Financial stress linked to risk of chronic disease

High levels of debt pose not only a threat to an individual’s financial stability, but also result in substantial health risks, according to a study presented by Momentum Multiply at the Actuarial Society of South Africa’s 2016 Convention held in Cape Town recently.

The paper, entitled “Financial wellness and debt as a predictor of physical wellness and claims” by Nico-Louis Minnie, Johann van Tonder and Ina Shaw, confirms a disturbing link between financial stress and physical wellness through the analysis of the health and debt data of some 20 000 consumers.

Minnie, Head of Momentum Multiply Rewards and a Fellow of the Actuarial Society of South Africa, notes for example that consumers with abnormal blood pressure were more likely to be 90 days or more behind with debt repayments.

Consumers with high glucose measurements were also found to be more likely to be in arrears with debt repayments.

“Blood pressure and glucose are two of the factors used by Momentum to calculate a person’s Healthy Heart Score, which measures the risk of developing cardiovascular disease like a heart attack or stroke within the next 10 years,” explains Minnie.

“This research shows a clear link between consumers’ financial health and their physical health. Through our research we have noticed a relationship between the level and state of consumers’ indebtedness and their likelihood of suffering from chronic diseases, which in turn will have a negative impact on their financial situation.”

The research further reveals that once a consumer’s personal loans amounted to more than 20 times their monthly salary, their chronic claims increased sharply the next year.

Minnie states that this research is particularly relevant in the South African context, where there has been a marked deterioration in household finances over the past few years. “Our research findings confirm the state of financial health as a contributing factor to the substantially higher number of medical claims over the past few years.”

“We are now planning to more closely examine the effect of other financial behaviours on physical health, such as financial planning, savings, spending habits and debt management."

Reducing financial stress

Minnie states that maintaining physical health through regular exercise and a balanced diet can reduce financial stress.

“In addition, financial stress can be further reduced by practicing the right financial behaviour, such as budgeting, financial planning and seeking financial advice from experts.” He notes that the study reveals that the top 5% of consumers in terms of having a good credit score had sought financial advice.

Minnie says that it is in employers’ best interest to help employees manage their finances more wisely through education and cost-effective financial planning.

“Assisting employees with financial planning could improve the profitability of businesses, as reducing their financial stress could lead to better productivity, better profits and potentially the ability to hire even more employees.”