October 24, 2024

Seasonal Affective Disorder and Your Finances

Dana Edwards, CFP®, CSRIC®, EA
Understanding the Impact of Seasonal Affective Disorder (SAD) on Your Financial Habits

Seasonal Affective Disorder (SAD) is a type of depression that occurs at specific times of the year, typically in the fall and winter months. The shorter days, reduced sunlight, and colder temperatures contribute to feelings of sadness, lethargy, and a lack of motivation. While SAD primarily affects mood and energy levels, it can also have a significant impact on financial habits, leading to changes in spending, saving, and overall financial decision-making. Today, we'll delve into how SAD can affect your financial habits, and how you can regain control of your finances in the dreary winter months.

There are many ways that SAD can manifest in your financial habits. The first and perhaps most commonly romanticized manifestation of SAD is impulse spending. People dealing with SAD may turn to retail therapy or impulse purchases as a way to cope with their feelings of depression and low energy. Shopping can provide a temporary mood boost, but it can lead to unnecessary expenses and financial strain. This impulsive behavior is driven by the desire to fill an emotional void, but it can worsen financial well-being and cause more emotional stress over time. In addition to impulse spending, SAD sufferers may also gravitate towards comfort spending, which can include buying comfort foods, entertainment subscriptions, or activities like eating out more frequently. These expenses may not be planned and can add up quickly, leaving individuals with less disposable income for savings or emergencies.

Hand-in-hand with this shift in spending comes reduced financial planning or financial foresight. SAD can affect cognitive function, making it harder to focus on long-term financial planning and goals. Individuals with SAD may find it difficult to maintain a budget, stay on top of bills, or contribute to savings during the winter months. This lack of attention to personal finances can lead to missed payments, overdraft fees, or a lack of preparation for future expenses. This can also lead to the neglect of long-term financial goals. When battling SAD, the future can feel distant and irrelevant, making it harder to stay focused on long-term financial goals such as retirement savings, investments, or paying off debt. This short-term mindset can cause setbacks in overall financial health, as decisions are made based on immediate emotional needs rather than careful planning.

Finally, SAD can also have an impact on seasonal income for certain types of workers, thus further exacerbating the effects of SAD-induced spending changes. For those whose income is tied to productivity — such as freelancers, entrepreneurs, or commission-based workers — SAD can directly impact earning potential. The fatigue and lack of motivation associated with SAD can lead to decreased work output, which in turn may reduce income. Less energy to work and lower productivity can cause financial instability, particularly if income fluctuates during these months.

Luckily, there are many things you can do to help you cope with SAD and its financial symptoms! First and foremost, if SAD symptoms are affecting your day-to-day life and wellbeing, it is important to seek professional help. A therapist or counselor can work with you to provide coping strategies and help address the underlying issues contributing to your seasonal depression. Beyond seeking professional help, planning self-care into your daily routine can help you combat SAD. Physical activity and sunlight exposure can help alleviate some of the symptoms of SAD. By staying active and maintaining social connections, you can improve your mood and reduce the emotional triggers that lead to overspending. In addition to this, planning for additional self-care expenses within reason during this trying time of the year can give you the padding in your budget needed to support mental-health related spending. Recognizing that you may engage in more comfort spending during SAD, allocate a small part of your budget for these expenses. By setting a limit, you can account for self-care purchases and mood-boosting treats without derailing your financial goals.

In addition to prioritizing steps to manage your mental health, there are budget-specific steps you can take to help you stay on financial track without adding unnecessary stress to your routine during months when seasonal depression is most likely to hit. The first of these is pre-planning your budget. Having a clear budget can help curb impulse spending and ensure that all essential expenses are covered. Even if you’re feeling low, a budget can serve as a guide to help keep you on track financially. Next, you can set up automatic payments and savings to help you stay on track. Setting up these automations for transfers and payments for bills and savings accounts can help you avoid missing important payments or neglecting savings goals. This ensures that even if your energy levels are low, your finances are still being managed responsibly.

Seasonal Affective Disorder can have a profound impact on both mental well-being and financial habits. By understanding the connection between SAD and your finances, you can take proactive steps to manage your money more effectively during challenging months. Implementing strategies such as budgeting, automating payments, and seeking emotional support can help you stay on track and prevent financial setbacks during the fall and winter seasons.

If you or someone you know is struggling with the financial effects of SAD, consider seeking professional financial or mental health support to create a sustainable plan for managing both your mental health and financial well-being.