Can the Average American Afford Happiness? The Role of Finances on our Mental Health

It is far more likely for financially healthy people to report better mental health on surveys (Greene & Patil, 2023). For two-thirds of Americans, the converse should be true: those who are not financially healthy are more likely to report worse mental health. This self-reporting encompasses many factors, including stress and other negative mental health outcomes. However, the same 2023 survey by Greene and Patil reveals some ambiguity when discussing the findings about the correlation between the two: “some individuals report lower stress levels than others, even in light of similar economic strain.” This suggests economic hardship alone is not enough to cause mental health problems for people, but instead mental health is influenced by a multitude of factors, financial stress being a significant component. 

There have been concerns about the current economic situation in the USA and how it is going to affect the average consumer’s life. According to CNN Business, inflation hit a 40 year high in 2022 before slowing down over the next three years. Despite inflation slowing down the price of groceries are still negatively impacting the working class. Inflations has led to fresh produce and other healthy food being outside of the working-class budget. CNN reports that their surveys found Americans have a negative view on the current economic situation. CNN makes it clear that despite the growing unrest about the economics the economy is nowhere near a dire situation. Some of the unease that people are feeling may be based on the economic crises of the 1920’s. People recognize that history can repeat itself, and there are more similarities between the early 1900’s and now that some might like to think. Like the 2020s, 1920s America suffered through a pandemic, and now people fear that we will continue following this historical track and face a second Great Depression. The over looming fear that is plaguing America is based on the strain that a financial crisis will have on our lives, so one question remains: how would a financial crisis impact our happiness?  

“We live in a world in which greater numbers of people are increasingly struggling to create financial health. And one of the biggest drivers of mental health is a person’s sense of financial stability,” said Tara Giuliano, Chief Marketing Officer, Nuveen. According to research done by TIAA 42% of US adults say that their mental health has been negatively impacted due to financial strain. This state of poor mental health leads to individuals not having the capacity to be able to make financially sound decisions. This leads to heightened stress which can cause reduced resilience to mental health challenges. According to TIAA 92% of adults who already have mental health concerns say that they struggle to make financial decisions. The stress caused by being unable to make financial decisions causes high rates of absenteeism in the workplace. This creates a vicious cycle of finical stress fueled by increasingly deteriorating mental health. 

It is no surprise that economic downturns negatively affect mental health. The WHO states that major socioeconomic risk factors for mental health concerns include poverty, financial problems and social deprivation. In turn this leads to those who have less education having a higher risk of poor health after job loss. To the surprise of no one research by the WHO has backed that people experiencing impoverishment, unemployment, and family disruptions are at a higher risk for depression, suicide, and alcohol abuse as well as other mental health concerns. In 2020 we witnessed the truth of this study as workers were let go and the mental health crisis heightened. These problems were also faced during the Great Depression as many could not afford necessities and found themselves at the end of their ropes. 

Unfortunately, many people can contribute a decline of their mental health to their finances, which is seen in real life stories like Rob Smale. Rob shares his story as he went from being an award-winning consultant to becoming homeless and developing problems with his mental health. Rob attributes his financial stresses from his struggle with addiction saying “I sat and wrote out a timeline of crisis points for my mental health and my financial health. It’s no surprise that sometimes my mental health was affected by financial problems and sometimes my financial problems were caused by poor mental health.”  This affected him well into his recovery journey, with him applying to almost 300 jobs, only to hear back from five but receiving no offers, which shows how difficult it can be to escape this cycle once it begins. Rob’s story goes to show the connection between mental health and how difficult it can be to improve both, which can tie into the difficult experiences that many people faced during The Great Depression. 

Similarly to Rob’s story, The Great Depression had an undeniable and multi-generational impact on the mental health of many Americans, as financial issues were inescapable. During The Great Depression, many Americans struggled with dealing with the financial state of the country, which caused a spike in child abuse, visits to psychiatrists, and unfortunately even in suicide rates, which saw an increase from 13.9 to 17.4 out of 100,000 people (in a span of only 4 years). “Many people carried a great psychological burden during the Depression because they had become unwilling participants in the economic breakdown.” Just like Rob’s story of being trapped in an endless cycle of mental health and financial issues, the Americans who suffered from The Great Depression became the pioneers of discovering the correlation between the two. These experiences prove that financial instability can and does affect people’s mental and even physical health and can impact people for years and even generations to come. 

The importance of mental health is beyond explicable. There are so many reasons why a person should prioritize their mental health just as much as a person’s financials'. There’s no question that financial and economic crisis can impact someone’s mental health. Whether that’s positively or negatively. There’re countless examples, such as the great depression and Covid-19, that’s caused an impact on the economy and has also, changed people’s behavior and affected their mental health. Often, financial debts are tied to mental health issues.  86% of people say on a money and mental health survey, out of 5,500 people, that their financial situation has played a part on their mental health. 46% of people that are in debt also have problems with their mental health or issues (Money and Mental Health, 2025). These numbers show the direct links of financial crisis and mental health issues. Statistics say that people with mental health issues are more associated or more likely to be in problem debt. The difficulties with problem debt, make it harder for people to live without the struggles, trials and tribulations, and obstacles of debt.  

There are plenty of factors that shapes a person’s mental health and how well they contribute to society or the economy, and how it affects someone pockets, or their financial success or wealth.  “Mental health’s shaped by social and economic conditions” (National library of Medicine, 2018).  It also mentions that mental health can be affected by welfare systems. When I think of this, I imagine someone living off welfare checks struggling to find happiness, might not have much, may be working out living situations. One could only imagine the amount of mental health issues that a person may be going through if affected by these financial situations. Economic crises may affect mental health either by increasing risk factors, such as unemployment, indebtedness and loss of socioeconomic status, or by weakening protective factors, such as job security and welfare protection programs. This topic of mental health’s as much of a concern as financial health and wealth.  

The undeniable link between financial stability and mental health is a cycle that has 

persisted throughout history, resurfacing during times of economic hardship. Just as 

The Great Depression left lasting psychological scars on those who endured it. 

Today’s financial struggles are taking a similar toll on Americans. Inflation, job 

instability, and the rising cost of living continue to fuel financial anxiety, leading to 

increased stress, depression, and difficulty making sound financial decisions. The 

evidence is clear—when people feel financially secure, their mental health improves, 

allowing them to break free from the vicious cycle of economic and emotional 

distress. 

So, what can be done to prevent history from repeating itself? While large-scale 

economic policies play a crucial role in stabilizing financial health, individuals must 

also have access to financial education, mental health resources, and safety nets 

that helps them navigate difficult times. Employers, policymakers, and communities 

must recognize that economic well-being is deeply tied to mental well-being and take 

action to support both. Ultimately, true happiness for the average American may not 

just come from financial security alone, but from a society that acknowledges and 

addresses the intersection of money and mental health. 

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Disclaimer: cover image generated by ChatGPT on April 27, 2025