Mental health and financial well-being

If you’ve only got a minute:

• The high cost of living and economic pressures can impact mental well-being and lead to a cycle of financial instability and mental health problems.
• Effective financial planning, including seeking professional help, can alleviate financial stress and improve overall mental well-being.

Financial stress has been identified as a significant contributing factor to mental health issues in Singapore. A 2022 survey by TODAY highlighted that the cost of living is the main source of mental health struggles among young adults, surpassing concerns about work and relationships. This survey, which polled 1,000 individuals aged 18 to 35, found that the top sources of financial stress were related to essential expenses such as groceries, healthcare, and housing.¹

Additionally, the Ministry of Health (MOH) reported an increase in the prevalence of poor mental health, rising from 13.4% in 2020 to 17% in 2022. This rise is partly attributed to economic pressures that impact young adults' sense of autonomy and self-worth, which are crucial for their overall mental well-being.²

Mental health and financial well-being are deeply interconnected, with each significantly impacting the other. These findings underline the importance of addressing financial stress through effective financial planning and support systems to improve mental health outcomes in Singapore.

Financial landscape in Singapore

Singapore boasts a robust economy, with a high GDP per capita and a low unemployment rate³. It also consistently ranks amongst the world's most expensive cities⁴. 

However, the cost of living is high and financial challenges persist. Many Singaporeans grapple with housing costs (Q1 2024 witnessed the sale of 185 HDB flats priced at S$1 million and above⁵), education expenses (the annual fees for most universities located here range from S$8,250 to S$13,500 per year) and healthcare bills (the average hospital bill can vary widely depending on whether the surgery is performed in a public or private hospital⁶).

The government has implemented various measures to ensure financial stability, such as the Central Provident Fund (CPF), which provides for the retirement (CPF Retirement Account), healthcare (Medisave & MediShield Life) and housing needs (CPF Ordinary Account) of CPF Board members.

Despite these efforts, financial stress remains a significant concern.

Financial stress and mental health issues

As money is an integral part of our daily lives, mismanagement or financial issues can lead to constant stress.

For example, high-net-worth individuals may face pressure to succeed, fear the loss of wealth, and are unable to overcome the stigma surrounding mental illness that prevents them from seeking help. In contrast, some people may struggle to make ends meet, face pressure to perform at work and worry about job security⁷. 

Major life events such as divorce, death of a loved one or financial catastrophes can trigger mental health problems for anyone, regardless of their financial status. 

Financial stress can lead to a cycle of worsening mental health and financial instability, manifesting in health issues like headaches, high blood pressure and sleep disorders, affecting overall well-being⁸. 

Put simply, poor mental health, characterised by conditions such as depression, anxiety, or chronic stress and may lead to impulsive spending, reduced motivation to manage finances, avoidance of financial responsibilities, and in some cases, substance abuse as a coping mechanism. These factors can result in accumulating debt, poor investment choices and reduced earning capacity.

A joint study by Duke-NUS Medical School and Singapore's Institute of Mental Health (IMH) revealed that Singapore could be losing close to S$16 billion annually, approximately 2.9% of its GDP, due to mental health issues like anxiety and depression.

The research also found that affected individuals missed an average of 17.7 workdays yearly, leading to significant economic losses from reduced productivity and increased healthcare costs.⁹

Recognising the signs of financial stress and its impact on mental health, as well as how mental health conditions can affect financial management, is the first step towards breaking the cycle and seeking appropriate support.

The role of financial planning in alleviating stress and improving financial wellness 

Financial planning enhances the sense of control over your financial future by enabling you to set realistic goals and build robust money habits like managing debt, setting aside emergency funds and investing wisely. It prepares you for unexpected events, improves relationships by reducing financial strain, and ensures long-term stability, particularly for retirement.

Another crucial aspect of financial planning, not to be neglected, is obtaining the right type of insurance as it helps mitigates risks and provides a financial safety net, offering peace of mind for health emergencies (safeguard against unexpected/large medical bills) and family protection (life/term insurance to protect loved ones in case of your passing).

Effective financial planning can break the cycle of financial stress and mental health problems by providing clarity and control over your finances which leads to improved well-being and a better quality of life in Singapore’s challenging economic landscape.

Read more: Habits to embrace in your financial journey

Believing in the mantra of doing well by doing good, DBS has pledged a commitment of S$1 billion over the next 10 years as part of its dedicated efforts to support low-income families and underprivileged individuals. The banks will provide them with educational opportunities (digital and financial literacy) to break the cycle of poverty, strengthen their emotional and mental resilience, and equip them with crucial life skills for a more secure future.

Understanding the importance of building good money habits early, DBS actively promotes financial literacy in schools. This includes a partnership with the Institute of Technical Education (ITE) to develop a financial literacy curriculum that reaches 27,000 students, covering topics like CPF accounts, insurance, cybersecurity, investing basics and protection against inflation.

Practical tips for improving financial health and mental well-being

Improving financial health and mental well-being in Singapore involves a holistic approach that emphasises overall financial wellness, which in turn contributes to better mental wellbeing.

Seeking professional help is crucial. Consulting a professional financial advisor (DBS Wealth Planning Managers) can provide personalised financial plans/solutions, while organisations like the Singapore Association for Mental Health (SAMH) and the Institute of Mental Health (IMH) offer support for financial stress.

Consider getting money advice on our Telegram channel and financial literacy portal. If you’re looking to join a supportive community, "The Burrow" on Facebook offers a platform where you can share experiences and gain insights on financial decision-making with like-minded individuals.

Remember, seeking help is a sign of strength, not weakness. Taking proactive steps to address financial and mental health concerns can lead to improved overall well-being and quality of life.

Finally, by embracing the synergy between your financial health and mental well-being, you pave the way for a more resilient, confident, and emotionally balanced approach to life's challenges and opportunities.

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Sources:
¹ TODAY Youth Survey, "Cost of living main source of mental health struggles, amid worries over healthcare and everyday expenses." Retrieved 7 Aug 2024.

² CNA, "'It’s okay to seek help': Why do people in Singapore struggle with mental health issues?" Retrieved 7 Aug 2024.

³ WorldData.info, "Economy in Singapore compared to the EU". Retrieved 8 Aug 2024.

⁴ WorldData.info, "Singapore: country data and statistics." Retrieved 8 Aug 2024.

⁵ “Singapore Property Market Report Q1 2024 ” Retrieved 8 Aug 2024.

⁶ MOH, “Hospital bills and fee benchmarks” Retrieved 8 Aug 2024.

⁷ TODAY Youth Survey, "Cost of living main source of mental health struggles, amid worries over healthcare and everyday expenses." Retrieved 7 Aug 2024.

⁸ Forbes, “The Surprising Effects Of Finances On Mental Health ”. Retrieved 8 Aug 2024.

⁹ Champa Ha, “Mental health issues impacting workplace productivity in Singapore.” HRM Asia, Retrieved 8 Aug 2024.

Disclaimers and Important Notice
This article is meant for information only and should not be relied upon as financial advice. Before making any decision to buy, sell or hold any investment or insurance product, you should seek advice from a financial adviser regarding its suitability.