The pop singer and mental health advocate, who announced her joint campaign with five mental-health organizations, called Be Vocal: Speak Up for Mental Health, on Thursday, opened up about living out her dreams despite her diagnosis.
"I'm living well with my mental illness – I am actually functioning like a very happy person would," Lovato tells PEOPLE. "I couldn't be happier today. Life is really, really great. I have a brand-new puppy and I'm able to not only take care of myself but take care of him as well. I'm living my dream. Life is pretty amazing."
The 22-year-old also credits the support she has found in her boyfriend, Wilmer Valderrama, 35, as a big reason for her positive outlook.
"He's been so helpful when it comes to being a part of my support group," she says of the That '70s Show actor, whom she thanked with a sweet Instagram tribute in March.
She continues, "The people that are closest to me in my life are understanding and are willing to call me out on things if they notice unhealthy behaviors coming into play.
"And he's one of those people who's stuck by my side from day one of me getting help and saying, 'Listen, I'm not going to be a "yes" person,' " she says. "Someone that just says 'yes' to you because they're afraid of what will happen to them because they don't want to get out of the circle. "
Instead, she says, "He's like, 'I will always be honest with you and I always want the best for you,' and that's what he's done, and I'm so grateful to have him in my life."
Paying It Forward
Since learning of her diagnosis during treatment years ago, Lovato has done her best to raise awareness about mental health issues by speaking publicly about her own struggles and starting a treatment scholarship program in honor of her father, Patrick, who also suffered mental illness and died in 2013.
"My father had schizophrenia and bipolar disorder as well, and I watched him live a very unfortunate life because of the lack of access to treatment," Lovato says.
"So it's very personal to me," she adds. "I just think mental illness is something people need to learn more about and the stigma needs to be taken away from."
Mental Health America is one of Lovato's partners on her new campaign.
"MHA's founder, Clifford Beers, declared over 100 years ago that we must address mental illness and 'fight in the open,' and that is exactly what Demi Lovato is doing," Paul Gionfriddo, president and CEO of the group, said in a statement to PEOPLE.
Through the project, Lovato is encouraging people with mental illness to speak openly about it with their doctor, support system, family and friends.
"It's also about speaking up for your community," she says, "which is taking action, whether it's writing a letter to Congress and telling them how this is affecting you and your life and how you would like to see mental health care more accessible in your community.
"There's so many different ways you can help. I think together as a country we have to step up and we have to do something about this issue that is becoming quite an epidemic."
Last year, Lovato traveled the country as part of the Mental Health Listening & Engagement Tour.
The "Skyscraper" songstress described the response she got on the tour as "incredible" and "welcoming."
"I've felt tons of support by fellow people that have mental illnesses at these events," she says, "and people who are just speaking up for people who can't speak anymore."
For more from Lovato, pick up the latest issue of PEOPLE, on newsstands Friday