The link between debt and depression

by | Oct 12, 2021 | Personal Finance

The link between debt and depression – don’t let your money damage your mental wellbeing

With October being Mental Health Awareness month, the pandemic has only served to reinforce the link between our money and our mental health.

The regulated lockdowns, which led to increased business insolvencies, retrenchments and loss of income for many people, has largely attributed to a spike in mental health issues such as grief, depression and anxiety.

A National Income Dynamics-Coronavirus Rapid Mobile Survey (NIDS-CRAM), conducted during May-June and July-August 2020, revealed that people who retained paid employment during the COVID-19 lockdown had significantly lower depression scores than adults who were retrenchment. The study concluded that ‘the economic fallout of the COVID-19 pandemic resulted in unprecedented job losses, which impaired mental wellbeing significantly.’

According to stats from VeriCred Credit Bureau, as of end of Q2, 2021, the average arrears debt per consumer stood at R15 893, and the largest Quarter-on-Quarter growth of debt, came in one month personal loans. This indicates that financial distress is centred around immediate debt difficulties, which are increasingly experienced by consumers. “It is therefore understandable that the stress levels of those in debt are heightened,” says Sebastien Alexanderson, CEO of National Debt Advisors (NDA).

Alexanderson strongly agrees that money issues not only affect your pocket, they also affect your emotional, physical, and mental wellbeing. “Based on our interactions with our clients, we have seen that when financial distress is severe, worrying about it can lead to physical symptoms like lack of concentration, headaches, tension and pain.


“More recently, with the pandemic and the effect of the lockdowns, consumers have also told us of their experiences with panic attacks, anxiety and depression, due to the financial strain they are under. Poor mental health can make earning and managing money so much harder than it already is, meaning that debt starts to become a vicious cycle”.


Here are some common ways that money and mental health can affect each other:

  • Certain situations might trigger feelings of anxiety and panic. Things like talking to your bank, opening envelopes and emails, or having a financial assessment.
  • You might feel very anxious about a decision to spend money, even when you can afford it.
  • If you’re feeling low or depressed, you may lack motivation to manage your finances. It might not feel worthwhile trying.
  • Spending may give you a brief high, so you might overspend to feel better – which can lead to debt.
  • Going through a period of mania or hypomania may lead to some impulsive financial decisions.
  • If a mental health problem affects your ability to work, then that will influence your income.
  • Being in debt can cause ongoing feelings of stress and can lead to bouts of aggression and insomnia.
  • Money problems can affect your social life and relationships.
  • Stressing about your finances might make you feel lonely or isolated.
  • Lack of money often leads to disagreements and strife in a marriage / partnership.
  • You might not be able to afford essential things we all need to feel well. This might be housing, food, water, electricity medication and therapy.


Alexanderson goes on to say: “Consumers struggling with their mental health would do best to talk to a healthcare professional. Sadly, there is still a very negative stigma attached to mental health issues – and this stops people seeking help.”

Here are some tips on how to better cope with your financial distress, and the emotional distress which may accompany it:

Get out of denial

Burying your head in the sand won’t help the situation. In fact, with matters involving legal action, time is of the essence – and the sooner you acknowledge your situation and start to focus on solutions, the better.


It’s okay to not be okay

We have been conditioned to put on a brave face and “be strong” even when we are falling apart. However, this approach doesn’t always yield the best results. It’s okay to not be okay – and acknowledging that things are tough right now does not mean you are a failure. It simply means that you have problems that you need to find solutions to. Don’t be too hard on yourself.


Reach out and talk to someone

If you have access to a health professional, counsellor, or life coach – then speak to them. If not, speak to someone in your circle who you can trust. Verbalising your distress can lighten your load and may be just what you need.


Speak with your creditors and people you owe money

One of the worst things you can do is to avoid your creditors. This will only lead to further hounding by debt collectors and eventually legal action will be taken. Do not avoid friends and family who you owe money to. This  could seriously damage relationships that matter. If you don’t feel confident enough to speak to your creditors, get a registered debt counsellor to assist you.


Make the effort to know your rights

South Africans have rights as consumers and debtors through legislation within the Consumer Protection Act and the National Credit Act. Make the effort to become as financially informed as possible.


Focus on the good

Sometimes we can become so overwhelmed by our problems that we don’t see the positive in our situation or acknowledge the solutions staring us in the face.


Watch out for the signs

Mental health problems are as real as physical ones. When coupled with financial problems, it can lead to a vicious cycle and ultimately a downward spiral. Watch out for anxiety, depression and other mental health problems in yourself and in those around you.


Alexanderson encourages people to reach out. “Whether it is a change in income, relationship problems,  increased work load, coping with the children’s school schedule, paranoia about getting ill, pressure to take – or not take – the vaccine, mounting debt and harassment from debt collectors  – everyone is fighting some sort of battle. It is important to know  that you are not the only one in a bad space right now.


“From registered debt counsellors, to mental health practitioners, religious leaders, family, and friends – your available support structure is probably bigger than you realised. Reach out.”

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