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The 3 Unveiled Truths About Depression

Depression is a pervasive and debilitating mental health disorder that afflicts millions of people worldwide.

July 6, 2023

The world has lost one of the most iconic performers and artistes of all time. Famous Hong Kong singer-songwriter Coco Lee, who sold millions of Chinese and English albums since carving her career in the 1990s, has passed away on 5 July 2023 at age 48. Her sister revealed that Coco had suffered from depression for a few years, but her condition worsened in the past few months. and ultimately led to her suicide and death.

Depression is a pervasive and debilitating mental health disorder that afflicts millions of people worldwide. According to the World Health Organization, more than 264 million people of all ages suffer from depression, making it one of the leading causes of disability and a major contributor to the overall global burden of disease. Its impact on individuals is multifaceted, affecting their mental and physical health, personal relationships, productivity, and quality of life. It's a dark cloud that casts a long shadow over many aspects of one's life, with effects that extend far beyond the realms traditionally associated with mental health.


Truth #1: Depression Can Influence Cognitive Function

Depression is not just an emotional disorder but also a cognitive one. It significantly affects how individuals think, concentrate, make decisions, and remember. Cognitive symptoms of depression can include difficulties in focusing, slowed thinking, indecisiveness, forgetfulness, and difficulty in problem-solving. This cluster of symptoms, known as 'cognitive impairment,' is present in approximately 20-50% of people with depression and can persist even when other symptoms of depression have been treated.

Depression's impact on cognitive function has a direct influence on an individual's decision-making capabilities. It affects an individual's ability to analyze information, weigh the pros and cons, and ultimately make informed choices. People with depression may experience a heightened sense of pessimism, leading to a negative bias in decision-making. They may have difficulty imagining positive outcomes or making future-oriented decisions, both essential components of effective financial planning.

These cognitive changes subtly yet profoundly influence financial decisions. For example, someone experiencing depression might struggle with the focus and clarity needed to understand complex financial information, leading to poorly informed financial choices. The indecisiveness characteristic of depression can cause delays in important financial decisions, such as investing for retirement or purchasing insurance. Heightened pessimism can result in an overly conservative investment strategy, potentially leading to lower long-term returns.

Moreover, the difficulty in foreseeing a positive future can undermine the motivation for long-term financial planning, as individuals may not see the point in saving for a future they find hard to envision. Understanding this cognitive impact allows us to appreciate the subtle, often overlooked influence of depression on financial planning and underscores the need for mental health awareness in this sphere.


Truth #2: Depression Can Lead to Behavioral Changes

Beyond the cognitive impact, depression is also associated with several behavioral symptoms. Individuals suffering from depression often experience a diminished interest in activities once found pleasurable, increased fatigue, and feelings of worthlessness. These symptoms can lead to withdrawal from social situations, neglect of personal responsibilities, and sometimes even a lack of basic self-care.

When these behavioral changes intersect with financial habits, the results can be detrimental. For instance, depression can foster two distinct yet harmful tendencies in relation to financial management: impulsivity and avoidance. On the one hand, individuals may exhibit impulsive behavior, such as unnecessary spending or making high-risk investments as a way to cope with feelings of emptiness or to seek momentary pleasure. On the other hand, depression may push individuals towards financial avoidance, where they neglect to monitor their finances, delay paying bills, or procrastinate on important financial decisions due to the overwhelming feelings of despair or apathy.

These behaviors can severely disrupt long-term financial planning. Impulsive spending can lead to accumulating debt, depleting savings, and creating financial instability. For instance, a person might use retail therapy as a coping mechanism, purchasing items they don't need, which could lead to significant credit card debt. Similarly, a depressive episode might push someone to make a high-risk investment in hopes of a high return, not fully considering the potential losses.

Meanwhile, financial avoidance can result in missed payments, leading to lowered credit scores and potential penalties. Avoidance also means less time spent on strategic financial planning, such as budgeting or investing, which can compromise long-term financial growth.

In sum, the behavioral symptoms of depression can manifest in financial habits in subtle yet consequential ways, emphasizing the importance of addressing mental health issues in comprehensive financial planning.


Truth #3: Depression Often Carries Hidden Financial Costs

Depression carries with it numerous costs, both direct and indirect, that can subtly yet profoundly impact a person's financial stability and long-term financial planning.

Direct costs associated with depression primarily revolve around treatment. These include expenses related to therapy sessions, psychiatry appointments, and medication. Additionally, there may be costs related to hospitalization or residential treatment centers in severe cases. Depending on an individual's healthcare coverage, these costs can be significant, requiring out-of-pocket payments that can strain personal finances.

Beyond the direct costs, depression also has a range of indirect costs that are often overlooked. Depression can significantly impair a person's productivity at work, leading to reduced earnings or even job loss in severe cases. Extended periods of depression can result in significant absences from work, known as absenteeism, or decreased productivity while at work, known as presenteeism. Both of these scenarios can have serious implications for a person's earning potential and career progression.

Furthermore, the behavioral and cognitive changes associated with depression, as discussed earlier, can lead to poor financial decisions, resulting in additional financial costs over time. These can manifest as excessive debts due to impulsive spending, or missed investment opportunities due to indecisiveness or financial avoidance.

In the long term, these hidden costs can significantly impact a person's financial planning. The direct costs may deplete savings and cause financial strain, and the indirect costs can compromise future income and wealth accumulation. For instance, funds that could have been invested for long-term growth might instead be used to cover ongoing treatment costs. Reduced earnings due to productivity loss can make it difficult to meet financial goals, such as home ownership or retirement savings.

It's clear that depression carries a significant, yet often unseen, financial burden. Understanding these hidden costs is a crucial step towards more effective financial planning for individuals dealing with depression.


Strategies to Address The Impact of Depression

Recognizing the complex relationship between depression and financial planning is the first step towards a mindful approach to financial well-being. Addressing mental health is not just beneficial for personal well-being, but it also plays a significant role in securing financial health. When mental health issues are effectively managed, individuals are better equipped to make sound financial decisions, maintain productive financial habits, and navigate the hidden costs associated with their conditions.

The first strategy is to create a depression-conscious budget. For individuals dealing with depression, traditional budgeting might feel overwhelming. Therefore, a simplified version should be considered. This could involve allocating money into broad categories like needs, wants, savings, and healthcare. Allocating funds specifically for healthcare needs, including therapy, medications, and other treatments, ensures that these vital services can continue without causing undue financial stress.

Secondly, one must consider their spending habits. Depression can lead to impulsive or comfort spending as a temporary means of feeling better. Monitoring and acknowledging this can help in developing coping mechanisms that do not involve spending money. It's also helpful to automate as much of the financial process as possible, such as bill payments and savings deposits. This reduces the burden of financial tasks during low periods, ensuring financial obligations are met and savings goals are still being achieved.

The third strategy is proactive communication with creditors. In periods of significant depressive episodes, meeting financial obligations can be challenging. Proactively communicating with creditors or lenders about one's mental health situation can lead to arrangements like payment plans, which can alleviate financial stress.

Lastly, it's essential to engage professional help. A financial advisor, particularly one experienced in dealing with clients who have mental health concerns, can be an invaluable resource. They can provide objective advice tailored to the individual's unique situation, guide them in making sound financial decisions, and offer reassurances during times of financial stress. You can book an appointment to have a chat with me and have someone to talk to.

Furthermore, financial education focusing on the basics of financial management, debt control, and future planning can provide a sense of control and confidence, which is often lacking during depressive periods.

In essence, integrating mental health into financial planning means acknowledging that traditional approaches may not work effectively for those dealing with depression. Instead, adopting a more tailored, compassionate approach can lead to improved financial stability without exacerbating mental health symptoms. This intertwining of mental health and financial planning emphasizes that one's overall wellbeing is a combination of both financial and mental health, and they should be addressed simultaneously.


Depression is not merely a personal or medical issue; its reach extends into many areas of life, including our financial wellbeing. The importance of mental health awareness, therefore, cannot be understated - it's not just about improving quality of life, but also about securing financial health.

Our financial lives are inextricably tied to our mental health. Recognizing this connection allows us to address these challenges in a more comprehensive, holistic way, ensuring that the path to financial stability also involves the journey towards improved mental health. As we continue to break down the stigmas surrounding mental health, let us also strive to incorporate this understanding into all facets of life, including our approach to financial planning.


Junwen Chen

My mission is to educate and empower people to design their lives so that they can live in abundance.

Let me partner with you, to design and nurture your dreams and ultimate life goals.


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