How does financial planning contribute to mental health?

Financial well-being and mental health are often viewed as separate entities, one relating to the material aspects of life and the other to our emotional and psychological state. However, recent studies and expert opinions reveal these two dimensions are intricately intertwined. Understanding this connection can significantly enhance our well-being, leading to a more fulfilling and balanced life.

Financial well-being encompasses more than having enough money to meet our current needs. It involves having the resources to achieve future goals, fostering a sense of security, and maintaining peace of mind. On the other hand, mental health is not merely the absence of mental illness but a state of well-being that enables us to cope with the everyday stresses of life, be productive, and contribute positively to our communities. Both aspects are crucial for our overall health and happiness.

Financial Stress and Mental Health

Financial stress is a significant contributor to mental health issues. When people are worried about their financial situation, it can lead to anxiety, depression, and even physical health problems. Research has shown a strong link between economic uncertainty and worse mental health outcomes. For instance, a study published in the Journal of Psychiatric Research found that debt stress is closely associated with psychological distress and poor overall health among adults in Ontario. Similarly, another study highlighted in the Journal of Health Economics indicated that debt and depression are strongly correlated, emphasizing the profound impact financial problems can have on mental well-being.

When individuals experience financial well-being, they tend to reduce money-related stress, leading to better sleep, increased energy levels, improved relationships, and enhanced mental and emotional health. For example, a survey by MIQ Private Wealth indicated that 88% of those who received financial advice reported being free of economic stressors, and 95% said it helped them achieve greater peace of mind.

The Positive Effects of Financial Planning

A financial plan is more than just a roadmap to wealth; it is a crucial component of mental health management. Financial planners can give individuals control over their financial future, reducing stress and contributing to overall well-being. According to Carol Lynde, president and CEO of Bridgehouse Asset Managers, having a financial plan significantly affects how well an investor sleeps at night. The study revealed that three-quarters of individuals with a financial plan reported sleeping well, highlighting the profound impact of financial planning on mental health.

Financial planning helps individuals set realistic goals, create budgets, and develop strategies to achieve those goals. This process fosters a sense of accomplishment, enhances confidence, and reduces anxiety about the future. Additionally, having a financial plan allows individuals to anticipate and prepare for potential financial challenges, reducing the uncertainty that often leads to stress and anxiety.

The Role of Financial Advisors

Financial advisors are crucial in helping individuals achieve economic well-being and, by extension, better mental health. Advisors can provide valuable insights, guidance, and support, enabling clients to make informed financial decisions. This, in turn, can lead to improved mental and emotional health as individuals feel more confident and in control of their financial situation.

Advisors are financial experts and empathetic listeners who can help clients navigate the emotional aspects of financial planning. For instance, Ron Malis, a financial advisor with Reegan Financial in Toronto, emphasizes the importance of active listening and asking follow-up questions to better understand clients' concerns. By creating a safe space for clients to discuss their worries and fears, advisors can help alleviate financial stress and promote mental well-being.

Moreover, financial advisors can help clients identify and utilize available resources, such as employer benefits and mental health support services. This comprehensive approach ensures clients receive the necessary support to address their financial and mental health needs.

Financial Education and Literacy

Financial literacy is another essential component of enhancing financial well-being and mental health. Financial education empowers individuals to make informed decisions, manage their finances effectively, and avoid common pitfalls that can lead to financial stress. A well-informed individual is better equipped to handle financial challenges, reducing the likelihood of anxiety and depression related to money matters.

Educational initiatives, such as workshops, seminars, and online courses, can provide valuable knowledge and skills to individuals of all ages. For example, Sun Life offers various tools and resources to help individuals manage their money and achieve financial security. These initiatives promote financial literacy and contribute to overall mental well-being by reducing financial stress and uncertainty.

The Broader Impact of Financial Well-Being

Financial well-being benefits extend beyond the individual, positively impacting relationships, work performance, and overall quality of life. When individuals are financially secure, they are less likely to experience stress-related conflicts in their relationships. Financial well-being enhances productivity and job satisfaction, as employees are not preoccupied with financial worries.

Furthermore, financial well-being can lead to better physical health. Reduced financial stress has been linked to lower cortisol levels, the stress hormone, which can improve overall health and reduce the risk of chronic diseases. In addition, financial security allows individuals to afford healthcare services, including mental health support, ensuring they receive the necessary care to maintain their well-being.

Practical Steps to Achieve Financial and Mental Well-Being

Achieving financial and mental well-being requires a proactive and holistic approach. Here are some practical steps individuals can take to enhance their overall well-being:

  1. Create a Financial Plan: Develop a comprehensive financial plan outlining your goals, budgets, and strategies. This plan should include short-term and long-term objectives and contingency plans for unexpected expenses.
  2. Seek Professional Advice: Consult with a financial advisor to gain insights and guidance on managing your finances effectively. An advisor can help you make informed decisions, set realistic goals, and navigate financial challenges.
  3. Improve Financial Literacy: Invest in financial education by attending workshops, seminars, or online courses. Enhancing your financial knowledge and skills can empower you to make better financial decisions and reduce stress.
  4. Practice Good Financial Habits: Adopt healthy financial habits, such as saving regularly, avoiding unnecessary debt, and living within your means. These habits can help you achieve economic stability and reduce stress.
  5. Utilize Available Resources: Take advantage of employer benefits and mental health support services. These resources can provide valuable assistance in managing your financial and mental health needs.
  6. Maintain a Healthy Lifestyle: Prioritize your physical and mental health by eating nutritious meals, exercising regularly, and maintaining a good work-life balance. A healthy lifestyle can enhance your overall well-being and improve your ability to make sound financial decisions.
  7. Communicate Openly: Discuss your financial concerns and goals with your partner or family. Open communication can help reduce stress and ensure everyone is on the same page regarding financial matters.


Understanding the connection between financial well-being and mental health is essential for a balanced and fulfilling life. By recognizing financial stress's impact on mental health, individuals can take proactive steps to improve their economic situation and, in turn, enhance their overall well-being. Financial planning, professional advice, and financial education are crucial components of this process, helping individuals achieve peace of mind, confidence, and security.

Investing in financial well-being is not just about accumulating wealth but about creating a foundation for a healthier, happier, and more resilient life. By addressing economic and mental health needs, individuals can achieve a state of well-being that enables them to cope with life's challenges, build strong relationships, and contribute positively to their communities. The journey from wealth to well-being is a continuous process, but it is an attainable and rewarding path with the right tools and support.

Twenty years from now you will be more disappointed by the things that you didn’t do than by the ones you did do.