Loans and Mental Health: Does the Two Have a Connection? 

Loans and Mental Health: Does the Two Have a Connection? 

Everyone wants to live the good life. We all want to enjoy life to the full as much as possible. But that is a reality that only very few people experience, especially in a place like Singapore where the cost of living is high. 

Many Singaporeans rely on loans to achieve their desired lifestyles. However, without the right foundation, taking out a loan can also take a toll on a borrower’s mental health. So before you bite off more than you can chew, give it some thought first to make informed decisions for a more financially secure but happier you. 

The CPF Burden

The Central Provident Fund is Singapore’s version of a social security contribution system. While it is set up for one’s financial security, dipping into your CPF funds for, let’s say mortgage repayments, will eat into it and impact your disposable income. 

Managing both CPF contributions and loan repayments might give you sleepless nights and cause anxiety.  

Keeping Up With the Joneses

One of the disadvantages of living in Singapore is the pressure of projecting success through a lavish lifestyle. Because of this societal emphasis on success and material possessions, many folks resort to borrowing large amounts of money from banks and lending companies to keep up with others. 

Some take out loans from a bank or an online money lender in Singapore to buy a flat in a rich part of town or upgrade their homes. This leads to many borrowers taking out large loans they can barely afford, placing an unnecessary financial burden on their shoulders. Instead of celebrating their dreams, they end up dealing with financial nightmares. 

The constant struggle to meet societal expectations leaves them with feelings of inadequacy and resentment. 

Loans and Mental Health: A Two-Way Street

While there are cases in which loans can negatively affect a person’s mental wellness, it also works the other way around. Poor mental health also negatively impacts one’s financial health. Bad financial judgment calls can be a result of depression-triggered impulse purchases, like going shopping to cope with emotional distress.

Struggling with mental health along with unsound financial decisions make loan management far more difficult than it should. On top of that, pre-existing mental health conditions can make budgeting and sticking to repayment plans very challenging. This could lead to a vicious cycle that requires intervention to improve one’s overall situation.

Practical Tips for Borrowers to Boost Their Well-being

If you feel like you’re caught up in this draining cycle of debt and depression, don’t lose hope. There are ways for you to get out of this rut and put your life back together one step at a time. 

Tip #1: Leverage Government Schemes

The government of Singapore offers residents various schemes to help borrowers improve their financial—and mental—situation. Take advantage of these avenues to get back on your feet. 

Tip #2: Seek Counsel

There’s no shame in asking for help when you need it, especially when it comes to financial health and mental wellness. Singapore has plenty of resources that help folks deal with anxiety, depression, and other mental health issues, as well as financial concerns. 

Tip #3: Communicate with Lenders

If you’re having a hard time managing your debt, reach out to your lenders. Generally, lenders are willing to work with you to ease your financial struggles. Many of them offer loan restructuring or alternatives to help borrowers during tough times. All you need to do is talk to them. 

Tip #4: Use Technology to Your Advantage

The Monetary Authority of Singapore offers free tools that simplify financial management. Budgeting tools—like MoneySense—can help you keep track of your income and expenses. They also show you where to adjust so you can live comfortably within your means. A tool like this takes your mind off your worries and gives you a more peaceful and sound mind. 

Wrapping It Up

Like it or not, loans are a reality for many people. And while they can help you achieve your dreams and goals, they can also be a cause of stress and anxiety. Understanding how loans impact one’s well-being can empower you to take charge of life and improve your situation. It is possible to effectively manage your finances and maintain a healthy disposition in life.

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