Money and Mental Health in College Students

The connection between money and mental health in college students is a significant one. College is a transitional phase of life where young adults are often living away from home for the first time and find themselves juggling new opportunities, conflicting priorities, tempting distractions, and important deadlines.

College is a unique environment and a high pressure situation, made even more more stressful by growing debt, a scarcity of funds, and a lack of life experience. It’s easy to see how it can all add up to mental health challenges in young adults. 

How Money Affects Mental Health in College Students

Money and mental health are inextricably entwined. Money is the catalyst for feelings of pride or shame, confidence or regret, excitement or anxiety, hope or fear, comfort or stress…there’s a complicated relationship between finances and feelings, to say the least. 

The mental highs and lows associated with spending rival any roller coaster at Six Flags—it’s easy to get caught in a cycle of impulse spending (“Shopping is self care!”) and buyer’s remorse (“That night out cost how much?!”) And let’s face it—it’s no fun to deprive yourself. Between the desire to have fun, the need to feel included, and the peer pressure to lead a social media-worthy life, saying no is tough. 

A lot of young people in college struggle to see the big picture of their financial situation, and since it all feels largely out of their control anyway, they just try not to think about it at all. But that’s not how brains work. The stress of growing debt and money scarcity continues to run in the background, stacking on top of the anxiety of managing multiple schedules, being away from family members, mastering new material, handling responsibilities, and figuring out adult life—all stressors that can lead to an emotional overload that results in burnout or depression.

Chronic stress doesn’t just cause mental health problems; it can also contribute to issues with physical health including  aches and pains, insomnia, high blood pressure, headaches, stomach problems, and a weakened immune system. 

When it comes to leading a well-balanced life, the physical, mental, and financial components are all important spokes on the wheel of wellness. 

The Financial Fallout

Many students think of college as an investment in their future, and it can be. However, as with any investment, there’s real money and risk involved. 

Public university students borrow an average of $30,030 for a bachelor’s degree at a four-year college, according to data from the Education Data Initiative. It’s no secret that higher education is an expensive endeavor. And college is only part of the equation; the cost of living is on the rise, too. Add that to the difficulty of balancing work hours with a school schedule and there’s a lot of mental math competing for brain power. 

It’s hard to remain motivated when living with a constant undercurrent of discomfort and fear, and academic performance often suffers. 42% of people who quit college indicate that they left due to financial pressures, according to college dropout data collected by the Education Data Initiative. Dropouts with student loans are also more likely to default on those loans, creating an ongoing cycle of financially-fueled stress and uncertainty. 

It’s easy to see how it can all contribute to a student mental health crisis. Even if mental health services are available, it rarely addresses the importance of financial wellness. Mental health care is important, taking care of your physical health is essential, and learning how to manage your money can contribute to a better outcome for your mind, body, and future. 

Healthy Minds and Money Management 

Financial wellness feels like one of those buzzword-y kind of terms—like something a financial advisory firm’s marketing department would make up for a fancy campaign. It certainly doesn’t feel like something that would apply to a segment of the population known for not having much money. 

But financial wellness doesn’t mean having “enough” money, just like physical wellness doesn’t mean that you’re equipped to climb Mt. Kilimanjaro. Financial wellness is the sense of safety and comfort that comes from feeling in control of your finances. 

Students are encouraged to take advantage of on-campus fitness classes, healthy dining hall options, onsite counseling services, and student health center offerings but financial wellness is largely ignored on college campuses—and it’s such a critical component of feeling calm, capable, and empowered to succeed.  

It’s possible for college students to achieve financial wellness even if they don’t have as much money as they’d like. Creating a budget allows you to truly understand your finances, instead of hiding and hoping for the best—and that’s particularly important in college when funds are low and loan balances are high. 

Next Steps to Less Stress 

YNAB offers a free year of budgeting software for college students and works closely with colleges around the country to offer resources in an effort to help improve financial literacy and to support the physical, mental, and financial well-being of students. 

The YNAB Method involves four rules for money management that can help students gain more control of their finances and ultimately enjoy less money stress:

Rule One: Give Every Dollar a Job 

The act of giving every dollar a job is a little bit like spending your money before you actually spend it—like the gamification of divvying up your dollars. And it helps you make sure that your spending matches up with your priorities. 

You look at how much money you currently have and you make decisions about how you’re going to spend every dollar of it by assigning amounts to different categories in your budget based on order of due date or importance. Then you follow that plan until you get more dollars to assign! 

Rule Two: Embrace Your True Expenses 

Unexpected expenses are a fact of life. But they’re also not usually all that surprising. You’ll eventually need a new laptop. Christmas comes every year. Your car will need maintenance. 

Instead of pretending to be shocked every time one of these not-so-unexpected things happen, go ahead and plan for them. Take your large expenses, estimate how much they may cost, divide that number by 12 (or however many months it takes for those costs to reoccur), and set money aside each month so handing that lump sum over hurts a little less.

Rule Three: Roll With the Punches

Budgeting doesn’t have to mean always telling yourself no. Want to go to Cabo on spring break? Cool! Save up the money and you’re good to go! However, if you keep ordering DoorDash when you’ve already depleted the money you’ve budgeted for dining out, you may have to move some of the money from your spring break category to account for that overspending. Which is fine! And it also might be good motivation to head to the dining hall before you indulge in yet another taco Tuesday delivery if you decide you’d prefer a passport stamp to Mexico. 

But that’s your decision to make. Budgets that don’t bend break—make changes as needed. Or wanted. 

Rule Four: Age Your Money

The longer you budget, the longer your money stays in your account. Once you get better at managing your spending, a built-in buffer begins to accumulate in your budget. Eventually, you could be paying next month’s expenses with last month’s income—and that extra bit of breathing room is a big step towards less money stress. 

If you know a recent high school graduate or college student, sharing the information about YNAB’s free college subscription program, along with resources about budgeting as a college student, is a great way to support their success, both academically and emotionally. 

And if you are a college student, we’re so happy to help you invest in your future! You can repay us with an appreciative shout out in that future Forbes feature recognizing you as the world’s most generous—and fiscally responsible—philanthropist some day.

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