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Debt and Mental Health: Understanding the Correlation Between Finance and Mental Wellbeing

Recently, research by the Money Advice Trust revealed that a quarter of people in financial difficulty as a result of the pandemic reported a negative impact on their mental health.

It’s no secret that debt problems can affect more than just the financial wellbeing of those suffering, and in fact, can be congruent with or a catalyst for mental health issues, making the debt cycle more vicious than ever before.

Debt can cause mental health issues but mental health issues can also contribute to the build-up of debt, which is important for loved ones of those suffering and debt industry professionals to understand in order to correctly deal with an individual case.

An infographic detailing the cycle people with financial difficulties or mental health problems can find themselves in. It reads 'Financial struggles can be a catalyst for mental health issues such as stress and anxiety, especially when enhanced by being chased by creditors or bailiffs' with an arrow looping around to a box that reads 'mental health problems can make it harder to ask for help, manage money and spending'.

But, it's only money!

Everyone needs money to live, and as much as we’d all like to believe the classic cliché that ‘money can’t buy happiness,’ there’s evidence to suggest that it can - at least - provide some comfort through the relief of financial stress and worry.

Statistics from the Mental Health Foundation highlighted that both children and adults living within the lowest 20% of the income bracket in the UK are two to three more likely to develop mental health problems than those in the highest bracket. Additionally, employment status (which generally, provides some sense of financial stability and security) also has an effect on mental health, with those who are unemployed having higher rates of mental health issues than those in employment.

So, just get a job?

According to UN labour experts, the COVID-19 crisis is expected to ‘push global unemployment to over 200m in 2022,’ and many suffering financially is as a result of job or income loss, sickness or being unable to access childcare or carer services due to the closure of schools and heightened precautions put in place across many private and public care establishments to better protect people from becoming infected with the virus.

In addition to job and income loss, the closure of the majority of retail and hospitality establishments, as well as number of UK businesses using the furlough scheme, hugely affected the UK job market, which is still getting back to a pre-pandemic state. This, as well as a number of other private, personal factors that might prevent individuals from being able to work, is just a small part of the many problems that people face when looking for work.

It’s important to remember that mental health can be debilitating, stopping people from earning money but also acting as a catalyst for - often - impulsive and uncontrollable spending.

But, mental health issues don't make you spend money!

For those without experience of a mental health issue that can have negative effects on finances through impulsive spending and poor money management, it can be difficult to truly understand how related mental health and debt can be.

In fact, earlier this year, psychology experts even built a framework to diagnose ‘compulsive buying-shopping disorder’ to help those struggling to better manage their spending behaviours. Unfortunately, the ability to spend frivolously is becoming easier than ever, with BNPL services like Klarna and Clearpay giving consumers the opportunity to borrow without thorough background or credit history checks.

Preventing the devastating financial effects of mental health issues (and vice versa!)

Luckily, there are dedicated experts working in both the personal finance and mental health industries that are contactable through designated services to help those suffering to improve their situation.

For those suffering: what can you do to help yourself?

We imagine you’ve probably heard some of these tips countless times before, but that’s because often, they work!

  • Speak to a professional - sometimes, speaking to someone who you don’t know, and is experienced in dealing with specific issues, can be easier than speaking to a loved one, as they are removed from the emotions of the situation. If you can, reach out to a debt and/or mental health professional depending on what you feel would best benefit you and get helpful advice around your individual circumstance.

  • Stay away from drugs and alcohol - unless of course you’ve been prescribed medication by your GP. Alcohol is a depressant, and enhances feelings of sadness, which certainly isn’t helpful when in a state of stress or worry. Equally, taking drugs or mixing substances can be harmful to the way you think and feel, and will most likely leave you feeling worse for wear.

  • Stay active - it’s a cliche, and probably the last thing you want to do when you’re feeling down but staying active - even if just going for a short walk - can make a world of difference to your mood and outlook.

  • Stay in touch with friends/family - often, those experiencing mental health struggles can feel extremely lonely and isolated. However, staying in contact with friends and family - even if just a text message or phone call - can be beneficial to ensure that you feel you have a support system in place.

  • Find something you love - distraction can be a great way to prevent yourself from participating in behaviours that are triggered by mental health episodes such as impulsive or uncontrollable spending, and if it's something you love, this can also be a bonus for your mental health and happiness. Whether it's running, painting, watching TV, or baking - finding a hobby you love can be life-changing!

For those supporting: what can you do to help your loved ones?

It can be hard to support a loved one experiencing something you’ve never been through before, but just being there can often be enough to show your loved one that you’re available to help them in whatever way they need. Some of the ways you can show your support are:

  • Checking in - sometimes, those struggling with debt and mental health issues find it difficult to approach people with their issues, so reaching out if you think something might be wrong, or you’re aware that your loved one is struggling, is a good way to show that you’re there to help.

  • Being present - financial wellbeing and mental health are extremely difficult subjects to talk about, so if your loved one does decide to open up to you, make sure you’re present and listening to show your care and support, and better equip yourself to understand how you can help.

  • Offering financial help (if able) - if you’re able to, helping your loved one out financially can be a great way to show support and ensure that they have what they need to get by until they are able to put other plans in place e.g. a debt solution, benefits claim, a steady income.

  • Offering help - financial help might not be readily available from you, however if you’re able to offer a place to stay, or invite your loved one round for dinner on a more regular basis in order to save them some expenses, this is a great way to show your support.


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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