsibility. Smaller shares say state or local governments (12%), charitable organizations (2%), or another source (6%), most often a combination of all of these, should be most responsible. 

There is a sharp partisan divide on this issue. About six-in-ten Democrats and those who lean toward the Democratic party (61%) say the federal government should have the greatest responsibility, and just 18% say it should be people themselves or their families. Among Republicans and Republican leaners, 28% point to the federal government, while a larger share (51%) say people themselves or their families should have the greatest responsibility for making sure they can meet their basic economic needs during the pandemic. 

Liberal Democrats are the most likely to point to the federal government as having the greatest responsibility to ensure people can meet their basic economic needs during the coronavirus outbreak. About seven-in-ten liberal Democrats (72%) say this, compared with 52% of conservative or moderate Democrats, 36% of moderate or liberal Republicans, and an even smaller share of conservative Republicans (23%). In turn, conservative Republicans are the most likely to say it is people themselves or their families who have this responsibility; 57% say this compared with 41% of moderate or liberal Republicans, 25% of moderate or conservative Democrats and just 11% of liberal Democrats.

• Family incomes are based on 2019 earnings and adjusted for differences in purchasing power by geographic region and for household sizes. Middle income is defined here as two-thirds to double the median annual family income for all panelists on the  American Trends Panel . Lower income falls below that range; upper income falls above it. Throughout this report, references to adults who have lost a job or been laid off include those who say they were furloughed or temporarily laid off.  ↩
• For more details, see the  Methodology  section of the report. ↩
• This includes households that experienced both a job loss and a pay cut, as well as those that experienced only a job loss. ↩

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Table of contents, what federal education data shows about students with disabilities in the u.s., most americans who go to religious services say they would trust their clergy’s advice on covid-19 vaccines, what we know about online learning and the homework gap amid the pandemic, unvaccinated americans are at higher risk from covid-19 but express less concern than vaccinated adults, americans who relied most on trump for covid-19 news among least likely to be vaccinated, most popular.

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Financial Stress and Hardship among Young Adults: The Role of Student Loan Debt

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• Women & Gender in Global Perspectives
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Research output : Contribution to journal › Article › peer-review

Analyzing data from the 2018 National Financial Capability Study, this study investigated the associations between, student loan debt and financial stress and hardship among young adults. The results show that student loan debt was positively related to all indicators of financial stress and hardship, after controlling for a range of socioeconomic factors as well as measures of financial knowledge and behaviors. In addition, minority young adults were more likely to experience health-care related hardship and higher levels of financial stress. This study further reports that financial literacy and emergency savings were important buffers againstfinan- cial stress and hardship among young adults, but utilization of alternative financial service contributed to their financial stress and hardship. These findings inform helpful, policy and practice implications for improving financial status of young adults with student loans.

• Student loan debt
• financial hardship
• financial stress
• race/ethnicity
• young adults

ASJC Scopus subject areas

• Sociology and Political Science
• Social Sciences (miscellaneous)

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• loan Social Sciences 100%
• financial report Social Sciences 31%
• student Social Sciences 24%
• financial service Social Sciences 24%
• socioeconomic factors Social Sciences 21%
• health care Social Sciences 14%
• literacy Social Sciences 13%
• minority Social Sciences 13%

T1 - Financial Stress and Hardship among Young Adults

T2 - The Role of Student Loan Debt

AU - Zhan, Min

N1 - Publisher Copyright: © 2022, Western Michigan University. All rights reserved.

N2 - Analyzing data from the 2018 National Financial Capability Study, this study investigated the associations between, student loan debt and financial stress and hardship among young adults. The results show that student loan debt was positively related to all indicators of financial stress and hardship, after controlling for a range of socioeconomic factors as well as measures of financial knowledge and behaviors. In addition, minority young adults were more likely to experience health-care related hardship and higher levels of financial stress. This study further reports that financial literacy and emergency savings were important buffers againstfinan- cial stress and hardship among young adults, but utilization of alternative financial service contributed to their financial stress and hardship. These findings inform helpful, policy and practice implications for improving financial status of young adults with student loans.

AB - Analyzing data from the 2018 National Financial Capability Study, this study investigated the associations between, student loan debt and financial stress and hardship among young adults. The results show that student loan debt was positively related to all indicators of financial stress and hardship, after controlling for a range of socioeconomic factors as well as measures of financial knowledge and behaviors. In addition, minority young adults were more likely to experience health-care related hardship and higher levels of financial stress. This study further reports that financial literacy and emergency savings were important buffers againstfinan- cial stress and hardship among young adults, but utilization of alternative financial service contributed to their financial stress and hardship. These findings inform helpful, policy and practice implications for improving financial status of young adults with student loans.

KW - Student loan debt

KW - financial hardship

KW - financial stress

KW - race/ethnicity

KW - young adults

UR - http://www.scopus.com/inward/record.url?scp=85139801042&partnerID=8YFLogxK

UR - http://www.scopus.com/inward/citedby.url?scp=85139801042&partnerID=8YFLogxK

M3 - Article

AN - SCOPUS:85139801042

SN - 0191-5096

JO - Journal of Sociology and Social Welfare

JF - Journal of Sociology and Social Welfare

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Peer-reviewed

Research Article

Financial stress and depression in adults: A systematic review

Roles Conceptualization, Formal analysis, Investigation, Methodology, Project administration, Software, Visualization, Writing – original draft, Writing – review & editing

* E-mail: [email protected]

Affiliation Institute of Applied Health Research, College of Medical and Dental Sciences, University of Birmingham, Edgbaston, Birmingham, United Kingdom

Roles Conceptualization, Supervision, Writing – review & editing

Affiliation Department of Economics, University of Birmingham, Edgbaston, Birmingham, United Kingdom

Roles Validation, Writing – review & editing

• Naijie Guan, 
• Alessandra Guariglia, 
• Patrick Moore, 
• Fangzhou Xu, 
• Hareth Al-Janabi

• Published: February 22, 2022
• https://doi.org/10.1371/journal.pone.0264041
• Reader Comments

Financial stress has been proposed as an economic determinant of depression. However, there is little systematic analysis of different dimensions of financial stress and their association with depression. This paper reports a systematic review of 40 observational studies quantifying the relationship between various measures of financial stress and depression outcomes in adults. Most of the reviewed studies show that financial stress is positively associated with depression. A positive association between financial stress and depression is found in both high-income and low-and middle-income countries, but is generally stronger among populations with low income or wealth. In addition to the “social causation” pathway, other pathways such as “psychological stress” and “social selection” can also explain the effects of financial stress on depression. More longitudinal research would be useful to investigate the causal relationship and mechanisms linking different dimensions of financial stress and depression. Furthermore, exploration of effects in subgroups could help target interventions to break the cycle of financial stress and depression.

Citation: Guan N, Guariglia A, Moore P, Xu F, Al-Janabi H (2022) Financial stress and depression in adults: A systematic review. PLoS ONE 17(2): e0264041. https://doi.org/10.1371/journal.pone.0264041

Editor: Pedro Vieira da Silva Magalhaes, Universidade Federal do Rio Grande do Sul, BRAZIL

Received: October 26, 2021; Accepted: January 31, 2022; Published: February 22, 2022

Copyright: © 2022 Guan et al. This is an open access article distributed under the terms of the Creative Commons Attribution License , which permits unrestricted use, distribution, and reproduction in any medium, provided the original author and source are credited.

Data Availability: All relevant data are within the paper and its Supporting Information files.

Funding: The author(s) received no specific funding for this work.

Competing interests: The authors have declared that no competing interests exist.

Introduction

Depression is one of the most common mental health problems and is marked by sadness, loss of interest or pleasure, feelings of guilt or low self-worth, disturbed sleep or appetite, feelings of tiredness, and poor concentration [ 1 ]. Depression is a leading cause of disability and poor health worldwide [ 1 ] and is expected to rank first worldwide by 2030 [ 2 ]. According to a survey from the World Health Organization, more than 322 million people, which accounted for approximately 4.4% of the world population, suffered from depressive disorders in 2015 [ 3 ]. The lifetime risk of developing depression was estimated to be 15%-18% [ 4 ]. Mental health problems including depression have imposed a heavy economic burden on individuals and households who are suffering from mental disorders and even on society [ 5 – 7 ]. Specifically, the global costs of mental health problems are increasing each year in every country. Those costs are estimated to reach approximately 16 trillion dollars by 2030 [ 8 , 9 ]. There is a considerable need to explore the risk factors of mental disorders or the determinants of mental health, which will inform preventive strategies and actions aimed at reducing the risk of getting mental disorders and thereby promoting public mental health.

Many social and economic determinants of depression have been identified. These include proximal factors like unemployment, low socioeconomic status, low education, low income and not being in a relationship and distal factors such as income inequality, structural characteristics of the neighbourhood and so on [ 10 – 12 ]. Research has emerged in the past two decades focusing on the association between the individual or household financial stressors and common mental disorders such as depression and anxiety. However, findings regarding the relationship between different indicators of financial stress and depression are inconclusive in the previous literature. Studies have shown positive associations between depression and various indicators of financial stress such as debt or debt stress, financial hardship, or difficulties [ 13 – 15 ]. Some other studies find no relationships when financial stress was indicated by low income. For example, Zimmerman and Katon [ 16 ] found that when other socioeconomic confounders were considered, no relationship between low income and depression was observed. Besides, there is evidence showing a negative association between low income and major depressive disorder in South Korea [ 17 ]. A 2010 review on poverty and mental disorders also finds that the association between income and mental disorders (including depression) was still unclear [ 18 ].

The social causation theory is one of the theories that has been proposed to explain possible mechanisms underlying the effect of poverty on mental disorders [ 18 , 19 ]. It states that stressful financial circumstances might lead to the occurrence of new depressive symptoms or maintain previous depression. This might be due to exposure to worse living conditions, malnutrition, unhealthy lifestyle, lower social capital, social isolation, or decreased coping ability with negative life events. Individuals or households with limited financial resources are more vulnerable to stressful life events (e.g., economic crises, public-health crises), which might increase the risk of mental health problems [ 18 – 20 ]. However, practically, social causation might not be applicable to situations where individuals are not in poverty or deprivation but still can experience depression due to financial stress.

Reviews to date have examined the relationship between debt specifically and broader mental health outcomes with depression being one of them. For example, two reviews published in 2013 and 2014 reviewed the literature on the relationship between debt and both mental health and physical health [ 21 , 22 ]. They concluded that there was a significant relationship between personal unsecured debt or unpaid debt obligations and the increased risk of common mental disorders, suicidal ideation and so on [ 21 , 22 ]. In terms of depression, they found that there was a strong and consistent positive relationship between debt and depression. Another focus of the literature is on the relationship between poverty and mental health problems including depression in low-and middle-income countries (LMIC). In those reviews, indicators of poverty include low socioeconomic status, low income, unemployment, low levels of education, food insecurity and low social class [ 18 , 23 ]. Both reviews find a positive relationship between poverty and common mental disorders, which exists in many LMIC societies regardless of their levels of development. Being related to low income, factors such as insecurity, low levels of education, unemployment, and poor housing were found to be strongly associated with mental disorders, while the association between income and mental disorders was unclear.

The reviews discussed above focus mainly on the relationship between debt or poverty and mental health outcomes. As sources of financial stress are complex and multidimensional, indicators such as low income or debt are not the only economic risk factor of mental health problems. Other sources of financial stress such as lack of assets, economic hardship or financial difficulties (e.g., whether an individual finds it difficult to meet standard living needs like buying food, clothes, paying bills and so on) might also relate to depression. In addition, various sources of financial stress might be related to mental health problems in different ways. Based on the existing reviews, it is still unknown which domains of financial stress have clearer associations with depression and whether there is heterogeneity in the relationship between financial stress and depression for different populations and contexts. Moreover, the existing reviews do not discuss the possible mechanisms underpinning the association between financial stress and depression. To better understand the association between financial stress and depression and the possible mechanisms underlying it, a systematic review was conducted bringing together a wide range of indicators of financial stress. The eligible economic indicators of financial stress in this review include objective financial variables like income, assets, wealth, indebtedness; as well as measures that capture subjective perceptions of financial stress, such as perceived financial hardship (e.g., subjective feelings of sufficiency regarding food, clothes, medical care, and housing), subjective financial situation (e.g., individuals’ feelings about their overall financial situation), subjective financial stress, subjective financial position, and financial dissatisfaction.

This study aims at providing a comprehensive review of the association between different financial stressors and depression considering the characteristics of the associations of interest and discussing the proposed mechanisms underlying the associations. An understanding of the relationship between financial stress and depression would not only advance our understanding and knowledge of the economic risk factors of mood disorders but also provide policymakers with more understanding of additional public mental health benefits of intervention aimed at alleviating poverty and/or at improving people’s financial conditions.

Search strategies

A systematic review of published literature was conducted using online searches on bibliographic databases. At the first stage, six bibliographic databases including CINAHL, PsycINFO, EMBASE, EconLit, AMED, and Business Source Premier were searched for related peer-reviewed journal articles to April 2019. The search terms are listed in Table 1 . The broad strategy was to combine terms related to finances, with terms related to depression, and terms related to the unit of analysis (individual, household etc). Several key studies that were eligible for inclusion criteria were pre-identified. Before the formal search, pilot searches were performed to make sure the pre-identified key studies can be found by the search. More details of search strategies are displayed in S1 Appendix . All the search results were limited to the English language. No time restriction was added to the search. The reference lists of the eligible studies and several relevant review papers were checked manually to supplement the main electronic searching.

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https://doi.org/10.1371/journal.pone.0264041.t001

Eligibility criteria

The inclusion and exclusion criteria for study selection were designed to ensure a focus on primary studies and secondary studies conducted on adults, using measures of financial stress (exposure) and depression (outcome). The eligibility criteria were tested on a selection of papers by multiple members of the study team to ensure that studies were categorised accurately. Based on the piloting process, the eligibility criteria were further modified. The following is the list of the final inclusion and exclusion criteria applied in this study.

Studies were included if they met the following criteria: (1) observational and experimental studies on the relationship between the individual or household financial stress and depression or depressive symptoms; (2) original research in peer-reviewed journals; (3) conducted on general population samples aged 18 and over; (4) used indicators which capture different dimensions of an individual or household financial stress, such as income, assets, debt, wealth, economic hardship, financial strain, financial stress, and financial satisfaction; (5) studies that measure depression through both non-clinical and clinical techniques (e.g., Centre for Epidemiologic Studies Depression Scale), were eligible for this review.

Studies were excluded if they were: (1) systematic reviews, dissertations, conference abstracts, or study protocols; (2) studies focusing on a specific population including female-only, male-only, people with a special occupation (e.g., soldiers), migrants, or people with specific illnesses; (3) studies relating to societal (as opposed individual) economic circumstances (e.g., income inequality measured at the community level or the country level) or shocks to the macroeconomy (e.g., stock market crashes, hyperinflation, banking crises, economic depressions, and financial crisis); (4) studies that only reported the joint association between several socioeconomic determinants and depression. These were included only if the association related to individual or household finances were reported and explained individually; (5) studies based on overall mental health, or other types of mental disorders (e.g., anxiety, suicide, self-harm, bipolar disorder, schizophrenia, dementia) where the association between household financial stress and depression was not reported and explained independently.

Study selection

Search strategies were applied to six databases (i.e., CINAHL, PsycINFO, EMBASE, EconLit, AMED, and Business Source Premier EBSCO) to generate a long list of candidate studies. All the search results were exported into Mendeley. Search results, after the removal of duplicates, were screened for relevance using the title and abstract information. The full texts of relevant articles were then checked for eligibility based on the selection criteria. Screening and selection were undertaken by two reviewers independently. All authors were consulted when a disagreement arose. The study selection process and reasons for study exclusions were recorded in a flow chart shown in Fig 1 .

https://doi.org/10.1371/journal.pone.0264041.g001

Data analysis

A pre-designed data collection form (listed in S2 Appendix ) was used for the data extraction process. The data extracted from the eligible studies covered the following categories: (1) characteristics of studies: year, author, journal, aim of study, countries, study type, data sources, responsible rate, level of study, eligibility of ethical approval; (2) characteristics of the population: sample size, age group, mean age of the participants, gender; (3) depression measures, definition of depression, validity of the measures; (4) measures of financial stress (exposures) used, measures of the exposure, definition of the exposure, validity of the measures; (5) statistical analysis: econometric methodologies, covariates, whether reverse causality was taken into account, whether there are subgroup analyses and methods (6) main results. The key information being extracted is presented in S1 and S3 Tables, which is a simplified version of the extracted data.

This review focused on the association between each dimension of financial stress and depression and analysed the heterogeneity of the association in different contexts. The eligible studies were reviewed narratively, and the results were stratified by different indicators of financial stress (e.g., low income, low assets, low wealth, debt, financial difficulties and so on). Causal inferences and proposed mechanisms underlying the association between financial stress and depression based on the reviewed evidence were discussed in the discussion section. No meta-analysis was conducted to pool the reviewed evidence due to the substantial heterogeneity in the measurements and definitions of the exposure and outcome variables, study context, and methodologies.

Quality assessment

The quality of the included studies was assessed using an adapted version of the Quality Assessment Tool for Quantitative Studies used in Glonti et al. [ 24 ] (see S3 Appendix ). The original version of this tool is developed by the Effective Public Health Practice Project (EPHPP) [ 25 ]. Seven key domains relating to study design, selection bias, withdrawals, confounders, data collection, data analysis and reporting were considered. Studies can have between six and seven component ratings. The score of each domain equals 1 if the quality is high, 2 if the quality is moderate and 3 if the quality is low. An overall rating for each study was determined based on the ratings for all domains. The overall rating of studies’ quality was classified as high, moderate, or low. Full details of the design and usage of the quality assessment tool can be found in Glonti et al. [ 24 ]. The quality assessment of the included studies was conducted by two reviewers independently. The results of the quality assessment were based on consensus between the two reviewers.

5,134 papers were identified after searching online databases including CINAHL, PsycINFO, EMBASE, EconLit, AMED, and Business Source Premier. The flow chart for the study selection process is displayed in Fig 1 . The total number of papers after removing duplicates was 4,035. Both titles and abstracts of the identified 4,035 papers were screened. 3,763 papers were removed since they did not satisfy the eligibility criteria. The full texts of the remaining 272 papers were accessed and further screened separately by the two reviewers based on the eligible criteria. 235 papers were further excluded leading to 37 studies for consideration. The main reasons for exclusion were that the exposure, the outcome variables of interest, or the targeted population of those studies did not meet the inclusion criteria. Three additional articles were further added after checking the reference lists of all the eligible papers and those of the past relevant review papers [e.g., 18 , 21 ]. 40 articles were finally identified for the data extraction.

Study characteristics

Regarding the number of reviewed studies by years of publication, most of the reviewed studies were published in the past two decades, with a noticeable spike in the last five years. The majority of studies (32 out of 40) reported evidence from high-income European countries and the USA, Australia, Japan, and South Korea. Eight studies were based on low- and middle-countries including China, Chile, and South Africa. In terms of study design, 17 studies were cross-sectional, and 23 studies were longitudinal. The age groups considered in the 40 studies vary: 17 studies focused on the general adult population including young adults, middle-aged adults, and older adults, while 23 studies focused specifically on working-age, young adults, middle-aged, or older adults. Data of study characteristics were displayed in the data extraction form in S1 Table .

Measures of depression

The most commonly used measure for depression was the Centre for Epidemiological Studies Depression Scale (CES-D) [e.g., 26 – 28 ]. Various versions of the CES-D were used in the reviewed studies: six studies used the full version, that is, the 20-item CES-D; 19 studies used the shortened version of the CES-D scale. Other measures were also used to assess the individual’s depressive symptoms such as the Hospital Anxiety and Depression Scale (HADS) [ 29 ], the World Mental Health Composite International Diagnostic Interview (WMH-CIDI) [ 30 , 31 ], a subsection of the General Health Questionnaire (GHQ depression) [ 31 – 33 ], the Alcohol Use Disorder and Associated Disabilities Interview Schedule-IV (AUDADIS-IV) [ 34 ], the 21-item Beck Depression Inventory (BDI) [ 35 ] and the Geriatric Depression Scale (GDS) [ 15 , 36 , 37 ]. Two studies used self-reported depression by asking participants whether or not they had any experience of depression [ 13 , 38 ].

Measures of financial stress

A wide variety of concepts and measures of financial stress were used across the reviewed studies. The financial exposure in the reviewed studies can be divided roughly into two categories. First, personal or household finances, which include income, assets or wealth, debt or hardship were investigated. These economic indicators were measured in different ways. Some studies measured the total amount of assets while other studies measured assets by counting the number of durable items owned by an individual (such as motor vehicles, bicycles, computers, or cameras) or a household (such as fridges, microwaves, TV, cameras). The measures of debt were more diversified: the onset of debt, the amount of debt in general and of different types of debt, the debt-to-asset ratio, debt problems like over-indebtedness, debt arrears, and debt stress. Financial hardship was defined as difficulties in meeting the basic requirements of daily life due to a lack of financial resources. For example, not having enough money for food, clothes, shelter and medical expenses; being unable to pay bills on time or heat the home; having to sell assets; going without meals; or asking for financial help from others were used by these studies as proxies for financial hardship [ 30 , 39 ]. Second, some studies examined the associations between depression and subjective perceptions of financial stress such as perceived financial hardship (e.g., subjective feelings of insufficiency regarding food, clothes, medical care, etc.), subjective financial situation (e.g., individual’s feelings of their overall financial situation), subjective financial stress, subjective financial position, financial dissatisfaction and so on.

Quality of reviewed studies

Full details of the quality assessment of the 40 included studies are displayed in S2 Table and S1 Fig . An observational study design was utilised in all of the included papers. 29 (72.5%), and 11 (27.5%) studies were rated as methodologically strong [ 6 , 13 – 16 , 20 , 26 – 28 , 30 , 31 , 34 , 37 – 53 ] and moderate [ 29 , 31 , 32 , 35 , 36 , 54 – 59 ], respectively. Among the 40 included studies, 34 (85%) had a low risk of selection bias, five (12.5%) had a moderate risk and one had a high risk of selection bias. Eight studies were able to be rated on withdrawals and drop-outs: two of them were rated as “strong”, four achieved a “moderate” rating and one received a “weak” rating. We found that 15 studies (37.5%) had a low risk while 25 (62.5%) had a moderate risk of confounding bias. Regarding the data collection, two studies were rated as ‘strong’, 37 received a ‘strong’ score, and one study was rated as ‘weak’. All the studies received a ‘strong’ rating for data analysis except for one study that was rated as ‘weak’. 35 (87.5%) studies received a ‘strong’ rating for reporting, while five studies had a ‘moderate’ quality of reporting.

Association between income and depression

Eleven studies were identified examining the relationship between individual or household income levels and depression. All controlled for other socioeconomic confounders or/and health status. Seven studies found a statistically significant association between low income and a higher risk of depressive symptoms after adjustment. The positive association between low income and depression was reported in both high-income countries and low- and middle-income countries and found in different age groups (i.e., younger adults, middle-aged adults, and older adults).

The intertemporal relationship between individual or household income and depression was investigated in three longitudinal studies [ 20 , 34 , 58 ]. Osafo et al. found that in the UK, an increase in household relative income (i.e., income rank) was statistically related to a decreased risk of depression at a given time point [ 58 ]. The effect of household income at baseline on the risk of showing depressive symptoms in the following time point was weakened but still statistically significant, controlling for the baseline depression level. Lund and Cois reported similar results: they found that lower household income at baseline could predict a worse depression status during the follow-up period in South Africa [ 20 ]. Based on evidence from the US, Sareen et al. found that individuals with lower levels of household income faced an increased risk of depression compared to those with higher levels of household income [ 34 ]. Furthermore, a reduction in income was also related to an increased risk of depression [ 34 ].

Focusing on pension income, which is one of the main sources of household income for the retired population, Chen et al. found that pension enrolment and pension income were significantly associated with a reduction in CESD scores among Chinese older adults, controlling for other socioeconomic factors and health status [ 43 ].

The strength of the relationship between income and depression varies and can be affected by how income is measured. For example, compared to absolute income, a household’s relative income level within a reference group was found to be a more consistent household financial predictor of depression [ 58 ]. Osafo et al. compared the effect of relative income with that of the absolute value of household income [ 58 ]. They found that a deterioration in the rank of household income was associated with a higher possibility of showing depression at a given time point, as well as the subsequent time point [ 58 ].

The relationship between income and depression holds for all income groups but is more pronounced among lower-income groups. According to Zimmerman and Katon, the association between depression and income is stronger among people with income levels below the median [ 16 ]. Based on a quasi-natural experiment, Reeves et al. also found that the reduction in housing benefits significantly increased the prevalence of depression for low-income UK households [ 38 ]. Additionally, the association between pension income and depressive symptoms in older adults were more pronounced among lower-income groups [ 43 ]. More broadly, the income-depression relationship might be influenced by the economic status of the regions where households live. For example, Jo et al. found that the association between income and depression was significant among participants from low-economic-status regions, while it was insignificant among participants from high-economic-status regions [ 55 ].

Association between material assets and depression

Two studies on the relationship between assets and depression were identified: one cross-sectional study [ 29 ] and one longitudinal study [ 20 ]. Those studies showed that assets were a significant predictor of depression after controlling for demographic and other socioeconomic confounders. Furthermore, the household assets-depression association was found to be stronger for individuals with lower levels of assets at baseline [ 20 , 29 ]. The directions of the assets-depression relationship were investigated in one study. Lund and Cois simultaneously examined both directions of the relationships using a nationally representative survey on South Africa [ 20 ]. They found that low levels of individual and household material assets were significantly related to depression in the follow-up period after controlling for age, gender, race and education. Conversely, having more depression symptoms at baseline was significantly associated with lower levels of individual assets in the follow-up period [ 20 ].

Association between wealth and depression

Three studies explored the relationship between wealth and depression in adults. All of them were based on high-income country contexts including the UK and the US and suggested a positive relationship between individual or household low wealth and depression among middle-aged and older adults. Two longitudinal studies examined the association between wealth and depression. Specifically, Pool et al. found that an increase in household wealth was statistically related to a decrease in the risk of depressive symptoms [ 50 ]. Osafo et al. compared the effect of relative wealth (i.e., wealth rank) and absolute wealth on depressive symptoms [ 58 ]. Their results showed that, instead of the absolute wealth, the wealth rank within a social comparison group was the primary driver of the association between wealth and depressive symptoms [ 58 ]. The strength of the relationship between wealth and depression varies according to the level of wealth at baseline [ 58 ]. For example, Martikainen et al. found the association between household wealth and depression was most pronounced among the lowest wealth group [ 33 ].

Association between debt and depression

Fourteen studies investigated the association between debt and depression and provided empirical evidence based on high-income countries (Europe and the US) and Chile. Three studies were cross-sectional and all of them reported a positive association between debt (assessed by student debt, the occurrence of any debt, or unsecured debt) and depressive symptoms after controlling for demographic and other socioeconomic factors [ 6 , 27 , 53 ]. Eleven longitudinal studies identified by this review investigated the association between debt and depression over time. The definitions and measures of debt vary across studies. Associations between the occurrence and/or amount of financial debt, the occurrence and/or amount of housing debt, excessive mortgage debt, the occurrence of any debt, the debt-to-asset ratio, and the debt-to-income ratio, on the one hand, and depression, on the other, were investigated in the reviewed studies.

The association between changes in debt status and changes in depressive symptoms was investigated in six studies. Specifically, using five waves of data from the Survey of Health, Ageing and Retirement in Europe (SHARE), Hiilamo and Grundy found that both men and women switched from having no financial debt to having substantial financial debt suffered from a deterioration in depressive symptoms [ 28 ]. Also, switching from no mortgage debt to having substantial mortgage debt was positively associated with the deterioration in depressive symptoms among women [ 28 ]. Using a large nationally representative dataset from the Chilean Social Protection Survey (SPS), Hojman et al. also found that individuals who were always over-indebted or switch from having moderate levels of debt to over-indebtedness had more depressive symptoms than those who were never over-indebted [ 46 ]. Additionally, they found that those who were not over-indebted, regardless of the previous debt status, did not experience a worsening in depression, showing that the effect of over-indebtedness on depressive symptoms faded away as the debt levels decreased [ 46 ].

Various measures of debt were used in the reviewed studies such as the occurrence of debt [ 26 , 27 , 53 ], the amount of debt [ 6 , 14 , 26 , 28 , 53 ], and the debt-to-income ratio or debt-to-asset ratio [ 14 , 46 , 48 ]. The debt-depression relationship varies with different operationalisations of debt with the debt to asset ratio being a more reliable predictor of depression than the total debt. Both Sweet et al. and Hojman et al. found that only the debt-to-assets ratio or debt-to-income ratio (rather than the absolute amount of debt) were consistently and positively associated with higher depression scores before and after adjustment (see S1 and S3 Tables for details of the covariates used) [ 14 , 46 ].

Different types of debt such as secured debt (e.g., mortgage debt) and unsecured debt (e.g., consumer debt) might be related to the depression in different ways. The reviewed studies reported a positive association between high levels of mortgage debt and high unsecured consumer debt (regardless of the amount) and depression [ 14 , 48 , 53 ]. For example, Leung and Lau examined the causal relationship between mortgage debt and depressive symptoms and found that a high level of mortgage indebtedness (defined as a mortgage loan to home value ratio over 80%) was associated with more depressive symptoms among mortgagors [ 48 ]. Both Zurlo et al. and Sweet et al. found that unsecured debt (e.g., consumer debt) was a significant predictor of more depressive symptoms [ 14 , 53 ]. Three studies compared the effect of different types of household debts on depression [ 26 , 28 , 46 ]. The results of those three studies suggested that the association between household debt and depressive symptoms was predominantly driven by short-term debt. Specifically, unsecured debt (e.g., financial debt), or short-term debt were associated with a higher risk of experiencing depression, while secured debt itself (e.g., mortgage debt) or long-term debt were not related to depressive symptoms. For example, using longitudinal data from the Survey of Health, Ageing and Retirement in Europe (SHARE), Hiilamo and Grundy found that household financial debt was positively and significantly associated with more depressive symptoms, while the effect of household housing debt on depression was weak or even insignificant [ 28 ]. Berger et al. found a similar result using longitudinal data from the US. Their results (controlling for baseline characteristics and socioeconomic factors) showed that only short-term debt (i.e., unsecured debt) was positively and statistically significantly associated with depressive symptoms, while the effects of mid-term and long-term debt (e.g., mortgage loan) on depressive symptoms were not significant [ 26 ].

However, it is not always the case that the association between debt and depressive symptoms is only driven by consumer debt. As reported in two longitudinal studies by Hiilamo and Grundy and by Gathergood, a secured debt like mortgage might be associated with depression when the secured debt becomes a problem debt [ 28 , 32 ]. Hojman et al. found that mortgage debt had no association with depressive symptoms, while consumer debt was positively and significantly related to more depressive symptoms [ 28 ]. Nevertheless, both Hojman et al. and Alley et al. found that mortgage arrears had a significant effect on more severe depression, even when the effect of consumer debt on depression was controlled [ 40 , 46 ]. In line with their study, Gathergood also found that housing payment problems were strongly associated with a higher depression score [ 32 ].

Association between financial hardship and depression

The association between financial hardship and depression was reported in four studies, all of which were based on high-income countries such as the US and Australia [ 15 , 30 , 39 , 52 ]. They all observed a cross-sectionally positive relationship between financial hardship and depression, which holds after adjustments (see S1 and S3 Tables for details of the covariates used). The intertemporal association between financial hardship and depressive symptoms was reported in two longitudinal studies [ 15 , 39 ]. However, the consistency of the findings is sensitive to the statistical methods applied. Mirowsky and Ross found that current financial hardship was associated with a subsequent increase in depression in the US [ 39 ]. The other study only observed an association between financial hardship at baseline and baseline depression, as well as a weak or even no association between prior financial hardship and current depression [ 15 ]. When the same statistical strategy was applied, the findings from Butterworth et al. were consistent with those were observed in Mirowsky and Ross’s study [ 15 , 39 ].

Furthermore, the reviewed studies showed that the effect of past financial hardship on depressive symptoms decayed with time. In other words, current financial hardship mattered the most for current depressive symptoms. Following Mirowsky and Ross, changes in financial hardship were stratified into four types [ 39 ]. An individual experiencing (not experiencing) current financial hardship and hardship in the past belongs to the always hardship group (no hardship group). An individual experiencing only current (past) financial hardship belongs to the new hardship group (resolved hardship group). Mirowsky and Ross found that the effects of consistent hardship and new financial hardship (3 years later) on depressive symptoms were positive and significant [ 39 ]. Moreover, there was no significant difference in the follow-up depressive symptoms between the consistent hardship group and the new hardship group [ 39 ]. Furthermore, the association between both resolved hardship and no hardship on depressive symptoms was not significant [ 39 ]. Consistent with this, Butterworth et al. also found that the individuals who currently experienced financial hardship were more likely to have depression than those who only experienced financial hardship in the past or never experienced it [ 15 ].

Age was the most analysed moderator of the association between financial hardship and depressive symptoms among the reviewed studies. This review found that there is no consistency in terms of the association between financial hardship and depression across different age groups. Butterworth et al. reported that the effect of financial hardship on depressive symptoms increased with age among Australian adults [ 30 ]. However, Butterworth et al. and Mirowsky and Ross reported different results [ 15 , 39 ]. Specifically, they found that the positive association between financial hardship and depressive symptoms decreased with age in the US. In contrast to the two studies listed above, Butterworth et al. did not find any statistically significant differences regarding this association among different age cohorts in Australia [ 15 ].

Association between subjective financial strain and depression

Eleven studies examined the association between subjective financial indicators (i.e., subjective financial strain, financial dissatisfaction or financial stress) and depression, providing empirical evidence based on high-income countries (Europe, the US, the UK, Japan and Korea) and on China. All of them (including four cross-sectional and seven longitudinal studies) reported a positive relationship between subjective financial strain and depression, holding after adjustments (see S1 and S3 Tables for details of the covariates used)). The intertemporal association between subjective financial strain and depression was reported in two studies [ 44 , 59 ]. For example, Richardson et al. found that increased subjective stress at baseline was associated with greater depression over time [ 59 ]. Similarly, Chi and Chou also found that higher levels of subjective financial strain measured at baseline were associated with more depressive symptoms after three years among Chinese older people [ 44 ]. The association between changes in subjective financial strain and depression was found in one longitudinal study [ 49 ]. Using data from the annual Belgian Household Panel Survey, Lorant et al. found that the worsening subjective financial strain was significantly associated with the increased risk of depressive symptoms and that of caseness of depression [ 49 ].

The positive and significant association between perceived financial strain in childhood and depression in adults was found in both a cross-sectional study and a longitudinal study [ 42 , 47 ]. Using cross-sectional data from 19 European countries in 2014, Boe et al. found that younger adults (25–40) who had experienced financial difficulties as children had higher depression scores in adulthood, while older adults (over 40) did not [ 42 ]. A similar association between adverse childhood financial situation and adults’ depression was also found in a longitudinal study [ 47 ]. Based on a national representative sample of 9,645 South Korean adults without depressive symptoms at baseline, Kim, et al. found that experiencing financial difficulties in childhood was associated with the increased chance of depression in adulthood [ 47 ]. Furthermore, the effect of experiencing financial difficulties in childhood on depression was weaker than that of current financial difficulties [ 47 ].

The gender difference of the association between perceived financial strain and depression was examined in two studies and no statistical difference between females and males was observed, though women tended to report worse depression [ 36 , 44 ].

Summary and discussion of the findings

This systematic review is the most comprehensive synthesis of observational studies quantifying the association between indicators of financial stress and depression in both high- and low- and middle-income countries to date. Findings regarding the relationship between financial stress and depression vary across different indicators of financial stress. Economic indicators such as material assets, unsecured debt, financial hardship, and subjective measures of financial stress are relatively strong and persistent predictors of depressive symptoms, while absolute income and wealth levels have an inconclusive association with depression. The only longitudinal evidence on relative income and relative wealth suggests a stronger relationship between relative income or relative wealth and depressive symptoms than that between absolute income or wealth and depression. Additionally, this review finds that the association between indicators such as income, material assets or wealth and depression is more pronounced in lower socioeconomic groups (i.e., low income or low wealth group). This review is unable to make a conclusion regarding the association between debt and depression across different socioeconomic subgroups. The only evidence is provided in one study showing that there is no difference in the association between debt and depression by assets level. Additionally, there is insufficient evidence to conclude a common pattern regarding the association between financial stressors and depression by gender or age groups, though differences of this relationship across age or gender groups are observed in some of the reviewed studies.

The income-depression association is inconclusive, although income is one of the most commonly used indicators of the individual or household’s economic situation. The reviewed studies consistently reported a positive association between low income and depressive symptoms in univariable analyses. However, this association was largely reduced or even became insignificant when other social and economic factors (such as educational level, employment status and so on) and health status were controlled for [ 31 , 33 ]. The findings are consistent with the results from the previous reviews and empirical research where different mental disorders were considered including depression [ 18 , 23 , 60 ]. It is likely that income has a close correlation with other dimensions of the socioeconomic condition such as educational levels and employment status that affect an individual’s mental health independently from income per se [ 23 ].

Furthermore, this review finds that compared to absolute income (or wealth), relative income (or wealth) in a reference group is a more important risk factor of depression. There is evidence showing a positive association between low-income ranks and current depression scores as well as follow-up depression scores, while no association is found between absolute low income and depression [ 58 ]. The findings here are in line with the previous review, which mainly focused on the association between income inequality and depression [ 61 ]. Patel et al.’s review concluded that a higher level of income inequality at the neighbourhood level was strongly associated with a higher risk of depression [ 61 ]. This review only identified one study investigating the association between relative income or relative wealth and depression. The insufficient evidence on this topic suggests the need for more research to investigate the mental health effects of relative income (or wealth).

Some of the reviewed studies have suggested a positive association between debt and depression despite the substantial heterogeneity in definitions and measurements of debt, study methods, study contexts, and targeted population. The association between debt and depressive symptoms is mainly driven by unsecured debt (e.g., credit card) or late mortgage payments. Secured debt (e.g., mortgage debt) per se is not associated with depressive symptoms. However, depression may still be more likely when individuals or households are no longer able to manage their debt or perform debt obligations. For example, the reviewed evidence shows that mortgage arrears have a significant effect on more severe depression, even when the effect of consumer debt and mortgage debt on depressive symptoms are considered within the same model [ 46 , 48 ]. The findings regarding the relationship between debt and depression are consistent with the findings from the previous reviews on the association between debt and health where depression was one of the outcomes [ 22 , 62 ].

An important consideration regarding the debt-depression relationship is that having personal or household debt does not always lead to depression, as debt is not always a sign of financial problems. Some personal and household loans are taken to finance housing purchases, business, and investments, which are granted based on the borrower’s financial situation and payback abilities. Additionally, except for stress, debt might also bring benefits to mental well-being by generating consumption, feelings of attainment or satisfaction or making investments [ 63 , 64 ]. As a result, the financial stress derived from debt could be partially offset by such positive mental well-being effects. The review suggests that future longitudinal research on the impact of debt on depression should consider mediators to understand the nature of the causal association between debt and mental health.

It should be noted that nearly a half of the reviewed studies are cross-sectional, limiting the ability to draw a conclusion on the directions and the causality of the associations between some indicators of financial stress and depression. A few of the longitudinal studies considered the reverse relationship and/or the unobserved bias using econometric methods. The majority of these longitudinal studies mainly focused on the relationship between debt or subjective measures of financial stress and depression. They provide supportive evidence that, debt and subjective financial stress might lead to subsequent depressive symptoms. Longitudinal evidence remains limited as to the understanding of both directions and causality of the relationships between other indicators of financial stress and depression. For example, only three longitudinal studies provided an exploration of the association between income and depression. The casual relationship between some indicators of financial stress (such as low income, material assets, wealth, financial hardship) and depression should therefore be interpreted with caution.

This review includes a number of studies focusing on the older-aged population. The signs of the relationship between financial stress and depression in different age subgroups do not show a significant difference. Despite this, it should be noted that there might be heterogeneity in the magnitude of the relationship between financial stress and depression across different age subgroups. However, it is difficult to identify if including the studies based on adults aged 50 and over would make the generalisability of the findings towards this population. Because a cross-study comparison is almost impossible as there is a substantial heterogeneity in different studies regarding country contexts, measurements of exposures and outcome variables, study methods and so on.

Based on the reviewed evidence, three possible mechanisms may be behind the relationship between financial stress and depression.

Social causation.

Firstly, as highlighted in the introduction, the effects of financial stress on depression can be explained by social causation theory. The reviewed evidence supports the social causation pathway according to which individuals or households who have low income or low wealth are more likely to be exposed to economic uncertainty, unhealthy lifestyle, worse living environment, deprivation, malnutrition, decreased social capital and so on [ 20 , 47 , 65 ]. Those factors might lead to a higher risk of developing depressive symptoms. Individuals or households with limited financial resources are more vulnerable to stressful financial events, which might increase the risk of experiencing depression. This mechanism is applicable to the studies where financial stress is measured by economic indicators related to poverty, such as income poverty, deprivation, and financial hardship.

Psychological stress.

The reviewed studies also show that subjective measures of financial stress have adverse effects on depression. Indeed, some studies state that subjective financial stress is more important than objective measures such as the amount of debt [ 13 , 41 , 66 ]. Objective indicators of financial stress might have an indirect effect on depression, which is mediated by the individual’s perception of those objective indicators as resulting in financial stress. Experiencing a similar objective financial situation, people may report different perceptions of the objective financial situation due to the heterogeneity of personal experiences, abilities to manage financial resources, aspirations, and perceived sufficiency of financial resources [ 67 ]. For example, individuals with limited financial resources are more likely to be concerned about the uncertainty of the future financial situation. The expectation of financial stress, not just their occurrence, may also cause depression. Furthermore, people living in poverty face substantial uncertainty and income volatility. The long-run exposure to stress from coping with this volatility may also threaten mental health [ 68 ]. Therefore, it is reasonable to believe that both the respondent’s perception of financial stress and objective measures of financial stress lie at the heart of the relationship between financial stress and depression.

Social selection.

Other studies suggest that depression might negatively impact the finances of individuals [ 20 , 69 ]. Social selection theory states that individuals who have mental disorders are more likely to drift into or maintain a worse financial situation [ 20 ]. Evidence shows that mental problems might increase expenditure on healthcare, reduce productivity, and lead to unemployment, as well as be associated with social stigma, all of which are related to lower levels of income [ 18 , 65 , 70 ]. However, some scholars argue that the relative importance of social causation and social selection varies by diagnosis [ 71 ]. Social causation theory is more important to the relationship between financial stress and depression or substance use; while social selection theory is more important in relation to severe mental disorders such as schizophrenia [ 70 , 72 ].

Limitations of the review

This systematic review is the first to comprehensively pool observational studies on the association between individual or household finances and depression or depressive symptoms. However, this review is subject to several limitations. First, since there is substantial heterogeneity in the measurements and definitions of exposure (financial stress) and the outcome variable (depression), targeted populations, and methodologies between studies, a meta-analysis combining the data from the reviewed studies is neither appropriate nor practical. As such, only a narrative approach is used in this review without quantitatively synthesising the data from the studies, which are difficult to compare. Second, the majority of studies reported evidence on high-income countries like the US, the UK, European countries. Therefore, the conclusions of this review are more immediately generalisable to these contexts as opposed to low-and middle-income country contexts. Third, this review undertakes the search on six databases for any related peer-reviewed journal articles without searching for other resources to find grey or unpublished literature and conference abstracts. Excluding the unpublished studies might limit the findings of this review since studies with significant results are more likely to get published [ 73 ]. The published studies may lead this review to overestimate the associations between any financial exposures and depressive symptoms. Fourth, the included exposures in this review are the most direct indicators (i.e., proximal indicators) of financial stress. The findings in this review might not be generalisable to the relationship between a distal factor (e.g., job loss) and depression. Evidence has suggested that a significant life event or experience, for example, job loss, is associated with financial stress and thereby can predict subsequent major depression [ 74 ]. Future review on financial stress and mental health outcomes might benefit from further including the effect of distal factors (such as job loss, changes in working hours, changes in marital status, and so on) on mental health.

Implications

This review has a number of implications for public policy around financial circumstances and depression. Firstly, it highlights the role that measures aimed at alleviating financial poverty and inequality could have in improving public mental health. Secondly, it suggests attention needs to be focused on unsecured debt as a public health measure. For example, providing financial counselling services and financial education to those who have debt stress and depression may help them to effectively deal with individual debt problems and associated depression. Meanwhile, the regulation of unsecured debt markets is crucial to the sustainable development of unsecured lending markets, and thereby supports both financial health and mental health. Thirdly, this review highlights the importance of targeted interventions to break the cycle of financial stress and depression. For example, instead of a one-for-all intervention focusing on the general population, interventions targeted at lower socioeconomic groups might be more effective since the association between financial stress and depression is more pronounced in these groups.

In terms of practical support, the interdisciplinary collaboration of psychologists and financial professionals in the development of interventions aiming to break the vicious cycle of depression and financial stress could be useful. For example, interventions such as poverty alleviation programs, the provision of financial advice or financial education might have a beneficial influence on mental health. The collaboration of policymakers in both mental health areas and financial areas might create win-win situations, having mutual benefits for both areas and saving costs to society in the long run.

Finally, this review highlights the need for further research in certain areas. First, this review suggests that more longitudinal research or randomised control trials (where feasible) are needed to further clarify the directions of the causal relationships and possible mechanisms between different financial stressors and depression or other mental disorders. A better understanding of this can help to design more effective interventions either aimed at alleviating financial stress or at improving mental health. For example, anti-poverty programs such as direct cash transfers might be more helpful for families in poverty or deprivation, where social causation plays the main role in the effect of financial stress on depression. However, if financial stress is due to social comparison, rather than absolute poverty, challenging social attitudes may be more beneficial. This review also calls for more future research to investigate the heterogeneity of the relationship and the difference in the direction of the relationship between financial stress and depression or other mental disorders across different populations. This would provide more precise and solid evidence for developing targeted interventions as noted above.

Second, this review finds that the majority of the existing studies on the financial stress-depression relationship are based on high-income countries. However, low-and middle-income countries have higher levels of poverty and economic inequality, as well as a high economic burden caused by mental disorders and low levels of investment in mental health [ 69 , 75 ]. Therefore, more future research that is based on low-and middle-income country contexts would be important.

In conclusion, this systematic review of the link between financial stress and depression in adults found that financial stress is positively associated with depression, in particular among low socioeconomic groups. The findings suggest directions for policymakers and the need for greater collaboration between psychology and financial professionals, which will be beneficial to developing targeted interventions either to mitigate depression or alleviate financial stress. Further longitudinal research would be useful to investigate the causality and mechanisms of the relationship between different dimensions of financial stress and depression.

Supporting information

S1 checklist. prisma checklist..

https://doi.org/10.1371/journal.pone.0264041.s001

S1 Fig. Quality assessment of the reviewed studies.

https://doi.org/10.1371/journal.pone.0264041.s002

S1 Table. Basic characteristics data extraction.

https://doi.org/10.1371/journal.pone.0264041.s003

S2 Table. Quality assessment form.

https://doi.org/10.1371/journal.pone.0264041.s004

S3 Table. Methods and findings extraction form.

https://doi.org/10.1371/journal.pone.0264041.s005

S1 Appendix. Sample search in PsycINFO.

https://doi.org/10.1371/journal.pone.0264041.s006

S2 Appendix. Data extraction form.

https://doi.org/10.1371/journal.pone.0264041.s007

S3 Appendix. Quality assessment tool following Glonti et al. (2015) [ 24 ].

https://doi.org/10.1371/journal.pone.0264041.s008

Acknowledgments

We would like to thank two anonymous reviewers for their comments that helped to improve and clarify the manuscript.

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