More important than money

January 21, 2022

It doesn’t feel like the end of 2021, but rather a long 2020 just ended. I was thinking of writing about a year-end personal finance checklist, but then I realized 2021 deserves a different kind of review given what we’ve lived through. 

For the last couple of years, we’ve all been a bit like a kite whose string has been cut-off—just floating around with no semblance of control. It reminds me of this memorable opening from A Tale of Two Cities by Charles Dickens:  

It was the best of times, it was the worst of times, it was the age of wisdom, it was the age of foolishness, it was the epoch of belief, it was the epoch of incredulity, it was the season of Light, it was the season of Darkness, it was the spring of hope, it was the winter of despair, we had everything before us, we had nothing before us, we were all going direct to Heaven, we were all going direct the other way.

It seems like a perfect description of the times we live in.  

Don’t get me wrong, reviewing your financial goals, portfolio, insurance and taxes at the end of the year is important. But given the last couple of years, I felt like there are bigger priorities, at least this year. 

This is my perspective on some really serious and sensitive issues, and I may get some things wrong, and I hope you’ll correct me. But at the end of it, if you are thinking about these issues, I’d consider that a win.

A time to reflect

The pandemic has touched every part of our lives. The sheer number of changes in everything from economics, politics, medicine, science to technology is mind-boggling. Some of these changes would’ve taken years and decades in the normal course of time. 

Given the compressed timeline, it’s hard to even wrap our heads around some of these changes. For example, If someone had told me that we all would be working from home a few years ago, I would’ve thought that the person must be on some strong stuff. But today, working from home is the norm. Zoom has become the new face to face, going to a restaurant is a social event, bedrooms are the new gyms and offices and commuting feels like something we were punishing ourselves daily with.

The pandemic has been a tale of extremes—a silver lining for some, a nightmare for most.  

For the past couple of years, we’ve all been stuck at home. While some people have managed to deal with the pressures of social isolation better, others have had to deal with anxiety and depression from loneliness. Being cut off from friends, family and communities and the wholesale changes in routines have been profoundly disorienting. We’re social animals, and we weren’t built for isolation. 

On the other extreme, people living with their families had to deal with their own set of challenges. With everybody working from home, the lines between personal and professional lives have vanished. For some, working from home has been a blessing in disguise because they are able to spend the time saved from those torturous commutes with their families. For others, it’s been a nightmare because they are working harder, longer than ever. More people are reporting that they’re burnt out compared to pre-pandemic.

It’s a case of extremes for relationships, too. On the one hand, It has brought people together and improved their relationships, but on the other, family and personal relationships have come under immense stress with everyone living together and lack of personal time. Parents are dealing with the challenges of taking care of their kids and dependents while simultaneously juggling work. 

The same goes for health. Some people have finally started exercising and eating healthy because gyms and restaurants are shut. On the other end, health has deteriorated for others due to the lockdowns and work from home. 

Amidst all this, we’re all dealing with tremendous loss, grief, existential dread and utter powerlessness in the face of relentless horror. It’s been a bit like standing still while relentlessly getting punched in the face.

Then there are the after-effects of an economic shock of a lifetime that still doesn’t seem over. Millions lost their jobs, livelihoods and took pay cuts. A lucky few were financially resilient to ride this out, but most people are on a financial cliff edge, having exhausted their savings.  

I know I sound morose, and I’m sorry. The reason I’m rehashing all this is because it’s important to pause and reflect on the nightmares we’ve been through. Burying our heads in the sand and pretending nothing happened isn’t helpful. You can’t make peace with things without reflecting on your past.

Our formative experiences shape our beliefs, attitudes and outlook on life—especially young people. 

The economic and financial crisis of the 1930s was so bad that an entire generation of Americans became risk-averse. The stock market had crashed 90% during this time. Many Americans stopped investing in the stock market, preferred safe jobs and stopped taking risks altogether—they came to be known as “depression babies.” 

As soon as we become aware of money, we develop beliefs about it– beliefs we cling to, sometimes for the rest of our lives, often at the cost of our souls. George Kinder

Studies done in the aftermath of 2008 confirmed this. The evidence showed that crises can have a long-lasting impact on mental health, physical health, relationships and careers. The financially vulnerable, young people and women tend to be the most affected by these shocks. Some scars remain for a long time.    

Our beliefs are the result of the environment we grew up in, what our parents believed in, our early childhood experiences, and the communities we grew up in. Early negative experiences unconsciously influence our behaviour—everything from how we invest to decision-making, spending, risk-taking, our personal relationships, to what jobs we choose. 

The memories of 2020-21 will fade in a few years, and we won’t remember much. The fact that we’ll forget things is precisely why it’s important to pause and reflect when events are fresh in our minds. Otherwise, the trauma we lived through will unknowingly shape our beliefs for the worse. 

Personal finance isn’t just investing and maximizing your wealth. It’s equally about your relationship, family and friends. These relationships have been under tremendous pressure in the past couple of years, and even they require constant investments. As corny as it might sound, these are some of your biggest assets in life.  

When things are tough, our default impulse is to internalize everything and try to deal with it alone, but that’s a huge mistake. This isn’t a movie. You need to get comfortable being vulnerable enough to open up to the people in your life and talk to them because they’re in this with you. 

Not to make it all about money, but ultimately, all these factors influence your attitude towards money. Money, beliefs, and relationships have a circular relationship. If you’re stressed, anxious, or have dysfunctional relationships, you won’t make good money decisions, and if you don’t make good money decisions, it can cause stress and anxiety—it’s a vicious cycle.

Financial difficulties and mental health.

Crises like this pandemic can also force you to question your most deeply held beliefs and shatter your assumptions. You might be dazed and disoriented, but this is the perfect time to reflect and change things that can make you unhappy. 

We’re seeing this happen all around. One huge post-pandemic trend has been the so-called “great resignation.” Millions of workers around the world are either quitting their jobs or changing them at an unprecedented rate. Economic factors like decades of poor pay, lack of workplace benefits, brutal working conditions and workplace inequities are at play. But this is also a result of people finally realizing that some things are just not worth it. There’s a great deal of soul-searching due to experiences of the past couple of years.   

I also understand that being hopeful might be tremendously hard at this point. But at the risk of sounding flippant, we are resilient creatures. 

Hearing that the world is going to hell is more interesting than forecasting that things will gradually get better over time, even if the latter is accurate for most people most of the time. Pessimism can be hard to distinguish from critical thinking and is often taken more seriously than optimism, which can be hard to distinguish from salesmanship and aloofness. — Morgan Housel

This won’t be the last shock we’ll live through, and this time isn’t different. We evolved to survive adversity. I don’t mean to sound like the self-help hopium peddlers, but the only way to get through life is to be hopeful and grateful that we get to fight another day. We underestimate the positive impact gratitude can have on our health and relationships.  

Viewing everything through a singular money lens is a terrible way to live. 

Mental health

Even before COVID, there was a silent epidemic of mental health around the world—stress, anxiety, depression and other mental health issues were rampant. But the pandemic has dramatically worsened mental health across the world. It’s not just an issue anymore; it’s a public health crisis. Sadly, very few people care about this.   

One of the greatest tragedies of our times is this willful ignorance of mental health. To this day, most Indians don’t think of mental health as a serious issue. Given the stigma surrounding mental health, talking about it is still considered a serious taboo. The “log kya kahenge” attitude is widespread. To make things worse, the mental health infrastructure is terrible, and there’s a serious shortage of mental health professionals.

A lot of people think mental health is a joke, but poor mental health can kill you. Mental health issues ultimately manifest physically. Prolonged stress and anxiety are linked to major health conditions from chronic heart disease, cognitive issues to immune disorders.  

Mental health isn’t a monolith as it’s portrayed—this is a tragedy of the aggregates. It’s a deeply personal issue and can affect individuals in different ways, and it’s quite subjective. The impact of stress and anxiety vary across different people and sociodemographic groups. Women, the poor and the vulnerable tend to be the most affected. 

Thanks to our cultural depictions and toxic masculinity, people don’t even talk about it with their own friends and family, let alone seek professional help. This reminds me of a passage from an article I read as I was writing this:

My advice to anyone suffering from mental health issues — and specifically athletes who can relate — is this: Ask for help. Stop trying to deal with these serious matters alone. You’re not alone. Believe me. — Steve Smith, former NFL player

Having said that, there are no easy answers. Mental health isn’t just a personal issue to be solved. They are as much personal as they are socio-economic. At the end of the day, it really does take a village—everyone from yourself, your families, schools, health institutions, and governments to deal with it. 

But at a personal level, acknowledging the issue and seeking professional help when needed is the first and the most crucial step. Because we are rationalizing creatures, and we are quite good at self-sabotage. Sadly, given the serious lack of awareness, a lot of people ignore it.  

Again, at the risk of sounding trite, some things that can meaningfully help are in your control. Taking care of your health by eating well, sleeping well, exercising, doing mindfulness activities like yoga, meditation, reducing screen time, taking breaks, spending time with family and friends can help tremendously.

If your stress and anxiety result from personal or professional issues, you need to think deeply about the root cause and then reevaluate things. Our default impulse is often to ignore the signs. When you ignore issues, they just fester until they blow up spectacularly. Nothing is worth living every day, stressed and anxious. You’ll just end up irreparably harming yourself.

Financial stress and anxiety

The other major issues are financial stress and anxiety. Although the symptoms are similar and the terms used interchangeably, stress and anxiety are different. Stress is usually a response to an external trigger, while anxiety is the persistent internal feeling of dread, typically due to poor beliefs. 

Stress and anxiety are perfectly normal human responses. They are survival mechanisms—they are signals that something is wrong. Mild stress and anxiety are good for us because they can push us to re-examine things and also help us learn and grow. But persistent stress and anxiety can quite literally kill you.  

Given that nobody cares about it, it’s very hard to quantify how serious financial anxiety is. But here’s a data point that can very well be about any country. Since 2009, The American Psychological Association (APA) has been surveying Americans about stress, and money has been consistently among the top reasons for stress. 

This is your brain when it’s stressed:

Much like the other mental health issues, financial stress and anxiety aren’t new. Across much of the world, they’ve been getting worse for decades due to the worsening inequalities of income and opportunities—the pandemic made this worse. There have been widespread job losses, pay cuts, and loss of livelihoods due to pandemic induced economic shocks. This has dramatically worsened financial anxiety and stress.

These are challenging times for many, and feelings of hopelessness and despair are everywhere. Money is a deeply emotional subject, and it’s perfectly ok to be stressed and anxious.  

When things are tough, the only way out is to reflect and work to change things—ignoring things won’t help. I’m sorry if this sounds flippant, but this won’t be our first crisis, and it certainly won’t be the last. This generation has already been through 2008 and this crisis. These things aren’t in our control.  

As much as it sounds like an empty platitude, change isn’t easy. The human brain hates uncertainty and change. Severe stress and anxiety can trigger fight-or-flight responses in you and can quite literally shut down your prefrontal cortex—the part of the brain that’s responsible for planning, judgment and decision-making. When your judgment is impaired, your impulsive, emotional brain takes over, and you end up making decisions that you will regret later and worsen your anxiety.   

These quick fixes will seem nice in the short term, but they will just end up making you more anxious and stressed in the long run. For example, you may resort to costly debt that is easy to obtain, but you’ll just be making a bad situation worse.

You’ll have to make difficult choices if you have to get out of a bad situation. That’s the only way to alleviate financial stress and anxiety. I know that’s easier said than done. 

Money can lead to a cocktail of emotions like denial, guilt, fear of judgment, shame, ego, pride and doubt. They make it hard for people to make the right choices, like seeking help or even talking to someone. The other big issue is that talking about money is a serious taboo, not just in India but across the world. This inability of people to be honest and open about money ends up causing serious mental stress and even destroys relationships. 

Nothing good can come of letting yourself get caught in this negative emotional spiral of anxiety and stress induced by financial hardship. You can only control those emotions if you start being kind to yourself. Only then can you figure out a way to deal with a situation. Fatalism and catastrophic thinking make things worse. 

This might mean reinventing yourself and changing your lifestyle. You may have to re-skill yourself, change your industry, do something new, or take a new job with lower pay. You’ll have to explore all the options that can help you pull yourself out of a bad situation, and these things are never easy. 

Here’s a paradox. One of the best ways to avoid financial anxiety and stress is to be financially prepared—have adequate insurance, emergency and retirement savings. But if you’re in a tough spot and give in to your anxiety, it changes your relationship with money and can have a variety of knock-on effects. Financially anxious people are less likely to take care of their health, save less and plan for things. They also become risk-averse and take on debt. All these things ultimately end up causing more stress and anxiety—it’s a vicious cycle.

It’s not just the financially vulnerable; even people who have stable jobs and earn well can be financially stressed and anxious. 

One of the biggest reasons people who make money are financially anxious is poor planning. They let their lifestyles outgrow their income, prioritize today over tomorrow, have poor attitudes towards debt, poor financial literacy, and benchmark themselves to the lifestyles of others. 

Unlike financial anxiety from economic shocks, this results from poor money attitudes. Fixing It starts with having a concrete financial plan. 

Regardless of our realities, mental health issues can have a tremendous impact, not just on us but also on those around us. Given the centrality of money in our lives, mental health issues can significantly affect our attitudes towards money. The opposite is also true—your relationship with money can have a disproportionate impact on your mental health. 

But perhaps first and foremost, we all must acknowledge and educate ourselves about just how dangerous and debilitating mental health issues can be. If not for us, for the people in our lives.  

Financial analyst and researcher at Zerodha

Post a comment

  1. Aditya Bopardikar says:

    Excellent article !! Mental health should be one of the top priorities for today’s generation especially after Covid

  2. Amanpreet kaur says:

    thanks for sharing great information .

  3. Shashi Shekhar says:

    Very nice and well thougth article.

  4. Priyanka says:

    What a comprehensive and enlightening read! I am one among those who resigned post-covid, in trying to deal with the overwhelming grief of my father passing. I left a plush job where i had been working for a decade, but was not happy there. I was financially independent at 37, due to years of investing, and when i needed time to heal, i was able to make a quick decision. Being financially secure has helped me deal with grief in my own way, taking my own time. I cannot imagine how people who do not have this luxury of time, deal with trauma, and still keep on working at jobs they do not love. Maybe i would go back to working, maybe not. For now, i have prioritised my well-being to all other material things.

  5. Uma says:

    Dear Nithin Sir, thanks for very realistic article. I do not know, is it possible for you or not, request you to start Zerodha canteens in karnataka like Indira canteens (breakfast rupees 5, lunch or dinner rupees 10. If it is successful, can be implemented rest of the country. Thank you very much sir 🙏.