Not long ago, you had to physically hand over cash to buy something. You witnessed it exit your wallet. You sensed it. With Klarna or Clearpay, you can now pay for a new phone in three instalments and barely notice the difference. And it’s being done by everyone else, right? This isn’t just a shopping habit; it’s a reflection of how we relate to money today. We are becoming increasingly free of the emotional burden of spending, whether in India, the United States, or the UK. Additionally, our Mental health is being profoundly affected by this quiet shift.
The Illusion of Affordability
The popularity of Buy Now, Pay Later (BNPL) plans has skyrocketed. They promise freedom and flexibility, but the ease of use can deceive our minds. When payment is deferred or divided into smaller payments, we are wired to feel less emotionally drained. Although the £15 or $25 payments seem insignificant, they quickly add up. Prelec & Loewenstein (1998) found that when the act of paying is separated from the act of purchasing, we experience less “pain of paying,” which makes us more likely to overspend. This psychological disconnection allows people to underestimate the long-term cost of their spending and often leads to impulsive financial decisions (Soman, 2003). In societies where digital credit is easily accessible but financial education is limited, these behaviours can spiral into chronic debt.
Debt and Mental health: A Global Connection
Stress over money doesn’t stay in the bank. It follows us into our homes, our relationships, and even our sleep. Research from multiple countries has shown that personal debt is strongly associated with depression, anxiety, and even suicidality (Richardson et al., 2013). According to Behere & Bhise (2009), informal borrowing and unregulated digital lending have been linked to rising rates of suicide and emotional distress in rural and underserved populations in India. Unsecured debt has been linked to worse health outcomes and higher levels of depressive symptoms in the United States (Sweet et al., 2013). The psychological toll can be severe when financial strain affects daily survival, such as paying for food, housing, or education. Even middle- and high-income earners report significant mental distress when caught in cycles of lifestyle-driven debt because of the pressure.
Financial Shame and Social Pressure
Money isn’t just about maths. It has to do with meaning. We buy things to feel better, to belong, or to prove we’re doing well—even if the reality looks very different. While a phone costing £900 may not perform as well as one costing £300, it does reveal something about us. In India, families often take on debt to host extravagant weddings. In the UK, I’ve worked with young adults secretly skipping rent payments to keep up with fashion hauls. In the US, even people with six-figure incomes can fall into lifestyle debt because expectations keep growing.
When we shop to alleviate sadness, boredom, stress, or low self-worth, we are engaging in emotional spending. Despite the fact that it may provide brief relief, it frequently results in deeper shame, particularly when the financial repercussions become apparent. Avoidance coping and diminished psychological well-being have been linked to emotional spending (Rick, Pereira, & Burson, 2008). This shame can prevent individuals from seeking help, perpetuating both financial and emotional strain.
Financial Literacy Isn’t Optional
People frequently do not comprehend what they are agreeing to in a world of sleek apps and approvals with a single tap. Financial literacy remains uneven in India and other emerging economies, particularly among younger populations (Lusardi & Mitchell, 2014). Many adults in the United Kingdom and the United States claim that they were never taught how to manage credit, loans, budgets, or emotional spending. Understanding compound interest is important, but understanding why we spend the way we do is just as important. Identity, self-esteem, and emotional regulation are all closely linked to financial behaviors. Mental health professionals need to be able to talk about money as a deeply psychological issue as well as a practical one.
What Can We Do Now?
We need to talk about money more often—not just how to make it, but how we feel about it— in families, schools, workplaces, and therapy rooms. Therapists should be able to ask about financial stress with confidence. Financial education ought to be treated as essential in schools. Additionally, we should normalize debt-related conversations to alleviate people’s feelings of isolation and shame. Financial stress can make you feel helpless, whether you live in Delhi, Detroit, or Derby. But by addressing the emotional side of money and building healthier habits, we can move from crisis to confidence.
Final Thoughts
The next time you see that tempting “Pay in 3” button, take a moment to pause. Ask yourself: Do I really need this? Or do I just need to feel better?
We live in a world where money is invisible. But the emotional toll it takes is very, very real. If we start noticing that cost—not just in pounds, dollars, or rupees, but in stress, shame, and mental fatigue—we might finally treat money not only as a resource, but as something deeply psychological.
If you or someone you love is contemplating suicide, seek help immediately. For help 24/7 dial 988 for the 988 Suicide & Crisis Lifeline, or reach out to the Crisis Text Line by texting TALK to 741741. To find a therapist near you, visit the Psychology Today Therapy Directory.
