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How Money Affects Your Teen’s Mental Health

Money can’t buy happiness — wonder how many times you’ve heard that one before. Well, whoever said that definitely wasn’t incorrect, but rather, didn’t quite finish writing the quote. Money can’t buy happiness, but together with financial literacy, it can help to avoid sadness.

Let us be the one to speak the truth that everybody already knows — money and financial literacy are, in fact, extremely important. It isn’t rocket science. One could be certain that such a universally known idea wouldn’t even come as that big of a surprise to a 6-year-old son kid who is still trying to grasp the concept of what a vowel is supposed to be. Now what if we told you, that money is so important, that more than 100,000 people in debt attempt suicide each year?

Maybe you haven’t really sat down and pondered over the ways in which your teen’s financial habits and financial literacy level could affect their mental state in the near future, as the rest of their lives are fast approaching. Well, thank your lucky stars that you’re here now, because today you are going to be  one step closer to possibly helping improve his or her mental health in the future. So, if you are interested in helping them lead happier, healthier lives, keep on reading.

How and why do people fall into debt?

If asked what the first thing that comes to mind is when hearing the words “financial debt”, any unsuspecting teen would probably envision someone living a lavish life without a care in the world, only to realise that he was gathering stacks upon stacks of unpaid bills that, surprise surprise, he could no longer afford to pay off. We all know how that one ends.

The last thing you’d want is for your child to realise too late in life that the most common triggers for debt problems are actually unemployment and redundancy.

So, it’s time to destroy this idea of theirs that only the man who lives luxuriously and carelessly is susceptible to debt issues, because — you guessed it — they have the potential to be the next victim, regardless of how much security their next job may offer them.

Thankfully, right now you are in the position to prevent such circumstances to the best of your abilities, so any parent with a deeply rooted desire in giving their child the best chances at going through life with minimal financial strain would take this opportunity to widen their child(ren)’s knowledge on finance, as they are the ones with the highest likelihood at reducing their risks of falling into such sticky situations.

How does debt affect your mental health?

Now that we’re a little more aware of why and how people fall into debt, let’s talk about just what it can do to your teen.

It’s a simple equation; having money equals being able to provide for our families, have more options and live pretty comfortable lives. Likewise, when you don’t have money— well, you get the plot. However, are you actually aware of the pain that debt can cause?

In January 2016, a study carried out on 33,720 U.S households was published in Psychology Science, showing that those with higher levels of unemployment had a higher likelihood of purchasing over-the-counter pain killers. Yes, I meant literal pain.

Among the many negative effects of debt are low self-esteem and even impaired cognitive functioning.

What that means is, you can’t learn or remember a thing and your attention span becomes no better than that of a chimpanzee’s. Doesn’t sound very fun, does it?

Some research shows worrying about debt makes one more likely to develop a mental illness. Keep in mind, however, that by ‘mental illness’,  we aren’t talking about severe cases like schizophrenia where you need to be monitored at all hours of the day, but that doesn’t make the possible effects of debt any less serious. In fact, debt can actually cause some really unsettling responses.


As a result of their debt, some people may subconsciously try to rationalize their mistakes and protect their ego by simply pretending their financial issues do not exist at all. In simpler words, these people are in denial. They ignore the fact that their financial conditions are slowly but surely slipping through their fingertips, and spend their money pretending they can afford to. They’ll be completely negligent of the fact that their problems are in dire need of some serious acknowledgement, right up until the point when something — legal action, credit denied, consistent pesky phone calls from creditors — poses as a painful wake-up call.

If your child, grown and no longer living in the nest, is going through denial and does not accept the harsh reality in good time, it won’t be long before his or her financial issues become so overwhelming that even the walls they’ve built are not enough to hide behind.


Denial’s polar opposite, stress is popular when it comes to debt-related issues. Debt and stress are like the conjoined twins you never invited to the party, but showed up anyway, and it takes more than a little effort to get rid of them.

One known study of stress levels in the UK was an online poll undertaken by YouGov, with a whopping sample size of 4,619 respondents. Of those who reported feeling stressed in the past year, 22% cited debt as a stressor.

Stress is a word we all know, although some of us may be more well-aquianted than others, but it can present itself in all kinds of ways. All too familiar examples include losing sleep, focus, hair — in other words, you’re losing a lot of things.

Stress can have negative effects on the big things like your child’s future job, to the little things like their daily meals, as going even slightly above their budget fills them with guilt. What a terrible way to live!

Fear and Panic

This is stress on steroids. When the thought of a late payment notice creeps up on you, you don’t just get uneasy, you gets beads of sweat, accompanied by a rapid heartbeat, a dry mouth and a shortness of breath.

And something else? Researchers at the University of Wisconsin found that high levels of debt contributed to lower marriage rates among young adults. Who would want their child to grow up not getting engaged solely because he or she couldn’t afford to?

About 260 million people suffer from anxiety and financial worries are a massive trigger for these disorders. Would you want your child to live a life assuming that he or she will becomes homeless, or that they’re going to get fired for being late to work? I’m sure no caring parent would.


As the economy collapsed, anger rose. It even got it’s own name: Debt-Anger Syndrome. Instead of reacting like any of the above, victims get mad. Anyone who contributes to their debt issues is an enemy— even the mailman who delivers the bills!

This not only ruins relationships but can lead to physiological effects like migraines, heart diseases and reduced resistance to infections. In fact, a 2016 report from the Federal Reserve Bank of Atlanta linked debt to higher death rates.


And once the victim has gone through all the stages from denying their debt to throwing hands at the world, depression comes in.

People who struggle with debt are more than twice as likely to suffer from depression, according to a study by the University of Nottingham in England. Depression brings low self-esteem and hopelessness. It can even add to debt, because you’ll will try to seek refuge in splurging on yourself. So, debt increases, depression increases, and the cycle is vicious.

Eventually, you don’t care about whether debt is causing pain or pain is causing debt, because all you’ll want is for the pain to end.

The Solution

It’s easier said than done, but the solution is straightforward — teach your teen how to get out of debt! Teach them how to reduce their expenses, increase their monthly payments to creditors, reduce interest rates and pay off bills by a set date, to prepare them for the future in the event that they do end up plummeting themselves into the seemingly bottomless pit that is debt.

If you aren’t too sure how to teach them these lessons yourself, don’t be afraid to take advantage of the many resources that are widely available to you now, and sign them up for a class or course that can teach them about financial literacy! You can bet that there’ll come a day when they’ll be thanking you for it.

So, now that you see the importance of educating our next generation of leaders about money, what are you gonna do about it?

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