Couple on couch discussing income.

New Research Confirms Financial Planning Contributes to Positive Mental Health

A new study confirms a direct link between engaging in financial planning activities and mental well-being. The research, released by Bridgehouse Asset Managers shows that engaging in financial planning activities may have a significant positive impact on mental well-being, regardless of the amount of money one invests.

Having a financial plan increases the ability to maintain a positive mindset and reduces anxiety about financial issues, such as cost of living, debt levels, and saving enough to retire.

The research was conducted by Bridgehouse Asset Managers in collaboration with the Canadian Mental Health Association Toronto and an advisory panel of experts, including professionals from the mental health, legal, and financial advisory fields. The study involved focus groups and an online survey as part of Bridgehouse's eight-year mental health research and education initiative, “Mental Health & The Financial Advice Relationship.” which investigates the impact of mental health and illnesses on financial decision-making.

It's About Taking Action

“It's not about how much money you have, it's about taking action and creating a plan for the future that leads to hope and mental well-being,” said Carol Lynde, President & CEO of Bridgehouse Asset Managers, “Financial planning should be right up there with diet, exercise and other recommendations for promoting positive mental health.”

The study found that individuals who engaged in a greater number of financial planning activities reported a stronger sense of security, control over their finances, resilience in the face of challenges, and a positive mindset. Even those with modest investments expressed less anxiety about financial issues such as the cost of living, debt levels, and retirement savings when they had a financial plan in place.

Most Impactful Finacial Planning Activities

The research found that the more activities respondents completed, the better their sense of security, control, resilience, and positive mindset. Financial planning activities included in the study were: calculating retirement requirements, calculating net worth, determining short-term goals, determining long-term goals, determining insurance requirements, establishing an emergency fund, creating a debt management plan, creating a budget, actively finding day-to-day savings online and scheduling regular meetings with an advisor.

The financial planning activities that contributed most to mental well-being and an ability to sleep at night were:

  • Establishing/maintaining an emergency fund;
  • Scheduling regular meetings with an advisor;
  • Calculating net worth.

Additionally, having a written financial plan was found to reduce stress and provide hope for the future. Participants described it as a roadmap that offered clarity, options, and a sense of control and security.

The study also emphasized the role of financial advisors in improving clients' mental well-being by instilling hope about their financial future, providing a sense of security, and bolstering confidence in achieving long-term financial goals.

Help For People Struggling

Managing money can be challenging, especially for those living with a mental illness due to medical expenses and limited income. Mental Health America lists these steps to get a handle on finances and gain financial independence.

  1. Develop a Spending Plan:

    • Understand your income and regular expenses.
    • Create a spending plan to guide your financial decisions.
    • Use tools like a daily spending journal to track expenses and identify areas for improvement.
  2. Get Help:

    • Seek assistance from trusted family or friends, financial advisors, or mentoring programs.
  3. Start Saving Money:

    • Start small by saving a little at a time.
    • Open a separate savings account and automate transfers.
    • Use visual aids like decorated piggy banks to motivate saving.
    • Establish personal incentives like saving spare change or unexpected windfalls.
    • Utilize employer-sponsored retirement plans or special savings programs like PASS for those receiving SSI.

Overall, managing finances effectively involves planning, implementing strategies to save for short and long-term goals, seeking assistance when needed. With financial advisors playing a large role in providing this type of help, Lynde suggested potential strategies for the financial industry to better support mental health. She suggested shifting focus beyond compliance requirements to prioritize the creation of financial plans tailored to clients' needs and encouraging active engagement in financial decision-making.

A Powerful Influence on Mental Health

“We knew from our prior research that mental health challenges have a negative impact on financial decision-making. We now know that taking financial action has a powerful influence on improving mental health, and that's a positive message to shout from the rooftops,” says Lynde.

Author: Alissa Zorn

Title: Trauma-Informed Coach

Expertise: childhood emotional neglect, perfectionism, parenting, journaling, comics, doodling, coaching

Alissa Zorn is the founder of She's a trauma-informed coach and cartoonist passionate about helping people overcome perfectionism and shame to build authentic, joyful lives. Alissa has been featured on the Good Men Project, Wealth of Geeks, Motherly, and more.