Financial difficulty can have a drastic impact on your mental wellbeing. Covid-19 changed people’s financial circumstances, and many people feel more anxious now that the furlough scheme has ended. For #WorldMentalHealthDay, we look at the links between money and mental health and how learning to manage money can help reduce financial stress.
Research by Office for National Statistics in 2020 found that 69% of people in the UK felt “very or somewhat worried about the effect that the coronavirus was having on their life”. One reason for this is financial stress.
Many people have become unemployed, furloughed or lost their income. According to a Which article, 2.7 million people claimed Universal Credit or Job Seeker’s Allowance while job hunting this March.
In July, the Local Government Information Unit reported poorer households suffered a greater income loss than wealthier households due to Covid-19 and were struggling to reduce spending.
Money and mental health
Someone struggling with mental health problems might find it difficult to work or get a job, leading to financial difficulty. Likewise financial difficulty causes stress and anxiety.
Research by Money and Mental Health in 2021 found that 29% of people experiencing mental health problems suffered an income loss in March 2020. This resulted in them having to cut back on essentials such as heating or food.
They also reported that among people with mental health issues:
- 35% worried about losing their job
- 68% faced a pay disparity of up to £8,400 per year
- 7% faced redundancy in March 2020.
How to manage your finances better – and reduce stress
Get organised and minimise your debts
Budgeting is key when it comes to organising your finances. Whether it’s the new iPhone or your weekly food shop, work out how much can afford to spend and stick to a budget.
If you’re new to budgeting or simply don’t enjoy it, a free tool could help. For example, the Money Advice Service has a free budget planner which assesses your finances and provides personalised tips on how to save.
If you have a credit card, keep track of your spending. Credit card debt may seem scary but staying on top of it will help you maintain a good credit score.
Always prioritise paying off cards with the highest interest rate first. This reduces the amount of interest you pay back and decreases your debt. If your credit provider offers a mobile app, use this to check your balance and monitor your spending.
Boost your financial knowledge
Our 2020–21 Young Person’s Money Index found that:
- 67% of young people worry about money
- 59% feel more anxious about money due to Covid-19
- 83% want to learn more about money and finance in school
- 41% do not know or are unsure how a student loan works
Many people end up in debt or develop poor spending habits because they don’t know how to manage money or how finance works.
A solid financial education will help people make smart financial decisions throughout their lives, and so reduces the chances of getting into debt. This in turn reduces financial stress.
Find out what support is available to you
If you’re experiencing financial stress, there’s no shame in seeking help – especially if you think it could affect your mental health. Services that offer free advice and support include:
Likewise, if you have mental health problems caused by your financial situation, several organisations offer free resources and helplines, such as:
Find out more about the Young Person’s Money Index
Check out our free financial education resources