What’s the Connection Between Alcohol and Debt?

Alcohol misuse has direct and indirect costs that can cause or exacerbate financial issues. Yes, alcohol is expensive, but it can also take a toll on our mental and physical health, which plays a role in debt. 

On the other hand, stress and anxiety from debt can negatively affect alcohol consumption. Excessive drinking and debt can trap us in a toxic cycle that captures the common saying “Alcohol ruins lives.” Let’s better understand the connection between alcohol and debt as we learn how to prevent or break out of the cycle. 

The Cost of Alcohol Consumption

Drinking is an expensive habit with direct and indirect costs. Not only is the actual alcohol pricey in itself, but a night out or even a party at home can rack up quite the bill with lots of additional costs. 

Direct financial costs of drinking may include purchasing alcohol, chasers, supplements, food, and midnight “drunchies” snack. They may include such related expenses as transportation, tipping, and cover charges. These costs can put quite a dent in our bank account, but drinking also can have aftereffects with other troubling indirect costs.

Alcohol consumption is associated with many physical, mental, and social consequences. Alcohol-related health issues can lead to costs for medical bills and insurance premiums. Legal consequences can require expenses for DUI fees, lawyers, and court costs. Impacted academic or employment performance can affect wages and goals, impinging on our future financial stability. The connection between alcohol misuse and debt, however, goes even deeper. 

The Connection Between Problems With Alcohol and Money

A negative relationship with alcohol might include excessive drinking, alcohol dependence, or alcohol use disorder (AUD). But problematic drinking, no matter where it is on the spectrum, can lead to financial issues. Let’s explore the different ways that alcohol and financial problems can be linked.

Behavioral and Psychological Factors

Alcohol significantly affects our thoughts and actions — leading to negative drinking and spending behaviors.

• Alcohol and decision making. Drinking lowers our inhibitions and impairs our judgment. This increases the likelihood of impulsive spending and making poor financial decisions.
• Stress and coping mechanisms. We all respond to and handle stress differently. However, drinking and spending are two common — but unhealthy — coping mechanisms. Both can temporarily provide a sense of pleasure that serves as a distraction from uncomfortable situations and emotions.
• Addiction and dependency. Dependence and addiction are marked by an inability to quit or cut back on drinking. Sustaining an alcohol dependence or addiction can be a significant financial burden.

Alcohol’s effects on our thoughts and actions can lead to financial troubles. To add to its complexity, alcohol consumption and our thoughts and behaviors can be influenced by socioeconomic factors. 

Socioeconomic Factors

Socioeconomic factors are frequently overlooked but are major components of our environment, which influences our behavior. As a result, socioeconomic status can impact alcohol consumption, which we now know can lead to financial problems.

• Income. Family income can influence the neighborhood we live in, the schools we go to, and accessibility to resources. While higher socioeconomic groups have the highest rates of alcohol consumption, lower socioeconomic groups face the most alcohol-related harm. Alcohol-related harms such as poor physical health, poor mental health, and financial strain can drive greater alcohol consumption — leading to financial harm.
• Education and awareness. Socioeconomic status also affects our education and access to resources. Better education can increase financial literacy and understanding of debt management. It also increases awareness of the financial implications of alcohol consumption. Lower socioeconomic groups who have less access to quality education and resources regarding the harms of alcohol may be disproportionately affected by alcohol consumption — continuing the cycle.

We’ve established that problems with alcohol are deeply connected to problems with money due to many factors. However, AUD is not only associated with financial strain, but is directly linked to debt. Let’s take a closer look at their relationship. 

Debt, Addiction, and the Vicious Cycle

Debt refers specifically to money that we owe. It can be in different forms, such as a mortgage, car loan, or credit card debt. Debt often accrues interest, which means that in the end, we’ll need to pay more than we borrowed. This in itself can lead to a vicious cycle as the debt grows and becomes harder and harder to pay back. 

Alcohol use disorder (AUD), or alcohol “addiction,” is a condition marked by the impaired ability to quit or cut back on alcohol despite physical, mental, or social consequences. AUD isn’t just a lack of discipline or a bad habit. The condition is associated with neurological changes that cause a physical and mental dependence on alcohol. When untreated, it can be difficult to quit drinking — increasing the risk of alcohol-related harm. 

Since alcohol dependence is the inability to stop drinking, the costs of alcohol can add up over time — leading to debt. Debt, on the other hand, creates mental and physical effects that can increase the risk of self-medication and excessive alcohol consumption. Together, alcohol dependence and debt can lock us in a vicious cycle that’s difficult to break out of. AUD has many mental, physical, and social consequences, and so does debt. Let’s get a better idea of what these are.

Long-Term Effects of Financial Irresponsibility

The consequences of financial irresponsibility add to the already detrimental effects of AUD. This is why the cycle of alcohol dependence and debt can be so harmful. Disregarding financial responsibilities leads to a range of consequences. 

• Personal financial health. Debt has lingering consequences on our financial health. Not only does it accumulate interest and fees that make it difficult to repay the debt, but it can also negatively impact our credit score. A low credit score can result in higher insurance costs, difficulties in obtaining loans, and fewer renting options.
• Mental health. Financial strain can lead to increased stress and anxiety. Without proper coping mechanisms, this can lead to increased alcohol consumption or other negative behaviors. With alcohol added to the equation, the risk of developing mental health conditions also increases. 
• Physical health. Debt can lead to inadequate maintenance of our physical health. We may not be able to fund the expenses for proper care — leading to a decline in our overall health.
• Social and family impacts. Money truly does “make the world go round.” Since almost everything revolves around money, financial strain can even impact our relationships and family dynamics.

Debt and alcohol dependence can significantly decrease the quality of our life. To avoid adverse effects, let’s explore some ways we can prevent or break out of the cycle. 

Preventing Financial Consequences of Alcohol Consumption 

Since financial issues and poor drinking habits can fuel each other, we can implement strategies to address both issues. 

• Educate yourself. Greater financial literacy helps us budget and practice more responsible spending. We can learn more about healthy spending strategies or get individual support through financial counseling services. 
• Set limits. This can be for spending on alcohol-related costs or for drinking. Setting limits helps us avoid debt and minimize behaviors that can lead to financial difficulties. Keep track or reach out to a buddy to have an accountability partner. 
• Seek professional treatment for alcohol misuse. Alcohol misuse can directly lead to financial troubles. Seeking professional treatment can help us develop a healthier relationship with alcohol to address adverse effects and reduce the risk of falling into debt. Apps like Reframe can also help us overcome alcohol misuse.
• Develop a support system. Having a strong support system is beneficial in helping us get through testing times. Our circle of support can be our accountability partners, listening ears, and motivators to help us stay healthy physically and financially.

Prevention and early intervention can nip the problem in the bud. However, even if we’ve fallen into the cycle of alcohol misuse and debt, we can break out of it by getting support to quit or cut back on alcohol.

Seeing Green

We often hear the phrase “alcohol ruins lives,” and although it sounds grim, it’s not untrue. Alcohol dependence can impact every aspect of our lives, even financially. Since AUD is characterized by physical and neurological dependence on alcohol, it’s directly linked to an increased risk of falling into debt. The physical and mental effects of debt can drive even greater alcohol consumption — starting a cycle that can be difficult to break. We can address both issues by practicing mindfulness — both mindful spending and mindful drinking. Stay in the green by weaning off alcohol!