Financial behaviours are influenced by our mental health

May 24, 2026 Features / Columnists, News

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By Dr. Telford Layne Jr. PsyD, MSc. Postgrad, BSc.
Clinical and Developmental Psychologist – Psychoanalyst
Unwrapping Gift – Clinic

(Kaieteur News) – Poverty is a trauma. What traumas do is distort our thinking, feelings and behaviours towards ourselves, others and our perception of life’s systems. Experiencing poverty alters how we relate, the same way experiencing wealth does.  Our ability to rise out of poverty is not so much in our income but in the state of our mental health. This trauma produces two outcomes. Some individuals become financially passive, while others overspend in search of emotional comfort.  Our financial behaviour is deeply connected to our psychological and emotional state.

Mental health influences how people earn, spend, save, invest, borrow, and respond to financial stress. In many cases, financial patterns are not simply about knowledge or discipline — they are connected to emotions, trauma, cognition, identity, relationships, and coping mechanisms.

But the reverse is also true: financial problems affect mental health too. Financial hardship does contribute to anxiety, depression, relationship conflict, sleep problems, low self-esteem (the gateway to poor mental health), chronic stress, suicidal thoughts in severe cases, etc. Unemployment, debt, and economic instability can create psychological trauma, especially when linked to identity and social status.

In societies with economic inequality or collective trauma, financial behaviour may also reflect a survival mindset, scarcity, distrust of institutions, and pressure to support extended family. Status-driven spending and fear of social judgment. In places with colonial histories, political instability, or economic uncertainty, financial anxiety can become intergenerational. It’s these staggering interplays of realities that make poverty such a significant trauma.

SIGNS

Am I spending to cope with emotions?  Do I have extreme fear around money?  Do I have a chronic avoidance of finances to the point of being passive? I get it, send it, I don’t, that’s ok? Repeated financial self-sabotage myself? Do I shop impulsively, then feel guilty afterwards? Is my mindset workaholism driven by insecurity? Do I feel emotionally “high” from spending or investing?  Do I have difficulty setting financial boundaries? If yes to most of these questions, what does that say about the impact of poverty as a primary or secondary victim?

INFLUENCES

Conditions such as generalized anxiety, chronic stress, or burnout lead to: Impulsive spending for temporary emotional relief. Avoidance of paying bills, budgeting, or checking bank account balances for guidance. Excessive saving out of fear and insecurity is a reality for those born in poverty and experience some wealth along the way. The fear of returning to poverty drives this financial behaviour that unconsciously redirects one to poverty when you are continually seeking to stay out of poverty. Difficulty making financial decisions. Most of the time, these difficulties are fear-based and involve distortions of emotions and logic. Constant worry about “not having enough,” even when financially stable for life. This often creates a cycle: financial stress → anxiety → poor financial decisions → more stress resulting in the strengthening of poverty.

DEPRESSION

Depression affects motivation, concentration, and executive functioning. Financial effects would include neglecting financial responsibilities and being financially irresponsible. Missed payments and disorganisation, struggling with financial accountability. Not valuing and relating to money and wealth from a positive mindset. Loss of motivation to work or pursue opportunities. Emotional spending to feel temporary pleasure. Feelings of hopelessness about improving finances, bettering the future. This leads to financial hopelessness and helplessness.

ADHD AND EXECUTIVE DYSFUNCTION

People with Attention Deficit Hyperactivity Disorder do struggle with impulsive purchases, difficulty budgeting consistently, forgetting due dates, inconsistent saving habits, seeking novelty and dopamine-driven spending and poor long-term financial planning. At the same time, many people with ADHD are highly entrepreneurial, creative, and capable of generating income in unconventional ways. Understanding your ADHD type helps you master your strengths and develop coping mechanisms to regulate emotions, which, in turn, helps you perform better financially.

CHILDHOOD TRAUMA

Early experiences strongly shape adult financial behaviour. Examples include: Growing up in poverty can create hoarding and chronic money anxiety. Childhood instability may lead to an obsession with security. Emotional neglect may lead you to spend money on validation. Witnessing conflict about money could push you to avoid financial talks. Strict parenting may trigger reckless spending as a form of rebellion. Poverty trauma can plant deep beliefs about money called money scripts.

“Money equals safety.” “Rich people are selfish.” “I don’t deserve wealth.” “I must sacrifice to survive.” Or “Money proves my worth.”

SHAME, GUILT, AND SELF-WORTH

These poor mental health symptoms or difficulties often influence identity and self-esteem. People from poverty-stricken backgrounds overspend to appear successful. Stay financially dependent due to fear of failure. Undercharge for their skills because of low self-worth. Feel ashamed of asking for financial help and avoid investing in themselves.

Addiction and Compulsive Behaviour

Mental health conditions may contribute to gambling addiction, compulsive shopping, risky investments, substance abuse affecting finances, and online spending addictions, which is a state of mental health crisis. These behaviours temporarily regulate emotions but create long-term instability. Individuals with addictions are most often unable to face their own lives, these addictions aren’t about pleasure but about escaping the unpleasantness of their lives.

TREATMENT

Improving financial behaviour often requires emotional and psychological healing alongside financial education. It’s not achieved overnight but calls for commitment towards a better life. It starts with addressing your mental health. See a psychologist who will employ the following approaches to bring about lasting changes and empowerment. Thus, creating generational wealth.

Budgeting, investment and respect for money. A comprehensive client treatment approach shifts the focus of mental care.

Cognitive behavioural therapy. Understanding, identifying, and changing false beliefs.

Mindfulness and stress reduction. Clarity of mind over fear-based thinking.

Accountability systems and budgeting with self-compassion rather than shame

Building long-term security gradually

Financial behaviour is rarely purely rational. Human beings make financial decisions emotionally first and logically second. Understanding the psychological roots of money habits allows individuals, families, organizations, and societies to develop healthier relationships with money, work, security, and self-worth.

Mental health care and financial wellness are fundamentally interconnected aspects of human well-being. To achieve financial health, we must acknowledge, understand, and support the mental health factors underpinning our financial behaviour.

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• Dr. Telford Layne, Financial behaviours, Financial hardship, mental health, poverty

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