Illustration: Jayachandran/Mint
Illustration: Jayachandran/Mint

Ways to ensure you don’t put financial well-being at risk

  • People with a mental illness can pass the task of managing money to a family member or a trusted friend
  • Those who have uncontrollable urges to spend could consider investing in products that lock in savings

For the last 10 years, Nayeem, who did not want to reveal his last name, has been on and off medication for anxiety and depression. “During this time, I never realized that I wasn’t managing my finances. If I had money, I would spend it. If I went out with friends, I would pay," said the 46-year-old, a businessman suffering from bipolar disorder. Nayeem had five credit cards with an average limit of 1 lakh per card, which he would use liberally whenever he was short of cash. On one occasion, he owed 5 lakh to the banks.

“Bipolar disorder consists of two poles—depression and overconfidence," said Mumbai-based Kuldip Datey, a psychologist and counsellor. “People suffering from bipolar disorder can end up splurging during episodes of mania. In one case I know of, the individual got into a hyper-confident state after elections and invested heavily in the stock market. He also spent a lot of money on parties," said Datey, adding that the extra spending during the phase didn’t suit his long-term finances.

Bipolar disorder is just one of the many mental illnesses that can affect a person’s ability to deal with money, thereby putting a person’s financial life at risk. While it’s well-established that mental illnesses can hamper an individual’s social life, experts say they can affect a person’s money life too. This World Mental Health Day, we talk about the delicate relationship between financial and mental well-being.

Delicate balance

There could be many reasons why an individual may not handle his finances well such as lack of awareness or a careless attitude, but a big aspect that is often ignored is a person’s mental well-being. Doctors say that there are mental illnesses can manifest in various ways and prevent people from having healthy money lives.

“We have this concept called the social drift theory. People with mental disorders, even when they are not having an episode can find it difficult to hold down a job that matches their qualifications and earn a decent income. Such people can drift down the social ladder," said Nikita Shah, a Mumbai-based psychiatrist.

For example, a borderline personality disorder may hamper a person’s ability to hold a job or a relationship. This could translate into erratic earnings and lack of progression up the career path, which will ultimately harm the long-term financial journey of a person. Similarly, Attention Deficit/Hyperactivity Disorder (ADHD) can take a toll on a person’s career and finances as individuals afflicted by it get bored easily and tend to change or leave jobs, which can cause financial hardship, said Shah.

Another mental illness that can harm a person’s money life is the paranoid personality disorder. “Such people tend to hoard cash and stay away from banks," said Datey. Not having the confidence to put away money in a bank or a saving instrument exposes the money to the risk of theft, impulse spends or fraud. Then there are people who are overly dependent and need to rely on someone for most of their needs; this too can extend to finances. If the person they depend on is poor at managing money or unscrupulous and wants to take advantage, they can suffer greatly, said Datey.

Getting help

When it comes to mental illnesses, there is still a lot of social stigma, which makes it difficult for patients to open up and discuss their problems—personal or financial. “People who have financial problems due to mental distress find it very difficult to open up and this makes it harder to get professional help. This is different from people who have relationship or career issues," said Mikul Patel, founder and chief executive officer, Moodcafe, a mental health startup. But not sharing financial problems in order to reach a viable solution can make matters worse.

Though Nayeem did not seek financial help specifically when he found himself in trouble money-wise, he discussed his troubles with his counsellor who helped him deal with his situation.

However, there’s help at hand. To supplement formal treatment and counselling, there are a number of mental health support groups. Umang Sheth, founder, Hugging Club of India, a mental health support group, said that its members meet fortnightly in Mumbai to discuss various issues surrounding mental health in a relaxed, informal setting. The group also encourages members to talk openly about mental illness and seek professional help.

The way forward

Counsellors and experts point out to the need of reaching out for mental health patients. People with mental illnesses or those experiencing signs of severe stress or some other type of psychological issue should be careful about taking financial decisions alone. It may be best to consult a mental health professional and delegate the task of managing finances to a family member or a trusted friend. This may also be a good time to seek out a financial planner who has a fiduciary responsibility to act on the client’s behalf.

Those with a condition that urges them to spend or splurge uncontrollably could consider investing in products that lock in savings. For example, Public Provident Fund and National Pension System have long lock-ins.

Remember that a contract obtained under undue influence is voidable under Section 19A of the Indian Contract Act.

There is also the option of creating an “advance directive" provision under India’s Mental Healthcare Act, 2017. An advance directive under Section 5 of the Act can be made by any adult whether or not they were previously suffering from a mental illness. Such a directive can specify a “nominated representative" to oversee the treatment of the person making the directive, in the event of their illness. This is also helpful to someone who may relapse into a mental illness from a previous state of mental health. An advance directive is more effective than a power of attorney (PoA) because the former can remain dormant until the issuer of the advance directive actually becomes mentally ill. It also allows the issuer to formally direct how he should be cared for in the event of a mental illness. A PoA, on the other hand, applies to financial and legal matters and is not tailored to medical treatment.

A plain paper with the signature of the issuer can appoint a nominated representative; stamp duty and registration is not required. However, an advance directive must be registered with the Mental Health Review Board appointed by the State Mental Health Authority. “On a practical level, we involve family members to take charge of finances when someone’s mental illness is affecting their money. For example, something as simple as setting up notifications for family members on credit card purchases," said Shah. “Family members also designate fixed deposits or savings for the patients and I’ve had discussions with some families on setting up trusts to manage assets on behalf of the patient," she added.

Mental illnesses are hard to diagnose and there’s still a lot of stigma around them. If you feel that you or someone close to you may have a mental disorder, don’t hesitate in getting help. Depending on what the condition is, you may also want to ring-fence your finances from yourself. Speak to a trusted family member or friend who can help you do this. Money, after all, is nothing more than a means to an end, which among other things includes mental well-being.

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