Cost of living crisis

Our mental health and our financial circumstances are often intertwined – but how can one affect the other?

7 min read 15 May 23

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Summary

At times, we can all find it hard to make decisions or think clearly. This can affect really simple things, like what to have for dinner or watch on TV. Putting off simple decisions like these isn’t going to have a detrimental impact on your life. But when it comes to financial matters, it could be a different story. Not thinking clearly, putting off decisions, or not understanding something fully could have serious consequences. The good news is, help is at hand.

We could all face emotional and financial difficulties

It sounds like a cliché, but life is an emotional roller coaster and at some point it’s likely we’ll all experience extreme lows. For example, if we’re faced with the loss of a loved one, develop a serious medical condition, or suffer from stress or anxiety, can all in one way or another, impact our mental health.

It’s in these moments, when we perhaps aren’t thinking rationally that any decisions we make may not always be in our best interests.

It’s important to realise that anyone can find themselves in a position where making decisions about things, big or small, may seem overwhelming. However, people who suffer from poor mental health can often find it harder to make financial decisions on an ongoing basis. And with 1 in 4* adults experiencing mental health issues in their lifetime, it’s an important thing to talk about.

Not only can poor mental health potentially lead to difficult financial circumstances, getting into financial difficulty can also be the cause of poor mental health – so this can often become a vicious circle.

According to the Money and Mental Health Policy Institute, founded by Martin Lewis, common symptoms of mental health issues can be increased impulsivity and memory problems – this can make it harder to keep on top of financial management on a day-to-day basis and longer-term, both of which increase the likelihood of financial difficulty.

Many people with mental health issues have also reported that their spending patterns and ability to make financial decisions change significantly during periods of poor mental health. The Money and Mental Health Policy Institute carried out research** with nearly 5,500 participants and found out that, while unwell:

0 %

of people spent more than usual

0 %

of people found it harder to make financial decisions

0 %

of people put off paying bills

0 %

of people avoided dealing with creditors

0 %

of people took out a loan that they'd not otherwise have taken out

Given the startling insight above, it may not come as a surprise that the research also showed that some of the biggest differences in financial outcomes between those with and without mental health problems, related to debt.

Amongst those who participated, 60% of people with mental health issues were in debt, as opposed to 42% of those without.

*NHS website: https://www.england.nhs.uk/mental-health/

**Bond N and D’Arcy C. The state we're in: money and mental health in a time of crisis. Money and Mental Health Policy Institute. November 2021.

There is always a solution. So what can you do if you’re suffering from poor mental health and financial difficulty?

Firstly, you’re never alone – there are many resources available to help anyone suffering from poor mental health and/or financial matters. Here are some tips on where to start:

1. Talking to someone about your mental health can really help

If you’re suffering from poor mental health, it’s important to get help and talk to someone. Whether that’s a GP, a friend or contacting a charity like the Samaritans. Getting support is key.

2. Being open with companies and providers

If you feel able to, it’s always worth telling the company, the bank, the insurance provider, or whoever you’re dealing with about your situation. There are often additional support measures and processes in place to help people in times of poor mental health. According to the Money and Mental Health Policy Institute's research, only 14% of people with mental health problems disclosed their condition to their financial service provider. Whilst it may not always be relevant, it could help make things easier in the long run.

3. Get a plan together to deal with any debts

Speaking to your lender or creditor as soon as possible can really help. When mental health issues are involved, there are often more options available to you and certain laws in place to protect you. You can find more information about mental health and debt on MoneySavingExpert's website, where you can download a free booklet full of tips and advice.

4. Seeking financial advice

You could benefit from speaking to a financial adviser to get a plan in place for the future. Again if you feel able to, it might help to be open about your mental well being. Advisers generally get to know their clients and are happy to work with their specific needs and circumstances. So for example, if regular reminders would be helpful for appointments or if you need documents in a different format then telling your financial adviser could make life easier.

Here to help

As we’ve highlighted above, it’s important to recognise that our mental wellbeing and emotional resilience can be impacted in different ways throughout our lives. If you have a Prudential product and would like to talk to us about your individual situation, you can find a contact number on our contact us webpage.

Your other financial service providers will also want to help you resolve any short or long-term issues you may have, so it’s important to contact them as soon as possible, too.

The important thing to remember is, you should never feel that you have to struggle alone.