Covid-19 has had a drastic impact on mental wellbeing as well as financial health. For #mentalhealthawarenessweek, 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 (COVID-19) was having on their life”.
One reason for this is financial stress. Many people have become unemployed or furloughed, or suffered a loss of income. According to a Health Foundation survey last June, over a third of those in full-time work worried about losing their job. And “mental health impacts on people who were unemployed were widespread and severe".
What is the relationship between money and mental health?
Money and mental health can be directly linked. 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 2019 found that people with mental health problems were more likely to be unemployed. And 72% of those felt their mental health had worsened their financial situation.
They also reported that when struggling with their mental health:
- 74% of people delayed paying bills
- 93% had an increase in spending
- 92% found making financial decisions more difficult.
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 and reduce financial stress.
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 has 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
Early financial education is crucial to give people the skills they need to manage personal finances and reduce stress. Many people end up in debt or develop poor spending habits because the don’t know how to manage money or how finance works.
A solid financial education will help you make smart financial decisions throughout your life. That will reduce your chances of getting into debt and suffering 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 money 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:
Would you like to learn more about how money works and managing personal finance?
Check out our free financial education resources
Find out more about our Young Persons’ Money Index