Mental health and financial well-being are deeply intertwined. Financial stress weighs heavily on anyone, but for individuals living with mental illness, the impact is often magnified. According to the Government of Canada, low-income Canadians report significantly worse mental health compared to higher-income groups. This clearly illustrates the relationship between income and well-being. Financial worries are increasingly common across all demographics, with nearly two-thirds of Millennials and Gen Z reporting that financial concerns are negatively affecting their mental health.
Money problems can infiltrate every part of daily life, from the ability to access housing and nutritious food to managing healthcare costs. The stress of overdue bills or looming debt often disrupts sleep, strains relationships, and erodes a sense of security. For those already living with mental illness, these challenges can create additional barriers to recovery and stability, such as despair.
Mental Illness Driving Financial Instability
Mental illness itself can create significant obstacles to financial stability. For individuals with bipolar disorder, symptoms such as impulsive spending, risky investments, and difficulty maintaining employment during manic or depressive episodes can lead to unmanageable debt and heightened financial stress. Research has shown that people with bipolar disorder are especially vulnerable to disruptions in income, often finding it hard to rebuild financial stability after a manic episode or a downward cycle.
Those with schizophrenia or related psychotic disorders, may experience delusions, paranoia, or disorganized thinking that affects their ability to make informed financial decisions. In severe cases, individuals may neglect essential obligations like rent or utilities, risking eviction or other crises. Depression, on the other hand, often leads to avoidance behaviours where unpaid bills and broken communication with creditors compound over time. The weight of these tasks can feel insurmountable, further deepening financial strain.
Anxiety disorders can trap individuals in a cycle of chronic worry about money while simultaneously avoiding financial tasks, compounding their distress. Similarly, obsessive-compulsive disorder may drive spending compulsions or hoarding behaviours, draining resources and jeopardizing employment due to productivity or attendance issues. Across diagnoses, mental illness can undermine the skills and consistency needed to manage finances effectively. This creates a deteriorating environment where financial instability becomes inevitable.
Financial Stress Exacerbating Mental Illness
Financial stress also has a measurable effect on mental health, creating a cycle that is difficult to break. Data from the Government of Canada shows that individuals experiencing financial stress are four times more likely to suffer from sleep problems, headaches, and other stress-related illnesses. These physical effects can worsen mental health, leaving individuals more vulnerable to anxiety, depression, and other conditions.
Stigma further compounds this struggle. The dual stigma of poverty and mental illness often leads to social isolation, often discouraging people from seeking help or disclosing their struggles to employers or support systems. Fear of judgment makes it harder to access financial advice or mental health care, trapping many in silence and further eroding their financial stability.
Underemployment and Lost Earning Potential
Employment challenges are a major driver of financial stress among individuals with mental illness. People with work-limiting disabilities are nearly three times as likely to live in poverty and four times as likely to rely on social assistance. Even if they are qualified and eager to work, unemployment rates among people with the most severe mental illnesses can reach 70 to 90 per cent.
Mental illnesses frequently arise in early adulthood, disrupting education, and career trajectories. As well, illness precludes or delays the development of financial literacy skills that are crucial for long-term stability.
Stigma plays a major role in employment barriers, with three-quarters of people reluctant to disclose their mental health conditions to employers. Even when they possess higher education or specialized training, those who do find employment are often limited to lower-wage, part-time, or temporary positions. This perpetuates long-term financial insecurity and limits the opportunity to build savings or wealth over time.
The Ontario Disability Support Program
For many, the Ontario Disability Support Program (ODSP) is a lifeline, offering financial and employment assistance. However, current rates remain low, averaging around $1,308 per month in 2024, leaving many recipients below the poverty line. Income clawbacks can discourage recipients from seeking employment, as even small earnings can lead to significant reductions in benefits. Strict limits on savings and assets prevent individuals from building financial stability and security; furthermore, the application process can be particularly challenging for those with psychiatric disabilities. There is increasing advocacy for reforms aimed at improving ODSP, including raising benefit rates, reducing clawbacks, and simplifying eligibility criteria.
A Vicious, Structural Cycle
The relationship between mental illness and financial stress is cyclical and deeply rooted in systemic factors. The connection between poverty and mental health reinforces itself, as financial instability exacerbates mental illness, which in turn impedes economic recovery. Without comprehensive systemic interventions such as improved access to mental health care, disability support reform, and financial literacy initiatives, many individuals remain trapped in this cycle. Mental health-informed financial counselling, flexible employment opportunities, and public education about the links between poverty and mental illness are essential steps toward breaking the pattern.
Eli’s Place Communications Team
Our Eli’s Place blogs are developed & written by the Eli’s Place Editorial Team — a collaboration between staff and volunteers committed to raising awareness about serious mental illness in Canada. We aim to inform, inspire, and engage with readers who care about mental health and recovery.
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- Eli’s Place Communications Team#molongui-disabled-link
- Eli’s Place Communications Team#molongui-disabled-link
- Eli’s Place Communications Team#molongui-disabled-link
