A recent review published in Psychiatric Services sheds light on how financial interventions can help improve behavioral health outcomes in adults with mental illnesses and substance use disorders. The study reviewed literature spanning over a century and found that finance-based interventions, such as money management programs and representative payee services, not only help individuals manage their finances but may also reduce substance use and improve overall functioning.
The researchers conducted this study to address a critical gap in the treatment of adults facing mental illness, substance use disorders, or both. Many people with these conditions struggle to manage their finances, which can exacerbate their health problems.
Cognitive challenges that accompany these disorders—such as impulsive spending, difficulty budgeting, or falling prey to scams—can worsen financial instability, which in turn may lead to greater stress and further deterioration of mental health. Financial difficulties can also interfere with treatment adherence and increase the likelihood of hospitalizations.
Previous studies had shown that individuals with severe mental illnesses who receive help with their money management tend to experience better health outcomes, such as improved quality of life and fewer hospitalizations. However, these findings were scattered, and no comprehensive review of the evidence had been conducted until now.
“Money is such an essential part of life and many Americans are hesitant to talk about money,” said study author Jack Tsai, regional dean and professor of public health at the University of Texas Health Science Center at Houston. “A large percentage of Americans also have consumer debt and there is low financial literacy across socioeconomic groups but particularly among adults with low income who have mental illness. I wanted to examine which interventions exist to help adults with mental illness gain financial literacy and better manage their money.”
The study was a systematic review of peer-reviewed literature published between 1900 and 2022. The researchers searched several databases, including PubMed and Google Scholar, for studies involving adults with mental illnesses or substance use disorders who participated in finance-based interventions. Their search yielded over 2,000 articles, which they narrowed down to 18 studies that met specific criteria. The studies selected focused on replicable financial interventions for adults with behavioral health conditions and reported quantitative outcomes related to money management or behavioral health.
“I was surprised that there haven’t been that many interventions developed in this space,” Tsai told PsyPost. “I knew most of the researchers of the studies I had included in the review, and I was hoping to find new interventions that I was not aware of but was surprised to find so little that was new. That suggests this is an area in need of further growth and development.”
These studies included a range of financial interventions. Some were voluntary, such as financial literacy programs designed to teach budgeting and saving skills. Others were more structured, such as representative payee programs, where a third party manages a person’s finances. In some cases, these arrangements were legally binding, with the third party controlling how disability funds or other benefits were distributed.
The researchers found that financial interventions can indeed have a positive impact on behavioral health outcomes. One of the most significant findings was that finance-based interventions could reduce substance use in individuals with mental illnesses and substance use disorders. In particular, the review highlighted the benefits of representative payee programs. These programs were found to help individuals manage their money in ways that led to reduced substance use, especially among people with severe mental illnesses.
In addition to substance use, financial interventions also improved money management skills in several studies. The researchers found that people who participated in structured financial programs, whether through representative payee services or educational programs, reported better control over their finances. These programs not only helped individuals keep track of their spending but also led to improved financial planning and budgeting over time.
Interestingly, the researchers noted that the benefits of financial interventions went beyond just financial stability. Improved money management appeared to have a ripple effect, leading to better mental health and overall functioning.
For instance, several studies found that participants in financial programs had fewer hospitalizations and made better use of outpatient health care services. Improved financial management also seemed to boost participants’ self-efficacy, or their belief in their ability to manage their own lives, which is a key factor in long-term recovery from mental illness or substance use disorders.
“There are several financial-based interventions that exist that can help people with mental illness and addiction better manage their money and improve their functioning,” Tsai explained. “A major notable finding is that money management does not only improve financial status but may improve behavioral health problems. Developing structure and discipline in one area of life (e.g., finances) may help improve other areas of life (e.g., addiction).”
However, the researchers also found some negative outcomes. In particular, they noted that when clinicians acted as both a therapist and a representative payee, the therapeutic relationship could suffer. Clients in these dual-role arrangements often felt coerced, which negatively impacted their overall experience with the intervention. This finding highlights the need to carefully consider who should serve as a financial manager and under what circumstances.
While the review provides important insights, it also has some limitations. One of the main issues is the small number of high-quality studies available on financial interventions for people with behavioral health conditions. Only four of the studies were randomized controlled trials, which are considered the gold standard for determining the effectiveness of interventions. Given the promising findings, the researchers emphasized the need for more rigorous research in this area.
“We need more randomized controlled trials of financial-based interventions,” Tsai said. “The most researched intervention was representative payeeship, but there is also great interest in self-management of income that needs further study.”
“I would like to develop a continuum of several evidence-based financial-based interventions ranging from very structured, professionally-led service models to self-paced education models to serve diverse populations with different financial needs. I’d also really like to study how finances and behavioral health are related in causal ways to determine cause and effect, and how to improve life in both of those areas for Americans. In this country, there is both a crisis of behavioral health and one of consumer debt and financial mismanagement so that motivates me to continue pursuing this area of research.”
“For others interested in this topic, please feel free to reach out if you want to collaborate on financial-based interventions,” Tsai added. “We are also always looking for funders to support our work.”
The study, “Systematic Review of Financial Interventions for Adults Experiencing Behavioral Health Conditions,” was authored by Jack Tsai, Rebecca L. Kinney, Eric B. Elbogen, and Jeffrey Gluff.
