Can financial stress hurt your health?

Stressed about finances? You’re not alone. In fact, money and finances have been the top source of stress for U.S. adults since 2007, according to the American Psychological Association’s 2014 Stress in America survey. 72% of those surveyed said they felt stressed about money in the past month and 26% said they were stressed about finances most or all of the time.

This level of stress is understandable, given the current state of the nation’s financial health. According to the Pew Charitable Trusts, 70% of U.S. households face financial strain. Most Americans could cover less than a month of their income through savings, and those with low income could survive on savings for just over a week. And while financial instability is more prevalent among low-income households, people at all income levels can have poor financial health. According to Pew’s research, 22% of households with more than $100,000 in income say they do not feel financially secure. Research from the Center for Financial Services Innovation (CFFSI) reveals that income volatility is just as important as total income in influencing an individual’s financial health.

How does financial stress impact health?

Stress of any kind, including the stress caused by finances, negatively impacts an individual’s mental and physical health. The Stress in America survey found that 29% of low-income and 21% of higher income individuals felt a sense of loneliness and isolation in the past month due to stress. One in four said that stress had a very strong or strong impact on their physical health. Those who were more stressed about finances were more likely to report engaging in unhealthy behaviors (like lying awake at night, overeating, watching television, smoking or drinking alcohol) to manage this stress. More importantly, studies have found that chronic stress actually alters the way the body functions, making it more susceptible to illness – from the common cold to heart disease.

Compounding the relationship between financial stress and health is the fact that paying for health care is major strain on household budgets. In fact, health care costs are the number one money-related concern among American workers, according to the Principal Financial Well-Being Index. Over a quarter of adults ages 18-64 say they or a member of their household have struggled to pay medical bills in the past year, according to the Kaiser Family Foundation. In 2014, 12% of all adults and 20% of low-income adults didn't get the health care they needed due to cost.

How can financial health improve physical health?

Improving one’s financial health is one way to improve overall health. People who have health insurance or a retirement savings account (both considered by CFSI to be indicators of financial health) are less likely to have problems paying medical bills. And while income plays a significant role in an individual’s financial and physical health, research shows signs of hope for people at all income levels. For example, a 2016 study published by the Centers for Disease Control and Prevention (CDC) found that among residents of an economically disadvantaged community in Michigan, higher levels of positive financial behaviors (including saving, spending within means, and paying off debt) were associated with higher adherence to health regimens. Additionally, the APA Stress in America survey found that among low-income Americans, those with low levels of stress about money were less than half as likely to rate their health as fair or poor compared to those with high levels of financial stress.

How can we fix the system?

Like physical health, financial health is influenced by both individual behavior and systemic factors. An individual’s proximity to safe outdoor spaces and grocery stores will likely influence the degree to which they exercise and eat fruits and vegetables. Similarly, an individual’s access to credit and high-quality financial services will likely influence the degree to which they are able to adopt behaviors that increase their financial stability.

For financial service providers, this means making sure products and systems work for those who need them most – like the 20% of Americans who are not currently included in the mainstream financial system, or the approximately 150 million Americans who couldn’t come up with $400 in an emergency. It also means making sure that the financial products that are available to U.S. consumers and business owners are designed to put their best interests first. That’s why Accion co-founded the Responsible Business Lending Coalition to create the Small Business Borrowers’ Bill or Rights. We understand that financial exclusion affects all levels of an individual’s well-being, including their physical health, and we’re working to ensure that all Americans have the opportunity to thrive.

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