THE LINKS BETWEEN MENTAL HEALTH AND FINANCIAL WELLBEING
The relationship between financial difficulties and poor mental health is clear and has been exacerbated by the pandemic. Mental-health problems can also be triggered by stressful events, from redundancy to dealing with a will after bereavement. It’s important to build an appropriate support network, including family and friends, GPs, advice services and financial coaches. Financial advisers can offer guidance on the help available for vulnerable people and also assist with advice and planning in changed circumstances.
If we ever needed a clear illustration of the link between our money and our mental health, the pandemic has provided it.
While many have suffered directly from COVID-19 and lost family members and friends to the virus, that is just part of the story. Although large numbers of people saved money as spending opportunities were curtailed, many others lost their jobs and saw their incomes reduced.
Those who experienced sudden and significant drops in household income during the crisis suffered the sharpest increases in mental illness, according to research by the National Centre for Social Research (NatCen) (1). That’s not surprising, however – the relationship between financial difficulties and mental-health issues is well established.
Cause and effect
Almost half of people in problem debt also have a mental-health problem, according to the Money and Mental Health Policy Institute. It found that 86% of respondents to its survey of nearly 5,500 people with experience of mental-health problems said their financial situation had made those problems worse (2).
Research also shows that people with mental-health problems were likely to be hit harder by any loss of income due to the pandemic and were more exposed to financial hardship (3).
Certain conditions can make it harder to manage finances effectively, too. For example, 42% of adults with poor mental health, low mental capacity or cognitive difficulties find dealing with customer services on the phone confusing or difficult, according to a 2020 survey by the Financial Conduct Authority (FCA) (4).
Just over a third are anxious when shopping around for financial products and services; a third put off dealing with financial matters, such as ignoring warning letters, and 29% had fallen into debt because they had not wanted to deal with difficult financial situations.
Breaking it down
It’s common for financial difficulties to arise from emotionally challenging life events, points out Harriet Shepherd, Workplace Financial Education Project Manager at St. James's Place. “People need to be aware that money worries can be a trigger,” she says. “The main financial events in your life are often linked to personal circumstances and have an emotional connection. They are often things that will only happen once or twice in your life, such as buying a house, dealing with a close family bereavement, and having to work on wills and probate.”
If it’s an issue people haven’t dealt with before, it’s not surprising that it’s often stressful and complex, Shepherd adds. “No one’s prepared for this stuff the first time around, which is why it’s vital to have a team to help you with it.
“It’s worth knowing what that team would look like before anything happens, so you know who to call on when you need to.”
Peace of mind
Your support team might include friends and family members, as well as official forms of support. For example, if debt is an issue, free advice services such as StepChange Debt Charity and Citizens Advice can be helpful, while The Money and Pensions Service is a valuable source of free, impartial guidance and information.
GPs, counsellors and psychotherapists may also have an important role to play in helping you deal with mental-health difficulties and navigating your way through challenging life events. You can find a local counsellor on the British Association for Counselling and Psychotherapy website or at Counselling Directory, while there may be local services offering access to free or affordable counselling.
If day-to-day money management is an issue, you could also consider working with a financial coach, while a traditional financial adviser can provide planning and advice services and help you to focus on dealing with whatever you’re going through in life. Some financial advisers are now qualified as coaches to help with issues around money and mental health, while a number of firms provide resources for advisers working with clients they identify as being vulnerable.
“When considering clients in vulnerable circumstances, there are four key drivers: health, life events, financial resilience and capability,” says Edward Grant, Director of Technical Connection, St. James's Place. The emphasis is on ensuring the most appropriate and relevant assistance is available to clients, he adds.
“We have a dedicated Vulnerability and Client Assistance Manager who runs clinics and leads discussions on a specific client’s needs or general support areas,” explains Grant. “We have also developed a series of fact sheets, videos and guidance on the key vulnerable circumstances.”
Advisers can also signpost clients to relevant charities, such as Mind, StepChange and Cruse Bereavement Care.
“People don’t need to be experts,” says Shepherd. “By taking on some of the practical financial issues, for example, advisers and coaches can give you the space to process what you’re dealing with.”
If you’d like help to navigate your finances during changing life circumstances, speak to a St. James's Place Partner.
1 Finances and mental health during the COVID-19 pandemic, NatCen, April 2021
2 Money and mental health: the facts, Money & Mental Health Policy Institute, 2019, derived from a UK-wide survey of 5,500 people with lived experience of mental-health problems
3 Income in crisis, Money & Mental Health Policy Institute, June 2020, based on a nationally representative poll of 2,096 people aged 18 and over
4 Financial Lives 2020 survey: the impact of coronavirus, Financial Conduct Authority, February 2021, based on a survey of 16,190 respondents