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Debt and Mental Health: How Has the Pandemic Affected Financial Stress?

The unexpected pandemic that has taken over the world since the beginning of 2020 has had serious consequences for many of us.

A person stands in front of a grey wall. They're holding a cardboard box filled with items from an office desk: folders, a notebook and a stationery pot.

Businesses have had to cut back on resources and make redundancies in order to survive, which in turn, has increased the amount of people who are lending and getting into debt. For many of us, the unprecedented introduction of lockdown and social distancing has shaken up day-to-day life, leading to mental health struggles as a result.

Furlough and redundancy worry

Those worried about the stability of their jobs as a result of the pandemic were given some relief when the government announced its furlough scheme - which guarantees any furloughed workers 80% of their salary for the affected months, paid for by the government as a way to retain jobs where possible.

Steph, 25, was placed on furlough before being made redundant:

“I was really worried when I found out that my job was at risk, but luckily, my employer acted quickly and ensured that I was placed onto the furlough scheme along with others at risk of losing their jobs.
Unfortunately, I did get made redundant, but I feel grateful that I’ve received government support and a stable income. The time on furlough has given me the chance to focus on my job search and thankfully I’ve managed to secure a new job.”

Redundancy, reduced working hours or pay or being placed on the government’s furlough scheme are just a few of the experiences made common by the pandemic and have increased the amount of people seeking debt help.

According to This Is Money, approximately ‘8 million people have sought help with their debt during the coronavirus crisis.’

Head of Development at Freeze Debt, Harjit Moore, came up with the idea for a debt solution app after suffering from financial worries himself and understands how those in debt might be feeling:

“The amount of people struggling with debt has spiked since the beginning of the pandemic. People are panicking about the state of the economy, job security, and how these things will affect their financial stability.
There is some comfort for people in knowing that many are in the same position but it doesn’t take away from the fact that debt is highly stressful and the added worry surrounding the state of the world certainly doesn’t help.”

Lockdown anxiety

Naturally, debt can go hand in hand with poor mental health and along with the anxiety of navigating the ‘new normal’ of life in a pandemic, day-to-day life has become difficult for some to handle.

In May 2020, the Office for National Statistics claimed that 46.9% (25m) reported ‘high anxiety’ following the closure of pubs, cafes, bars and restaurants; with wellbeing, work and household finances being the top concerns for people regarding the pandemic. Additionally, happiness ratings between 27th March and 6th April were significantly lower for those who believed their financial situation would get a lot worse over the next 12 months, compared to those who believed it would stay the same or get better.

Jarryd, 24, who found a debt solution through the Freeze Debt app, was vocal about his mental health struggles as a result of dealing with debt during the pandemic:

“The debt during the pandemic has affected me massively mentally. I was struggling to find reasons to even move forward with life.”

Unfortunately, Jarryd’s case isn’t unusual, and many people are feeling the pressure of outstanding debt. Thoughts of hopelessness, guilt, shame and failure are all associated with financial struggles, with many asking themselves questions such as:

“How can I provide for my family?”

“Why did I let my debt get this bad?”

“What did I do to deserve this?”

These questions alone can instigate fear and anxiety, leaving people feeling overwhelmed and unsure of where to turn.

The bright side

The effect of the COVID-19 on debt and mental health is worrying to say the least and getting back on track following the pandemic will look different for everyone.

However, the rise of debt and mental health issues during the coronavirus crisis has changed our relationship with money, which going forward, can only be seen as a positive. Mobile Banking app, N26, surveyed 10,000 people and of those, 65% have been putting aside more money in an attempt to build up a savings pot for tough times.

In addition to this, 73% of consumers said that they have adapted their financial priorities, with almost two-thirds claiming concerns about the economy being the reason for this.

If maintained, these changes promote a sensible approach to finances that, in turn, could help reduce the amount of personal debt in the UK and further diminish mental health struggles caused by said debt.

For those struggling with debt and/or their mental health during these unprecedented and unsettling times, it’s important that help is sought and there are plenty of services that offer free, non-judgemental, and confidential advice.


About Freeze Debt

Freeze Debt is the first debt advice and solutions app helping UK users to take their first steps towards a debt-free future. Our free service provides those struggling with unmanageable debt a confidential space to speak openly about their debt and financial worries and find a suitable solution based on their personal circumstances.

Freeze Debt's in-app messaging service is a revolutionary and modern way for users to address their debts and find solutions in less than 5 minutes, compared to the traditional and uncomfortable ‘call-centre-model’ that can take an average of 45 minutes.

So far, we’ve helped clear over £30m of debt and helped many people begin their journey to a debt-free future.


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