Understanding finance management in the face of poor mental health
“Most of my days were a blur but the constant sense of exhaustion and an overarching feeling of meaninglessness in life is something I will never forget. It was so all-consuming that I had stopped caring about paying my bills, keeping a tab on my savings and expenditures or even keeping my cash and ATM cards safely for that matter,” recalls Vishakha Barua (name changed). 28-year-old Vishakha had a protracted stint with depression and her battle with the illness made her realize that the deterioration in mental health can have spillover effects on various areas of patient’s life.
Globally, more than 300 million people, equivalent to 4.4% of the world’s population are affected by depression according to the World Health Organization. The WHO also states that, “Nearly half of these people live in the South-East Asia Region and Western Pacific Region, reflecting the relatively larger populations of those two Regions (which include India and China, for example)”.
The stigma around mental illnesses has started evaporating albeit at an extremely slow pace. But conversations on mental ailments continue to be coloured by misinformation, prejudice and with little understanding of how the disease affects patients and the trickle-down impacts it has on a patient’s career, interpersonal relationships and finances.
The difficulty in envisaging a mental health emergency
The road to acknowledging that one may be suffering from a mental illness and seeking medical help can be a difficult one. Given the lack of acceptance and knowledge about how debilitating mental ailments can be, people never factor in that possibility of an emergency because of mental illnesses when planning their finances, Barua says. “I had to quit my job because my depression was so severe.
While I had enough savings the ordeal made me wonder what would have happened if I had nothing to fall back on. Before my mental health started declining, I had been financially disciplined. But I had never ever saved money or made an investment thinking that I would need it someday because of a mental illness. The thought never occurred to me and the possibility of being caught in a financial sinkhole because of physical illness always seemed more real.”
In 2018, the Live Love Laugh Foundation, a charity founded by Bollywood actress Deepika Padukone that has been creating awareness about mental illnesses in India conducted a survey on common perceptions regarding mental health. The report highlighted the lack of understanding that mental illnesses are medically treatable, and that the absence of timely intervention can pose a threat to the lives of the patients. About 60% of the respondents cited lack of self-discipline and will-power as the causes of poor mental health. It is no surprise that for most people, the idea of being financially prepared for a mental health emergency is laughably ridiculous.
The trouble in decoding the financial impact
Deepak Chhabria, CEO of Axiom Financial Services Pvt Ltd. opines that the element of shame associated with mental illnesses in conjunction with the fact that financial matters are extremely private can create a unique conundrum. “Mental health is a very delicate subject and people are hesitant to openly discuss the same. But recent incidents like the death of an actor by suicide and of celebrities sharing their mental health challenges, it has made the atmosphere more conducive for discussions. Financial implications of mental health issues are still to be understood, as finance is a private matter and also a subject which people do not discuss.”
Mismanagement of finances due to poor mental health can in turn exacerbate the condition of patients. According to a journal published in The Lancet Psychiatry, people with mental health problems are more likely to get into financial difficulties, and people with financial problems are more likely to develop symptoms of mental illness than those without money worries.
Reducing the burden
Parvati Iyer, chief investment officer at Femwealth, an online investment management platform says, “Mental health challenges can magnify financial issues and create a vicious cycle. Poor mental health can make earning and managing money difficult. And worrying about this can further worsen your mental health. Thus money and mental health are intrinsically linked. Therefore in order to break this vicious cycle, one of the first things to do is to automate all financial transactions.”
Iyer also suggests that investing cycle be put on auto-pilot using a SIP into mutual funds and ensuring that a direct bank debit is done on specific dates such as the 1st or 5th of the month. “In event of a disposition to take knee jerk reactions, one can also consider investing in products that lock your savings like NPS, ELSS. If there are any outstanding debts or loan, one should give higher priority to servicing the loan. This will help in reducing anxiety regarding obligations. Needless to say the basics like medical insurance to cover the mental illness should be in place,” she says.
While automation may reduce the burden of having to actively manage one’s finances, it may not be enough, should there arise a situation when the patient is forced to quit his/her work. Chhabria says that the first step in such circumstances is to realize that the person grappling with mental health conditions may not be in a position to take correct decisions regarding their finances. “It’s imperative that the savings are protected, so that in case the patient’s condition becomes such that they need to take a break from their professional lives, they are prepared if their income and cash flows are impacted. Firstly, if they are confident of a relative to take responsibility of this activity, they should appoint one. The important decision of managing money and investing should be handed over to this person. In cases where there are no relatives, a trusted friend or legal counsel’s services should be used.
But this should be done after proper legal documentation with responsibilities clearly specified is put in a place. These individuals can take fiduciary responsibility after understanding the financial situation and health condition.”
Seek the advice of a finance professional before opting for a major purchase or a big ticket loan in case your mental health has been suffering.
Keeping a trusted friend or family member aware of your financial condition can help you avoid erroneous financial decisions.
In event of a disposition to take knee jerk reactions, one can also consider investing in products that lock your savings like NPS, ELSS.
Put investing cycle on auto-pilot using a SIP into mutual funds and ensuring that a direct bank debit is done on specific dates such as the 1st or 5th of the month.
This article is part of the HT Friday Finance series published in association with Aditya Birla Sun Life Mutual Fund