“A woman who is more financially confident and secure is a happier woman. And a happier woman is going to be better able to nurture, share, and give support to all those in her life.” – Suze Orman

How do you feel when you think about money? Does it make you feel uneasy, ashamed, guilty, fearful, or even angry? Or does it make you feel peaceful, contented, and even happy?

Although money is not the most important thing in the world (people and relationships are more important), it has a profound effect on our lives, for better or for worst.

Having financial abundance brings us peace of mind, comfort, freedom, and even happiness. On the other hand, not having enough to make ends meet can make us feel stressed, ashamed, and powerless.

Sadly, women, on average, earn less than men for various reasons. It can be due to the gender pay gap caused by discrimination, working in female-dominated industries that command lower pay, being a mother and raising a family (and thus, working less or giving up paid work).

But aside from these factors, women are also more susceptible to experiencing mental health concerns — such as anxiety, depression, and post-traumatic stress disorder – compared to men. And whether you realise it or not, our mental health affects every aspect of our lives — including our finances.

How my poor mental health affected my financial health

My 20s was, for lack of a better term, a mess.

On the outside, I was functioning quite well by society’s standards – holding full-time work and even climbing the corporate ladder, and doing what a woman in her twenties would typically do: travel, go to parties, be in romantic relationships, pursue post-graduate higher education, live independently in her apartment – on the inside, however, I was mentally, physically and financially unhealthy.

I suffered from depression, anxiety, chronic illnesses, two autoimmune diseases, and even had breast cancer and heart disease scare (which was thankfully ruled out after years of monitoring and countless tests and check-ups). And because I was always in the hospital, one of my doctors, who I started seeing at the age of 21 until my last check-up before migrating to Australia at 33, even commented: “I already saw you growing up! I will miss you.”. Even though I’m grateful for my doctor, who was part of my health journey, I will not miss all the hospital visits, medications, and all the medical expenses that ate up most of my salary and savings!

Science has now validated that our mental health affects our physical health (look up the fancy term psychoneuroimmunology to learn more). When we are chronically stressed, anxious, and depressed like I was before – our immune system, heart, endocrine system, and other aspects of our physical health suffers.

Simply put, poor mental health can manifest as various physical illnesses. And if you’re not living in a country that provides free healthcare (or you have a pre-existing condition not covered by medical insurance), being sick will surely drain your bank account. Not to mention the possibility of not being able to work or perform poorly at work.

Aside from physical illnesses manifesting from poor mental health draining my bank account, here are the other ways depression, anxiety, chronic stress, and low self-esteem affected my financial health:

• Like most women, I knew that I have to prioritise saving and investing, but I still didn’t and over the years, bought a lot of unnecessary things like clothes, shoes, bags, makeup, etc., justifying that “I need it and it’s on sale anyway”. I didn’t realise it back then, but the real motivation behind all the unnecessary spending on material things was because it made me feel better. Shopping, or what we call “retail therapy”, made me feel better. It may be a short respite from all the pain, but it still helped ease it even for a while. And there’s a neuroscience explanation for this: whenever we shop, our brain anticipates a reward and releases dopamine (a feel-good hormone), which gives us a shot of pleasure. Dopamine release can also explain the reason why shopping becomes addicting to some.
• I got involved in a toxic and abusive relationship that took advantage of my vulnerability and squandered and stole my money, and also invested in an insurance and business that I intuitively knew was a wrong financial decision and lost a lot of money. I will not go into the unnecessary details, but the point is, being depressed and having low self-esteem impairs our judgment, lowers our standards, and causes us to make overly-emotional decisions that can be disastrous financially.
• I spent more than I can afford in fancy restaurants, hotels, clubs, events, and travelling. Again, to make me feel better about myself and numb the pain and suffering I was feeling. And as an act of rebellion because I was angry for being sickly at a young age. I justified “enjoying life” because I might die early anyway, so what’s the point of saving? Clearly, that was the wrong way of coping with depression.
• I became too generous to my financial detriment and treated and lent money to people who did not pay me back. While helping someone is a noble act, we have to take care and “save” ourselves first before saving someone else. We should not deplete but extend generosity to ourselves as well.

If you can relate and had similar experiences, don’t beat yourself up. Forgive yourself for making financial mistakes that were unconsciously driven by your emotions and mental health. 

“We spend more than when we feel less than.” – Suze Orman

When I focused on healing myself mentally and physically, I started healing financially as well.

I am happy to share with you that although I’m still on a journey to make up for lost time, I am financially on the right track. I am now debt-free, started growing my retirement fund, on the right path to becoming an investor, and have a substantial amount of savings. Nowadays, I enjoy saving – without feeling deprived or being a miser — more than spending that I recently received an email from The Commonwealth Bank of Australia congratulating me for being one of their top savers! I’m not sharing these to boast. After all, I’ve only made modest financial achievements and in no way an expert with money (I still make bad financial decisions from time to time). I’m sharing this intending to give you hope that it is possible to bounce back after a financial wreck and be healthy in every aspect of your life, including your finances.

The Brain Science of Decision-Making

Do you make rational financial decisions?

On a daily basis, we decide whether to save, spend, or invest our money. But although we may think we are making rational decisions financially, it turns out, decision-making is not a rational process.

Decision-making is not rational. Our intuition and emotions play a role when it comes to decision-making.

When discussing the neuroscience of decision-making in class, our mentor, neuroscientist Dr Sarah McKay, mentioned a study that found out that people whose part of the brain that generates emotions were damaged cannot make decisions!

Also, in people who are depressed, their amygdala (the “emotional” part of the brain) is more active than their pre-frontal cortex (the “rational” part of the brain). In contrast, healthy people’s pre-frontal cortex can inhibit amygdala activity, making them better at regulating emotions and making sound decisions.

Knowing this helped me to become compassionate towards myself whenever I remember the financial mistakes I made in the past.

Money and Women Empowerment

What’s the connection between money and being an empowered woman?

As mentioned earlier, although money is not more important than people and relationships, it has a tremendous effect on our lives. Being on top of our money can make us feel empowered (as opposed to feeling powerless and afraid) in various ways:

• Money gives us the power, freedom, and control over our lives and destiny. Having money can help us leave a toxic and abusive relationship, change careers, quit a toxic job, start a business, say no to people and have healthy boundaries because we don’t depend on them financially. Ultimately, financial abundance allows us to live our life the way we want to.
• Money can make us happy and live a meaningful life. When we are healthy financially, we can take care of ourselves and our family without feeling stressed or burdened. We can also help and give generously to charity without being depleted, and we can pursue our passions without worry or guilt. All these can add happiness and meaning to our lives.
• Money makes us feel confident and courageous. Confident that whatever happens, we have our own back, that we can take care of ourselves when faced with various adversities. It makes us courageous enough to take risks that could improve our lives because we know that we’ll still be okay even if things don’t work out as planned.

Some suggestions: what to do before spending money – strategies that worked for me

I’m not a financial expert, but I will share with you what worked for me that you can apply and see if it’ll work for you as well.

1. Before purchasing something, check your emotions or how you’re feeling first.

Ask yourself: “Am I stressed/depressed/angry/ashamed/guilty/excited/happy/anxious?”.

Don’t make financial decisions — especially the significant and life-altering ones — when you’re either experiencing negative emotions or overly excited and happy (positive emotions can sometimes make us overly optimistic and overestimate success).

Give the rational part of your brain time to overpower the emotional part of your brain. Remember that emotions, though a natural part of the decision-making process, can distort our thinking and influence our behaviour.

2. Uncover the motivation behind the spending.

Acknowledge the reason why you want to buy or spend on something.

Is it to make you feel better because you’re feeling down or feeling “less than”?

In this case, perhaps talking to a friend, watching a funny movie, taking a walk in nature, or exercising are better coping strategies than buying that designer dress, bag, or latest iPhone (items may be less expensive, but you know what I mean). The same goes with experiences – do you really have to splurge on that fancy restaurant or spend too much on vacation?

3. Give it time and sleep it off.

This strategy is effective, although not easy at first if you’re used to spending impulsively.

If you want to buy something that’s not necessary or something you need, leave it for 24-48 hours, or longer if you like.

After taking a “break”, see if you still want to buy it. If you really do and can honestly afford it, go for it! I’m all for treating ourselves from time to time. What’s important is not to keep purchasing unnecessary items out of impulse.

4. Spend on what adds value to your life.

Prioritise spending on experiences and altruism.

As long as we can really afford it, experiences like travelling, spending quality time with family, celebrating special occasions, pursuing our hobbies and passions, going to the theatre, experiencing various forms of art, and becoming altruistic by helping the less fortunate will make us feel happier.

It will also fill our lives with richness and meaning instead of spending money on unnecessary material things that only give temporary pleasure and lose their shine more quickly.

While I love beautiful and luxurious items, I make sure that I purchase them for the right reasons (i.e. it’s meaningful to me or truly add value to my life). I also make it a point to practice minimalism (i.e. valuing quality over quantity and experiences and people over things).

The Key Takeaway

Our mental health affects our financial health because decision-making, which includes financial decisions, can be heavily influenced by our emotions and mental health.

Further, poor mental health can lead to poor physical health and impulsive and needless spending to feel better, resulting in bad financial decisions that undermine our financial goals.

Therefore, to become financially healthy, we must acknowledge the influence of our emotions when making decisions and prioritise looking after our mental health.

To become empowered women, we need to have the power and control over every aspect of our lives, including our money.

Now it’s your turn

1. Reflection: How’s your current financial health? Are you happy with it? If not, do you think your mental health plays a significant role in being unable to reach your financial goals?
2. Action Step: Before buying something you don’t need, try to pause and check how you’re feeling or what emotions you’re experiencing. Ask yourself: “Do I want to buy this to make me feel better because I’m sad/angry/bored/depressed/anxious/overly excited/embarrassed/etc.?

Thank you for reading! Please leave a comment below and share what you’ve learned or how this post helped you gain insights into becoming more financially healthy. Also, which of the suggested strategies before spending have you tried and worked for you?

References:

Beyond Blue (https://www.beyondblue.org.au/who-does-it-affect/women)

Orman. S. (2007). Women and Money. Spiegel & Grau.