The Real Cost of Financial Distress

In present times, you will notice that every other person is undergoing financial distress, and this has accelerated even more in the post-pandemic world. For some, this stems from an escalating debt or a loss of a job; for the rest, it could be unexpected expenses or a mix of these factors. A 2022 PWC Employee Financial Wellness Survey indicated that personal financial distress impacts employees emotionally, mentally, physically, and socially.
More than 3,000 workers who participated in the survey claimed that money worries in the past year have left a major impact on their mental health (34%), sleep (33%), self-esteem (30%), and physical health (23%). The recent economic instability means that a higher percentage of people are now witnessing financial struggles and hardships. Those of us who are fortunate to have steady incomes above the Indian average salary, which is Rs. 3,87,500 p.a., as of 2022, have more options as to how we spend or invest money, for the most part.
Let’s take a look at how an accumulation of this financial distress translates to a diverse set of added costs and problems.

A Breakdown of “Actual Costs” of Financial Distress

1. Loss of Productivity

Lifestyle experts have time and again spoken about the connection between employees’ physical health and their engagement and productivity on the job. This holds true for financial well-being as well. When we are stressed about our finances, it can deeply affect how we show up for work. This may lead to poor performance or even worse, cause job loss, which can deteriorate one’s financial situation rather than improving it.

2.Mental Health Issues

Individuals experiencing financial distress are twice as likely to show signs of poor health and are four times more prone to complain of ailments, as per a report published by Forbes. A combination of financial and other stressors can manifest itself through mental health issues like anxiety, a feeling of being overwhelmed, depression, lack of motivation, and loss of concentration in routine activities, including work. The real problem arises when these physical symptoms start hampering workplace engagements, productivity, and attendance. In some cases, the one’s going through such stressful situations are also likely to quit their jobs, thereby hampering retention rates.

3.Lack of Money Management

One of the biggest causes and effects of financial distress is a lack of financial literacy and poor money management habits. This existing stress further creeps upward and additional expenses like credit card bills, home loan EMIs, and other debts emerge, and suddenly, the person finds themselves struggling even more with a mounting pile of unpaid bills. Invariably, any delay in payments can severely affect one’s credit score and overall credit worthiness.

4.Physical Ailments and Unhealthy Coping Mechanisms

Financial worries can put you out of action and cause physical ailments such as gastrointestinal problems, heart disease, high blood pressure, and headaches among other things. In some cases, people delay or skip visiting a doctor for fear of additional expenses. What further deteriorates the situation is when people resort to unhealthy coping methods like drinking too much, consuming illegal drugs, overeating, or gambling. You get trapped in a downward spiral of rising financial problems and declining mental health.

The Way Forward

No matter how dreary your situation may be, there’s a way out. Instead of bottling things up and making your financial stress worse, take charge of your personal finances and gain financial stability.
The foremost measure is to seek help on personal finance management and gain investment ideas from a reputed finance expert or wealth management company like Dezerv. When you learn the link between money and mental health, you can navigate the future with confidence and clarity in this uncertain time. With this, remember to eat right, make a fitness plan, find safe investment options, plan your spending, set a realistic budget, and build an emergency fund. By doing this, you can balance your financial, physical, and mental health.