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money worries and mental health

Poor mental health often connects with financial difficulties, and not discussing these problems can lead to feelings of isolation, guilt, and shame.

Money struggles can make people feel lonely due to feelings of guilt, shame and embarrassment. It can impact your mental health and many do not want to open up about their concerns, not wanting to be placed in a vulnerable position or made to feel judged about their financial difficulties.

There is a clear correlation between poor mental health and money struggles, as individuals often feel isolated from their peers due to low self-esteem and not being able to participate in activities. Not being able to afford essentials or have disposal income to spend on leisure, food and holidays can compound these feelings of loneliness.

Both the pandemic and the recent cost-of-living crisis have exacerbated money worries due to rising inflation increasing the price of everyday essentials such as food and fuel. While it is normal to feel anxious from time to time, you may find during these economic times that money worries are at the forefront of your mind. However, there are many other factors that may cause you to feel anxious when it comes to money. Identifying the root cause of your financial concerns can help to make it easier to get help.

Anxiety surrounding money concerns can often present itself in the following ways:

  • Trouble sleeping
  • Withdrawing from social situations
  • Avoiding addressing bills or checking your bank account
  • No work-life balance
  • Ridgely budgeting

Common factors that may contribute to you feeling anxious about money may include:

  • Redundancy
  • Unexpected expenses
  • Debt
  • Overspending

If you have borderline personality disorder (BPD), it could make money management more challenging. Some of the emotions attached with BPD can create an increasing risk of spending money recklessly. You may experience some of the following problems when it comes to money management:

  • Impulsive spending
  • Self-medicating through alcohol and drug abuse
  • Debt (overusing credit cards or elsewhere)
  • Avoiding tackling bills or checking your bank account.

Cost of living

Support is available for the cost of living crisis, from our Advice and Support Service and with government schemes.

Low-income families are set to receive a new package of cost-of-living support starting in Spring 2023.

  • A £900 cost-of-living payment paid in three instalments throughout 2023 is available to households on means-tested benefits. The first payment of £301 will be paid between the 25th of April 2023 and the 17th of May 2023 for most people on DWP benefits.
  • For most people on tax credits and no other low-income benefits this first payment of £301 will be paid between the 2nd and the 9th of May 2023.
  • The second payment of £300 is scheduled to be paid in Autumn and the third rate of £299 is to be paid in Spring 2024.
  • There is a disability cost-of-living payment of £150 for disabled people receiving non-means-tested disability benefits which will be paid in the summer of 2023.
  • A pensioner cost of living payment of an extra £150 or £300 will be paid to pensioners’ normal payment from November 2023. The full amount of Winter Fuel Payment for session 2023/24 will depend on when you were born and the circumstances during the qualifying dates.

However, despite the cap on the unit price of energy for households rising to £3,000 a year in April 2023, the government will not be continuing its universal £400 energy discount during winter 2023/24.

What is debt?

Debt is a subject many of us shy away from discussing due to its negative connotations. Many feel embarrassed to admit that they are in debt and unaware of the options surrounding the available help.

There is also a strong correlation between debt and mental health. Half of adults with a debt problem also live with a mental health condition.

But what is debt? Debt can be described as a sum of money that you have borrowed and will be paid back later to either the individual or organisation that first loaned you the money. Types of debt can include mortgages, personal loans or credit card, or might include an informal debt in the form of borrowing money from friends or family.

Everyone is vulnerable to facing debt at some point in their lives as debt can be caused by a range of unavoidable factors. This can include being made redundant, illness or unexpected living costs such as emergency repairs. Other reasons could be avoiding paying bills, gambling or heavy reliance of credit cards.

Managing debt

Alongside seeking advice and help from a professional, there are some lifestyle changes that you can incorporate into your day-to-day life when managing your finances.

Not all debt is the same therefore it is important to divide your debt up into priority and non-priority debts: priority being mortgage, rent and utility bills, and non-priority being credit card debts, unsecured loans and money owed to loved ones.

A proactive step that you can take to prevent future debt is to reduce your monthly expenses.

This can take the form of cutting down on unnecessary direct debits, limiting recreational spending and shopping for cheaper alternatives.

If you feel overwhelmed at the initial thought of tackling your debts and don’t know where to start this is usually a sign that you need professional help.

It is important to reach out to a debt advisor as they will be able to help you to investigate each of your individual debts and talk you through the various options that are available to you.

Some of the ways that a debt advisor may be able to help you include:

  • They may help you to construct a budget sheet to work out your income and expenses.
  • Advise you on how you can maximise your income.
  • Help you to find ways to repay debt affordably.
  • Help you to prioritise and minimise your debt.
  • Set up a debt solution that will work for you.

Your credit score

A ‘credit score’ is a three-digit number that provides lenders with a future prediction of how reliable you are at repaying money that you have been loaned. It is important to have a good credit score as the better the score the more likely a lender such as a bank will be to allow you to borrow money.

Having no borrowing or credit can also negatively affect your credit rating as lenders have no history of your ability to pay back money that has been loaned to you. Credit cards, if managed correctly, are a good way of building a healthy credit score.

Checking your credit score

There are a few different ways that you can check your credit score. Some banks can give you access to your credit score through mobile banking apps. You can access your credit score by visiting a credit reference agency like Equifax or Experia.

You are entitled to a free yearly report of your credit score and if you have a credit card your provider will also be able to supply a complimentary credit score with your monthly statement.

Using a credit card for your credit score

There is a lot of misinformation and confusion about the influence of credit cards on credit scores. During the cost-of-living crisis, you may be tempted to use a credit card for purchases that you would not otherwise be able to afford. However, you should be careful as with a credit card it is easy to spend a significant amount of money that you may struggle to pay back each month.

Your credit card

Taking out a credit card can help you to build good credit, if used wisely, and provide an extra layer of protection against fraudulent activity. For example, you could use a credit card to buy your shopping and pay the full balance off in full. Using one and not going over the limit while keeping up with monthly repayments can contribute towards achieving a healthy credit score.

But they can make it easy to overspend and you are required to pay back what you spend each month and they incur a high interest rate.

Improving your credit score

A good credit rating is required for a range of different borrowing from taking out a credit card to applying for a mortgage. If you are viewed as less risky a lender is more likely to allow you to borrow more money at a lower interest rate.

You can improve your credit score by:

  • Do not miss your monthly payments
  • Check your credit score to ensure that the information held on you is correct and specific to you
  • Eliminate any outstanding debt before applying for more credit
  • Keep your transactions low
  • Being mindful of how other people’s debt can affect your credit score, such as a partner or somebody who lives with you
  • Ensure that you are registered to vote.

Having a good credit score can benefit your mental health by alleviating daily stress, providing financial security and boosting your self-esteem.

How to get help

Asking for help can help relieve the burden of both financial difficulties and loneliness. Speak to family and friends if you haven’t done so already, as this can relieve stress and help with poor mental health.

Our Advice and Support Service can help with a free budget planner and a mental health and money toolkit. It is open Monday to Friday, 10 am to 4 pm, where advisers can signpost you to local support that most fits your needs, including our own Change Mental Health services. We offer initial advice on money worries and help to deal with emergencies.

Our Advice and Support Service is open Monday to Friday, 10 am to 4 pm, where advisers can signpost you to local support that most fits your needs, including our Change Mental Health services. We offer initial advice on money worries and help to deal with emergencies.

Contact 0808 8010 515, email us at or fill out the enquiry form on the Advice and Support Service page.

StepChange are a charity specialising in helping people through debt and provide free debt advice

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