The connection between mind and money: Understanding how debt can hurt your mental health

by | Oct 31, 2022 | Personal Finance

13 October 2022 :In a world where we face mounting financial pressure, it becomes increasingly difficult to stick to the confines of our budget and keep our spending in order. Rising interest and inflation combined with skyrocketing fuel costs have knocked the finances of South Africans, leading to a rise in debt as consumers increasingly turn to credit to make ends meet.

According to TransUnion Q2 2022 Industry Insights Report, despite general consumer sentiment indicating a cutback in spending, new credit activity grew in the first quarter of 2022, with credit card expenditure and the opening of new accounts increasing by a staggering 37.9% year on year.

Stress – often caused by money troubles – and mental health are closely intertwined. With October being Mental Health Awareness Month, CEO of National Debt Advisors (NDA) Charnel Collins says, “Financial difficulties often result in anxiety and stress, which can impact negatively on our mental health, or exacerbate an existing problem.”

During the Covid-19 lockdown, the South African Depression and Anxiety Group (SADAG) conducted an online survey to assess the impact of the pandemic on South Africans’ mental wellbeing. It was revealed that 46% of those surveyed cited financial stress and pressure as one of the main factors that impacted their mental health.

Research conducted by the Money and Mental Health Institute in the United Kingdom made clear this link, with almost half of those categorised as facing ‘problem debt’ also grappling with a mental health issue, while 86% of respondents with experience of mental health problems said that their financial situation had made their mental health worse.

“There are many ways financial struggles can affect your mental health, says Collins. “Being unable to support your family, honour your payment commitments or make ends meet will cause feelings of anxiety and panic. Financial stress can also affect one’s social life leading them to withdraw from social engagements. This, in turn, limits the sufferer’s opportunity to seek support or unwind, leading to an increased sense of isolation.

‘’Over-indebtedness does not only impact our ability to achieve financial security, but it also harms our mental state, taking a toll on our emotional wellbeing. In turn, mental health issues can often require one to take time off from work resulting in a loss of income and an increase in debt that might perpetuate the cycle.”

Collins says that debt counselling is a debt relief option, created to help over-indebted consumers who are struggling to repay their accounts. “Individuals tend to deal with debt stress alone due to a lack of information on debt counselling, hoping that things will get better in the next month. But sadly, without structured support and guidance, they seldom do.

“The good news is that, when fully committed, debt counselling can change a consumer’s financial status for the better. Often after completing the process, consumers are in a position where they can afford their monthly expenses without depending on loans, which significantly reduces the stress and anxiety of worrying about making ends meet.


Debt counselling services include:

  • A free preliminary debt assessment before applying and a full debt assessment after applying, which examines the consumer’s debt and clarifies their financial situation.
  • A reckless lending investigation: This ensures that a consumer understands the risks and financial responsibilities that come with a credit agreement.
  • A debt payment restructuring plan. This involves the debt counsellor negotiating with credit providers on behalf of the consumer, agreeing on a payment path that is manageable for the consumer.
  • A new monthly budget: The debt counsellor assists the consumer with a detailed plan to manage their income and expenditure.
  • Protection from asset repossession and against harassment from credit providers, which can exacerbate financial strain.
  • Monthly aftercare until the consumer is debt free.


Collins shares a few tips on how one can avoid or limit financial anxiety:

  • Have a budget in place: Writing down your income and your expenses helps account for where you spend your money.
  • Save for a rainy day: Not having savings in place results in having to take out a loan when there is an urgent need for money, often leading to stress.
  • Debt management: Paying off your debts in manageable monthly instalments and using any extra cash towards settling your debts will help ease financial stress.


‘’Consumers are encouraged to seek professional help when it comes to debt management. Being guided through the process by an expert lessens the anxiety and sense of being overwhelmed that often comes with facing financial difficulties,” concludes Collins.

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