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Money & mental health: how to cope with financial worries

Statistics gathered by the Office for National Statistics (ONS) shows that around 43% of Brits are struggling to pay their bills.

With energy costs up to doubling in price, many more people are being plunged into insecure living circumstances – the effects of which can be devastating for people’s mental health.

Find out what simple steps you can take to resolve your financial struggles and what you can to do to prioritise your mental health.  

Money & mental health: how to cope with financial worries

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How can money affect your mental health? 

Money plays a big role in your wellbeing. So with prices soaring and many more people finding themselves in difficulty, it’s an understandably challenging time for many.

Whatever stage of live you’re at and whatever your outgoings are, it can be difficult to keep yourself in a balanced state of mind if you’re seriously worried over your future.

And as prices are continuing to rise, this is unfortunately a situation many people are finding themselves in. 

The relationship between money and mental health is often described as a vicious cycle as not only do people with mental health conditions often have a worse relationship with money, finding yourself in money trouble can impact your mental health.

According to mental health charity Mind, people struggling with money can often be forced to go without food, water and living essentials.

People will often develop sleeping problems and will start to experience feelings of anxiety and panic when it comes to discussing their finances.  

And while money problems can affect anyone, people with pre-existing mental health conditions are also more likely to end up with disproportionately worse outcomes when it comes to managing money.

Research by the Money and Mental Health Institute shows that during the pandemic, people with mental health problems were three times more likely to fall into debt, were twice as likely to borrow money to cover everyday spending and were much more likely to have zero savings to fall back on. 

Money problems can affect everyone, regardless of how much, if any, money they earn and their mental health. But as we approach Mental Health Awareness Week – 9th to 15th May 2022 – it’s a good time to understand how you can take steps to improve your financial situation

How to recognise signs of money problems 

Everyone’s relationship with money will be different, but there are some common symptoms frequently associated with potential money concerns to be aware of.

Many people experiencing money anxiety or having money problems will often: 

  • Feel guilty for spending money, even if they can afford it 

  • Be afraid to speak to the bank or will avoid checking their balance as much as possible 

  • Feel too ashamed to reach out for money advice 

  • Be stressed, especially if they have additional caring responsibilities, such as children. 

  • May have previously experienced financial abuse 

  • Borrow money to meet day-to-day costs 

  • Struggle to save for the future 

  • Aren’t sure where to find the right financial advice 

Even if you aren’t currently having problems with money, thinking about how money makes you feel can still help you to prepare in case you do face problems in the future.

Take some time to think about: 

  • How does spending money make you feel? Do you feel guilty or ashamed? 

  • Are there times when you’re more likely to spend or save money? 

  • Are there times when you feel more or less in control of your spending?  

  • Are there aspects to money management that make you feel noticeably worse? For example, attending universal credit assessments or opening envelopes? 

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How to manage your money wisely 

Finding yourself facing money problems can be an uncomfortable and difficult situation to be in, but it’s vital to remember that anyone can fall into financial hardship and that you’re not alone.

Unfortunately, due to the taboo and stigma surrounding money, it’s easy to feel like you’re isolated and that your issues are somehow your fault.

Regardless of your financial circumstances, there are some simple steps you can take to improve your financial situation and potentially your mental health too. 

If you have outstanding debts, are struggling to meet your costs or want to seek out advice, you should consider speaking to an agency or charity, such as Citizens Advice, Shelter or StepChange.

These charities can help you put in place steps necessary to resolve your financial issues, and in some cases, will even speak to parties that you owe money to.

If you’re struggling to pay off interest on loans, you could use the government-backed Breathing Space scheme, which is designed to give you time to figure out how best to meet your debt payments and to take on the right advice.

Seeking out the right money advice can make a big difference to your circumstances and can prove to be far more valuable than the price of not finding the advice you need. 

Or, if you’ve recently been made redundant or are sick and unable to work, you could consider claiming Universal Credit or Personal Independent Payment (PIP).

Many people will feel anxious, stressed, uncomfortable or ashamed when completing a benefits assessment, however it’s important to note that these payments are here to help you if you find yourself without an income, or need income support.

The process of claiming Universal Credit can take several weeks, so it’s important to apply as soon as you know you’ll be without an income.  

Tips for improving your financial circumstances 

If you have a regular source of income, there are some simple steps you can take to save for the future and to ensure that your money isn’t a source of constant anxiety for you.

These steps can include:  

  • Paying off any outstanding debts and arrears. 

  • Setting aside a portion of your monthly earnings each month. It’s a good idea to build up enough savings to cover a minimum of three month’s expenses. 

  • Budgeting for your essentials and setting aside weekly or monthly spending limits can help you keep track of where you could be using your money better. 

  • Incorporate money or banking activities into a regular routine, so that you can become more comfortable when it comes to dealing with your money.  

Whatever your circumstances, it’s important to remember that when it comes to money troubles, you’re not on your own.

Whether you need someone to talk to or need help when it comes to managing your money, there are always some simple steps you can take to improve your financial situation.  

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About the author
Kate has written for leading publications and blue chip companies over the last 20 years.