Cost or burden of illness studies for mental illnesses has helped define the magnitude of their negative effects on the household, community and national economy. Despite its many benefits, there is a paucity of these studies among Nigerians being managed for mental illnesses. This study was aimed at assessing the economic burden of mental illnesses and its effect on household purchasing power. The study was descriptive cross-sectional in design conducted among 284 out-patients with five categories of mental illnesses at the Neuropsychiatric Hospital, Aro recruited via a systematic sampling technique. Data collection was quantitative using a semi-structured interviewer-administered tool. Participants provided the actual direct costs and estimates of indirect costs incurred during their most recent inpatient admission and their first clinic visit after discharge. Parametric and non-parametric statistical tests were conducted on the direct and estimated indirect costs respectively after testing them for normality using the Q-Q plot with statistical significance determined at p50% earning <US1.8perday.Theirmeandirectandestimatedindirectcostswere(US23.1±US11.3andUS15±US$28). There were no statistically significant differences in the mean direct and estimated indirect costs incurred by participants across the categories of mental illnesses. A significantly higher proportion of participants could afford the essential goods (88%) compared to those who could afford luxurious goods (29%) with p<0.001. The mean direct costs incurred by those who could afford the essential and luxurious goods were significantly higher than those who could not following a t-test. The median estimated indirect costs incurred by those who could not afford luxurious goods differed significantly from those who could with the Mann Whitney U-test. Participants with mental illnesses face a high economic burden in managing their condition with the majority unable to afford luxurious goods. Affordability was also associated with incurring more direct costs