Financial wellness and mental health have been found to have a clear connection. While financial stress can exacerbate things like anxiety and depression, conversely, mental health issues can cause people to make choices that are not in their best financial interests, creating a vicious cycle. Financial literacy is a key tool for breaking this cycle. By empowering individuals to make better financial choices, we can enhance both their financial and mental well-being.
Finances are a top source of stress for many Americans. According to the American Psychological Association’s Stress in America 2022 report, 66% of Americans cite money as a significant stressor. Financial instability often correlates with heightened anxiety and depression, as individuals struggle to make ends meet. In 2023, 29% of Americans reported “unmanageable” debt levels, further deepening this financial and emotional strain (Financial Health Pulse 2023 U.S. Trends Report).
Medical debt is a particularly damaging form of financial stress. Those with medical debt are three times more likely to experience anxiety, depression, or stress (Consumer Financial Protection Bureau, 2022). The financial burden of healthcare costs can overwhelm individuals, further impacting their mental health and making it harder to make sound financial decisions.
On the flip side, it has been found that access to health insurance, an essential part of a strong financial foundation, can improve mental health. Evidence shows that having health insurance is associated with better subjective well-being. A study on Medicare expansion in Oregon found a 32% increase in happiness among those gaining insurance coverage (Wiltshire et al., 2020). Health insurance reduces financial stress by alleviating the burden of medical bills, which can improve mental health outcomes and provide the most valuable thing of all, peace of mind.
Financial literacy plays a critical role in preparing Iowans for taking on their finances. When individuals are equipped with the knowledge to manage their finances, they are more likely to make choices that will benefit their future. Understanding financial options, including health insurance, helps people avoid financial pitfalls and plan for their future, fostering both financial stability and emotional well-being.
The Iowa Department of Insurance and Financial Services supports financial literacy by providing resources and education on insurance and other financial topics. Through education and resources, the department helps Iowans make informed financial decisions. By promoting financial literacy, the department plays a vital role in helping residents achieve both financial security and better mental health. Please visit save4lateriowa.gov for free, financial literacy courses and resources to help you plan for your financial future.
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