Money and mental health
Healthcare Counselling and Psychotherapy Journal, July 2021

People with mental health problems do not always have money problems, or vice versa. But there is often a link between money and mental health. In fact, one problem can feed off the other, creating a vicious cycle of increasing financial difficulty and worsening mental health – a cycle that can be hard to break.

Going into the pandemic, more than 1.5 million people across England were experiencing both problem debt and mental health difficulties, according to analysis of the ‘Adult psychiatric morbidity survey’ (APMS), a nationally representative survey of more than 7,500 people. In other words, about half (46%) of people with problem debt also have a mental health problem.¹ Moreover, 86% of respondents to a Money and Mental Health Policy Institute survey of nearly 5,500 people with experience of mental health problems said their financial situation had made their mental health problems worse.²

People with mental health problems are also more likely to be in problem debt. Almost one in five (18%) people in England experiencing mental health problems is in problem debt. People struggling with their mental health are also three-and-a-half times more likely to be in problem debt than people without mental health problems.¹

It's not hard to see how experiencing financial difficulty and debt can affect your mental health. Financial troubles are a common cause of stress. The stigma around debt can also mean that people struggle to ask for help, leaving them isolated. The impact on people’s mental health can be particularly severe if they resort to cutting back on essentials, such as heating and eating, or if creditors are aggressive or insensitive when collecting debts.²

Evidence also shows that experiencing financial difficulty significantly reduces recovery rates for common mental health conditions. People with depression and problem debt are 4.2 times more likely to still have depression 18 months later, compared with people without financial difficulty.³

People in problem debt are also three times as likely to have recently thought about suicide, compared with people without debt problems.⁴ Suicide is a complex phenomenon and there is usually a range of social factors, life events and other circumstances that drive someone to think about taking their own life. However, there is a strong link between problem debt and suicide. More than 100,000 people in England attempt suicide while in problem debt each year.⁴

Experiencing mental health problems can also have a big impact on your finances, in a number of significant ways. First, people affected by mental health problems are less likely to be in paid employment. Plus, those who are working are more likely to be in low-paid roles. Less than half (48%) of people with a mental health problem in the UK were in employment in 2018–19, compared with four in five (79%) of those without mental health problems. People with mental health problems are also over-represented in high- turnover, low-pay, part-time or temporary work.⁵

Some people experiencing mental health problems are reliant on benefits when they are unable to work. Statistics show that four in 10 recipients of housing benefit (42%) and over a quarter (28%) of Job Seekers Allowance recipients have anxiety or depression. The percentage rises to 64% of Employment and Support Allowance recipients, a benefit aimed at those unable to work due to poor health or disability.⁶

Mental health problems can influence our thoughts, emotions and behaviour. Common symptoms of mental health problems, such as increased impulsivity and memory problems, can make it harder to keep on top of financial management, or to get a good deal in consumer markets, increasing the likelihood of financial difficulty.⁷

Many people with mental health problems report that their spending patterns and ability to make financial decisions change significantly during periods of poor mental health. A Money and Mental Health Policy Institute survey found that 93% of respondents spent more than usual when they were unwell; 92% found it harder to make financial decisions.²

Mental health problems can also make it harder to engage with essential services, such as banks and energy companies. People can struggle to understand bills and remember account details, which can lead to financial difficulties and distress. Almost 40% (37%) of people who have experienced mental health problems exhibit significant levels of anxiety when dealing with essential services, including symptoms such as a racing heart or trouble breathing.⁸

Communicating with essential service providers can be a particular issue: three-quarters of people who have experienced mental health problems have serious difficulties engaging with at least one communication channel, such as the phone, face-to-face contact or postal services. Phone calls are the most commonly problematic. More than half (54%) of people who have experienced mental health problems find the phone difficult or distressing. If alternative channels aren’t offered, these difficulties can prevent people from accessing support and addressing problems with their account.⁸

Unsurprisingly, the coronavirus pandemic and its accompanying economic shocks have had a significant impact on the number of people across the country who are experiencing mental health problems. Data from the Office for National Statistics suggest that the number of British adults experiencing symptoms of depression has doubled during the pandemic.⁹

Moreover, research by the Money and Mental Health Policy Institute shows that people with mental health problems will be hit harder by any loss of income – and are at greater risk of deprivation – than the wider population during the coronavirus crisis.¹⁰ The higher risk factor is explained by the fact that this group entered the current crisis in a more financially precarious position. The annual median income for people with common mental health conditions is £8,400 less than that of the rest of the population.¹⁰

As a result of this greater financial precarity, people struggling with their mental health are more exposed to the financial shocks that could arise from the pandemic. The Money and Mental Health Policy Institute’s research shows that people with experience of mental health problems would be three times more likely to run out of money within a week, if they lost their main source of income. Around two in five (38%) have already suffered a drop in income since the outbreak began; nearly a third (31%) say they have cut back on essentials, such as food and heating, to make ends meet during the crisis.¹⁰ 

The Money and Mental Health Policy Institute research has pointed to the benefits of greater focus by healthcare professionals on helping prevent financial difficulty among people with mental health problems, while highlighting that this kind of approach is relatively uncommon.¹¹

In a survey of more than 400 people, only a third (33%) who have received medical care for a mental health problem were spoken to about financial management by a health professional. Just one in 20 participants who had seen a GP (6%) had been offered information about, or support with, managing money.

The figures are different in secondary mental health services, where over a third (36%) of respondents who had seen a mental health specialist, and one in five (20%) who were supported by a therapist or counsellor, were spoken to about managing money.¹¹

Of course, it’s encouraging that some people are getting help with financial matters in secondary services. But the Money and Mental Health Policy Institute doesn’t think it’s enough, especially when nine out of 10 people receiving treatment for a mental health problem do so in primary care.¹¹

Research by the Money and Mental Health Policy Institute found that people experiencing mental health problems want earlier support to avoid financial difficulties. The research also suggests that the earlier we can reach people to offer support, the more likely they are to be able to take in and act on information and advice given. Nearly two-thirds of research participants (64%) with experience of mental health problems think they would have recovered more quickly if they had been helped to manage money better.¹¹

The Money and Mental Health Policy Institute has argued for a proactive public health approach to prevent financial difficulty among people experiencing mental health problems. For example, the introduction of a ‘brief intervention’ on money advice, similar to existing interventions to address smoking and domestic abuse. GPs and other health professionals would then provide people with information about the link between mental health problems and financial difficulty, and signpost or refer to local sources of support.

There is also a need for organisations, such as the National Institute for Health Protection (which recently replaced Public Health England) and the Money and Pensions Service (the government body for promoting financial wellbeing), to work together to improve public information about the links between mental health problems and financial difficulty, and how they can be broken.

As well as an increased focus on prevention, we need to see better support for those already experiencing the toxic combination of financial and mental health problems, perhaps by integrating debt advice into mental health services. Research suggests that signposting people to debt advice as part of the Improving Access to Psychological Therapies (IAPT) programme could improve the recovery rate for people with depression and financial difficulty from 22% to 48%.¹² It could, therefore, not only transform lives, but also save healthcare professionals’ time, freeing them up to focus on clinical interventions. In addition, it could bring healthcare savings of around £2.4m and a boost to the wider economy worth £105m, as a result of reduced barriers to employment and increased productivity.¹²