7 Financial Pitfalls and How They Can Negatively Impact Your Health

By June 4, 2018 No Comments
Financial Planning

Does Money Matter?

People often think they can compartmentalize various parts of their life. We may think that the way we eat doesn’t impact the way we feel, or that our financial situation won’t have an impact on our health or relationships. While for some it’s possible to keep everything separate, oftentimes challenges in one area of our lives can bleed over into other areas as well.

One area that can have a significant impact on your life is your financial health. The purpose of this article is to cover some common financial issues and highlight how they come about, how they may impact you in other ways– including your health, and how you can work to overcome these challenges.

We must take control over our finances, so our finances don’t control us.

Almost everyone has to deal with financial pressure at some point in their life. Budgeting and ensuring you have adequate savings to cover the unexpected isn’t easy. Unfortunately, when things get dire, financial problems can really take a toll on our mental and even physical health. In some cases, the consequences are straightforward. For instance, if your financial problems mean that you can no longer afford to pay for health insurance, then you may not be able to see a doctor. This could exacerbate a minor medical problem and lead to even greater financial costs. What’s more, the mental stress associated with money problems can strain relationships and impact your wellbeing. Below is a rundown of some common financial pitfalls that people find themselves in, how they could affect your health, and steps you can take to address them.

1 – Not Saving Money

No one can predict the future! No matter how much money you are making today, you cannot say with certainty that your earning potential will be the same tomorrow. Anything could happen, from layoffs to incapacitation. By saving money now, you build a buffer for the unexpected.

Without savings, people can suffer from insecurity, which is not good for their mental health. Indeed, the inability to save can bring anxiety which could potentially lead to other health problems including depression or even the potential for substance abuse.

On the other hand, having a disciplined approach to your finances where you accumulate savings, can bring emotional satisfaction, which could have a positive impact on your physical health and give you confidence in other areas of your life.

Ultimately, building your savings can be challenging because it requires us to look forward. To save we must defer our consumption; instead of enjoying that hard earned cash right now, you have to wait until some time down the road. While not always easy, saving is critical for your financial health.

2 – Having No Long-Term Investment Plan

Other than putting you on the road to financial abundance and freedom, long-term investments can bring you much-needed peace of mind. Smart investing leads to greater gains on your money than you would receive if you just hid cash under your couch cushion. Without long-term investments, people may grow nervous at the prospect of retirement and other large life events. Further, savings alone often isn’t enough since most traditional savings products do not keep up with inflation, which means the real value of those savings over time can actually decrease! 

For many, investing requires the assistance of a financial expert. There are so many areas and instruments to invest in, and getting into the wrong one could actually increase your level of stress. For instance, if an investment is too risky, its wild price swings might actually make you more stressed than had you not invested at all. On the other hand, finding the right investment can bring stability to your financial future, and this can significantly enhance your emotional and physical wellbeing.

If you’re overwhelmed by the investment options available to you, it may make sense to consult a financial advisor. These experts can help you evaluate your tolerance for risk and what sort of investments are right for you given your preferences and goals.

3 – Acquiring Unsustainable Debt

Debt management is one of the greatest financial challenges one can face. Recently, consumer lending has been relatively loose, meaning nearly anyone can get a loan for nearly any purpose. Indeed, aside from the minor dip after the great recession consumer credit has grown drastically. This freely accessible credit, however, may come with high fees and interest rates, making its management quite difficult.

It doesn’t take a medical expert to tell you that debts can weigh heavily, especially when you cannot get on top of repayments. However, not all debt is created equal and the emotional and physical impact of holding debt can vary from one person to another. For instance, bad debts lead to stress and even depression in the most severe cases. A recent study has shown that people suffering from stress associated with debts are more likely to have mental-health issues and subjectively lower health:

Individuals with unmet loan payments had suicidal ideation and suffered from depression more often than those without such financial problems. Unpaid financial obligations were also related to poorer subjective health and health-related behaviour.

On the other hand, the ability to take control and pay a debt in time can bring emotional satisfaction and enhance a person’s general wellbeing. Before taking on a new debt, you should be honest about whether the payments are sustainable. You should have a financial plan and vision for how you will pay the debt down and should be realistic about why you should take the debt on in the first place.

Retail therapy may feel good in the short term, but if it cuts into your financial plan it may hurt you in the long term.

4 – Overspending

Overspending has to do with people failing to live within their means. Overspending means that you are spending more money than you take in. In the long run, this means that you’ll have to borrow in order to finance your budget deficit. The problem with this is that the debts can become large and unmanageable, and that unnecessary borrowing could develop into a negative behavioral pattern.

Overspending becomes serious when people are forced to borrow in order to repay their old debts. In such a situation, it is very easy to fall into a debt trap that is extremely difficult to get out. This can then lead to a debt crisis, which is a stressor that could lead to potential health problems such as chronic anxiety, sleep disorders, headaches, and gastrointestinal disorders among others.

Like debt, overspending can be controlled by having a financial plan. Spending within your means and leaving something to save and/or invest can be quite emotionally satisfying no matter how little you earn.

5 – Not Having a Financial Plan

The best way to manage personal finances is by drawing up a plan and sticking to it. Many people spend a lot of time thinking about how to earn money and how to spend it, but not much time thinking about how they can make their money work for them. 

Without a plan, it is not easy to weigh the urgency of your needs, and you can end up spending all your money only to realize later that you forgot to deal with the more pressing issues first. This can lead to lack of satisfaction at work and lead to financial stress which is bad for your emotional wellbeing.

Having a financial plan and sticking to it can help you to set realistic goals and lead a life with a sense of financial direction and purpose. This can lead to increased personal satisfaction and will help you to map your financial growth and associated milestones. Again, discipline and a long-term vision are keys to success here.

Health insurance is one example of how connected your financial and physical health can be.

6 – Not Having Health Insurance

It is surprising how people spend thousands of dollars to secure their cars and houses but may forego the opportunity to secure expenses related to their physical health. We often forget that our personal health is our greatest asset.

The danger of neglecting to get medical insurance is that it becomes likely you’ll ignore minor ailments which may develop into more serious health problems. Ultimately, the savings of not buying insurance may melt away when you’re faced with large medical bills for conditions you’ve neglected to treat.

Thus proper personal finance management should take a holistic view of your potential financial needs, including the need for medical insurance. With insurance, the costs associated with healthcare services are (oftentimes) much more predictable and easy to bear. Some insurance programs provide you access to preventive care or have health-based incentives to minimize chances of falling sick and ensure that ailments are detected early enough to reduce the cost of treating them in their later stages.

7 – Not Seeking Professional Personal Finance Assistance

When you are in financial distress, the steps you take to deal with your situation will go a long way to determine how those issues are resolved and the effect they have on your emotional and physical wellbeing. Without professional assistance, people turn to habits whose effects can be quite disastrous to their health.

Below are some bad habits that can develop from financial problems and how they can affect a person’s health.

Some Destructive Behaviors That Can Correlate With Financial Challenges

Not everyone who has financial challenges may have other problems or turn to addiction to address them. However, below, we have highlighted some examples and associated studies that show there can be a correlation between strained financial situations and behavioral patterns that may have a negative impact on your health.

Excessive Alcohol Intake and Tobacco Use

When people face financial crises they may sometimes turn to alcohol and tobacco, or other substances for comfort. The problem is that excessive intake of alcohol and tobacco can cause a number of health problems. For instance, excessive alcohol consumption can lead to cardiovascular disease, cancer of the liver, anemia, depression, and cirrhosis among other killer diseases. Tobacco smoking is also associated with health problems such as lung cancer, high blood pressure, and coronary heart disease among others.

Instead of turning to alcohol and tobacco to mask or avoid financial stress, the more prudent approach would be to seek the assistance of a professional personal finance expert or to personally address those financial challenges directly. 

Overeating

When some face financial stress, they may end up searching for comfort in food as opposed to looking for professional assistance, this can lead to weight gain and eating disorders. As a way to cope those facing financial stress can develop bad eating habits and this can lead to obvious health challenges such as excessive weight gain. If obesity sets in, it comes with a host of health risks such high blood pressure, diabetes, fatty liver disease, sleep apnea, cancer, heart diseases, kidney disease, osteoarthritis, and some types of cancer. Interestingly, some studies have even shown a correlation between early-life poverty and later-life obesity.

None of this, however, is a foregone conclusion. Financial challenges don’t have to lead to bad health outcomes. Further, you can take personal steps to ensure you don’t face any financial challenges in the first place.

Choosing a path that may defer gratification but makes us healthier and happier in the future is the hard but important choice we must make.

The Takeaway

Overall, there are many anecdotal and scientific reasons to believe that financial health can impact your mental and physical health. Common financial challenges that could manifest in other parts of your life include a lack of savings, insurance, investments, professional financial assistance, excess debts, and overspending.

These financial problems could lead to anxiety and stress which may then develop into other medical problems. Furthermore, some people get into self-destructive habits as they try to battle financial stress. These coping mechanisms, which may include excessive alcohol intake and smoking can lead to a multiplicity of other health problems including cancer, high blood pressure, and diabetes. 

Ultimately, your financial well being can have a significant impact on your physical and mental health. Thus, it is imperative to adopt proper financial management practices such as saving, budgeting, investing, and spending within your means to make sure that your financial situation does not have a negative impact on other parts of your life.

For many people talking about their finances is taboo. We think it’s time to change the narrative. It’s time to start talking about money, the important role it plays in our lives, and to take control over our finances so our finances don’t control us.

Note: If you have any medical issues please consult a licensed medical professional. Do not delay and risk your health. CNote is not a registered investment provider, and this information should not be relied upon as investment advice. Every financial situation is different and you should seek tailored advice to your specific financial circumstances. 

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