The Link Between Health and Financial Well-Being

Financial well-being can impact nearly all areas of your life, including your physical and mental health. Even an additional $5,000 per year can give you a measurably longer and healthier life, according to Peter Muennig, professor of health policy and management at the Columbia University Mailman School of Public Health.

“Additional money adds up in terms of health and longevity,” Muennig says. “If you’re financially secure with a retirement account that’s doing well, you will probably feel more comfortable shopping at a ‘natural foods’ supermarket, and you might not take a side job or work overtime, leaving more time for exercise. Less stress, a good diet, and exercise means that you will likely age more slowly than you otherwise would have.”

Financial wellness is correlated with good health, while financial stress, including a high debt-income ratio, puts physical and mental health at risk. Oscar Jiménez-Solomon, a research scientist at the New York State Psychiatric Institute, has dedicated his career to understanding the relationship among indicators of financial hardship, income, and mental health. His research explores both sides of the equation—how financial wellness impacts mental health, but also how mental health impacts financial wellness—and seeks to develop solutions to address these challenges.

Studies show that people who have difficulty repaying their debts and have a high number of debts have a significantly greater risk for depression and suicidal thoughts and behaviors, says Jiménez-Solomon.

“The research shows that indebtedness creates two experiences that can be fairly lethal,” Jiménez-Solomon says. “One is a sense of uninterrupted hopelessness, feeling like there's no way out and feeling trapped. The other is shame, which is very isolating. People walk around with secrets and feel not worthy of support. Societies like ours tend to see economic success as a reflection of a person's qualities and economic difficulties as a sign of personal failure.”

For those struggling with financial hardship, creating a concrete plan of action may be helpful.

“What we see is that when people have a plan, hope can begin to increase,” Jiménez-Solomon says. “One of the key components of hopeful thinking is to feel that you have concrete pathways to achieve the things that matter to you and your life goals. Having a sense that there's a way out of your situation can have an important financial and mental wellness impact.”

Jiménez-Solomon recommends seeking support, whether it’s from someone the person trusts, a peer, a friend, or a professional. Free financial counseling services are available to New York City residents and those who work in the city. Financial counselors at the NYC Financial Empowerment Centers can help individuals develop a personalized budget, identify strategies to reduce expenses, develop a plan to manage debts (e.g., negotiating better repayment plans), build credit, and access financial support.

“Having the support of someone you trust can make a big difference not only in terms of mental health. It also can encourage people and help them stay motivated to keep working on their financial situation,” Jiménez-Solomon says.

Columbia has numerous financial benefits available to employees. To establish secure financial footing for the future, Muennig recommends employees maximize their retirement savings and invest in a health savings account.

“Employees who maximize their optional retirement savings and invest in a health spending account are much more likely to achieve a healthy old age than those who do not,” Muennig says. “Because savings compound, an employee who takes advantage of this tax benefit in their 20s will be worth millions in their retirement.”