Burnout and financial well-being: this article explores the connection between the two, by focusing on how financial stress exacerbates burnout and vice versa. It provides research-backed strategies to manage both burnout and financial health, including financial literacy, self-care, and developing healthy spending habits.
Estimated Read Time: ~10 minutes
Keywords:
Burnout, financial stress, productivity, financial well-being, self-care, financial literacy, spending habits, work-life balance, emotional resilience, income loss.
Burnout is, often described as a state of physical, emotional, and mental exhaustion caused by prolonged stress. It has traditionally been viewed through the lens of occupational health and psychological well-being. Emerging research suggests that the impact of burnout extends beyond the workplace. It’s infiltrating various aspects of an individual’s life—including their financial well-being.
The strong and selfless, who are most vulnerable to burnout, often find themselves in financial distress as well. This creates a vicious cycle where one fuels the other. In this article, we explore the correlation between burnout and financial well-being. It’s backed by solid research, and we discuss strategies to break this cycle.
Burnout – The Financial Costs
Direct Financial Consequences
When burnout takes hold, the direct financial consequences can be significant. Studies show that individuals suffering from burnout often experience decreased productivity, absenteeism, and a higher likelihood of leaving their jobs, which can lead to income loss. According to the American Institute of Stress, job-related stress—including burnout—costs U.S. employers approximately $300 billion annually due to lost productivity, healthcare costs, and turnover. On a personal level, this translates to lost wages, increased healthcare expenses, and, in some cases, unemployment.
A study published in The Journal of Occupational Health Psychology found that people experiencing burnout were more likely to take extended sick leave, resulting in lost earnings. For professionals who are self-employed or work in freelance roles, burnout can lead to a temporary or even permanent cessation of work, creating a direct impact on income flow. Moreover, individuals experiencing burnout are more likely to make costly mistakes at work, which could result in financial penalties or missed promotions.
Indirect Financial Consequences
The indirect financial consequences of burnout are equally concerning. Burnout often leads to poor decision-making, including impulsive spending, poor investment choices, or avoidance of important financial tasks such as budgeting and saving. The mental and emotional toll of burnout can diminish an individual’s capacity to manage their finances effectively.
In fact, a 2020 report by the International Labour Organization found that burnout is linked to increased risk-taking behaviour, including financial risk-taking. Individuals suffering from chronic stress are more likely to engage in behaviours like overspending or neglecting long-term financial planning in favour of short-term relief. This financial mismanagement often results in debt, which only adds to the stress and fuels the burnout further.
Burnout: The Psychological Impact of Financial Stress
While burnout can lead to financial distress, financial stress can also be a cause of burnout. According to the American Psychological Association’s 2021 Stress in America Survey, 64% of adults report that money is a significant source of stress. This financial stress contributes to mental exhaustion, sleep disturbances, and emotional strain, all of which are precursors to burnout.
Financial stress is particularly pronounced among individuals in lower-income households, where financial instability exacerbates feelings of helplessness and anxiety. For those who are already susceptible to burnout due to demanding jobs or caregiving responsibilities, financial strain can push them over the edge. Studies show that individuals who experience both financial stress and burnout are more likely to suffer from depression, anxiety, and other mental health issues.
Financial Insecurity in High-Stress Professions
Even in high-earning professions, financial insecurity can be a significant driver of burnout. Healthcare workers, lawyers, and corporate executives often experience financial pressures due to the high costs of maintaining their professional standing, such as student loan debt, business expenses, or high living costs associated with their careers. A 2019 survey by the National Bureau of Economic Research found that 45% of physicians report being burned out, and many cite financial stress—whether from student debt or the pressure to maintain a certain lifestyle—as a contributing factor.
When individuals feel trapped by their financial obligations, they are more likely to experience emotional exhaustion and a sense of helplessness, two core symptoms of burnout. In many cases, these financial pressures are self-imposed, with individuals feeling compelled to maintain a high standard of living or meet external expectations, even if it comes at the expense of their well-being.
Breaking the Cycle: Strategies for Financial and Emotional Well-Being
Addressing the relationship between burnout and financial well-being requires a comprehensive approach that includes both mental health interventions and financial planning. Here follows are research-backed strategies to mitigate the cycle of burnout and financial distress.
Prioritize Financial Literacy and Planning
Financial literacy plays a critical role in mitigating the impact of financial stress on burnout. A 2020 study in the Journal of Financial Planning found that individuals with a higher level of financial literacy experience lower levels of financial stress and are better equipped to make sound financial decisions, even in high-pressure situations.
By educating themselves on budgeting, saving, and investing, individuals can regain control over their finances, reducing the stress that contributes to burnout. Regularly reviewing one’s financial situation, setting clear financial goals, and developing a long-term financial plan can provide a sense of security and reduce the feeling of financial overwhelm.
Certified Financial Planners, such as Jitesh Jairam, recommend the 50/30/20 rule, where 50% of income is allocated to necessities, 30% to discretionary spending, and 20% to savings and debt repayment, as a framework for balancing financial well-being.
Seek Professional Financial Advice
In cases of overwhelming financial stress, seeking professional financial advice can be invaluable. A 2019 study published in The Journal of Behavioural Finance found that individuals who worked with financial advisors reported lower levels of financial stress and greater confidence in their financial decisions.
A financial advisor can help create a tailored plan to manage debt, save for the future, and reduce financial anxiety. Additionally, financial advisors can assist with strategies like debt consolidation or income diversification, both of which can help alleviate financial pressures that contribute to burnout.
Incorporate Self-Care into Financial Management
Just as self-care is essential to preventing burnout, it is also vital for maintaining financial well-being. Research from The American Journal of Public Health shows that individuals who engage in regular self-care practices—such as exercise, mindfulness, and time off from work—report lower levels of both financial stress and burnout.
Incorporating self-care into one’s financial routine might involve setting boundaries around work, limiting overtime, or scheduling regular financial check-ins to avoid financial surprises that could lead to stress.
Develop Healthy Spending Habits
One way to mitigate the effects of financial stress on burnout is to develop healthy spending habits. According to a 2018 report in Psychological Science, individuals who adopt mindful spending practices—where they consciously evaluate the emotional and psychological impact of their purchases—report greater overall well-being and reduced financial stress. By focusing on spending that aligns with their values and avoiding impulsive financial decisions, individuals can reduce the emotional toll that finances take on their mental health.
Emphasize Work-Life Balance and Financial Flexibility
For those in high-pressure jobs, achieving work-life balance is crucial for preventing both burnout and financial strain. Employers and employees alike should recognize the importance of flexible work arrangements, which have been shown to reduce stress and improve job satisfaction. According to a 2019 report by Gallup, companies that offer flexible work policies see a 43% reduction in employee burnout. Additionally, creating financial flexibility—such as building an emergency fund or diversifying income streams—can provide a safety net that reduces the financial pressures contributing to burnout. Having an emergency fund of three to six months of living expenses can create a sense of financial security and reduce anxiety related to unexpected financial challenges.
An Interconnected Challenge
Burnout and financial well-being are intricately connected, creating a feedback loop where financial stress exacerbates burnout, and burnout leads to financial strain. For individuals who are strong and selfless, this cycle can be particularly damaging. However, by recognizing the warning signs of burnout and taking proactive steps to manage both mental and financial health, individuals can break the cycle and regain control over their lives.
Addressing burnout requires a holistic approach—one that incorporates mental health support, financial literacy, and the development of healthy work and spending habits. By fostering both emotional resilience and financial stability, individuals can protect themselves from the dual threats of burnout and financial distress.
Set Your Appointment with Virtual Adviser
As you would have gathered, you need an expert financial advisor to guide you through the process of making rational decisions. Especially so, when you are feeling the weight of burnout. At Virtual Adviser, we are not just experts, we also truly care about your health and welfare. Reach out to us for help.
References
- American Institute of Stress. (2021). Workplace Stress Statistics.
- International Labour Organization. (2020). Burnout and Financial Stress: A Growing Occupational Hazard.
- American Psychological Association. (2021). Stress in America Survey.
- Gallup. (2019). State of the Global Workplace: Flexible Work Reduces Burnout.
- Journal of Occupational Health Psychology. (2020). Financial Strain and Burnout: A Study of Healthcare Workers.
- Journal of Financial Planning. (2020). Financial Literacy and Its Impact on Stress Reduction.
- National Bureau of Economic Research. (2019). Physician Burnout: Causes and Solutions.