At the Trust we understand that financial problems can considerably impact people’s mental health. Debt and low levels of financial resilience (such as having no savings) can cause various problems such as difficultly sleeping, anxiety and stress, often having a compounding effect. People experiencing mental health problems are also more likely to run into financial issues. Money and Mental Health Policy Institute reports they are three and a half times more likely to be in problem debt than people without mental health problems. 
We have been tracking the personal finances of households across the UK since the start of the pandemic and we always ask people about how their finances are affecting their mental health. Is their financial situation making their mental health worse? Is it causing them to lose sleep? Does thinking about their finances make them anxious?

Personal finances and mental health

Anxiety is the area where we tend to find the highest number of people reporting issues when it comes to their finances. When we ask about whether their financial situation is making them anxious, around half of people tend to answer ‘yes’, with a particular spike during the cost-of-living crisis in 2023: 

The good news is that on a range of wellbeing indicators things have improved since the cost-of-living crisis when people were navigating sky-high energy bills. The table below shows the wellbeing measures we monitor and what people have reported over the last four waves:

This is not to say everything has improved; in many cases they got worse and returned to levels seen in 2023. 37% of households reporting feeling like they have no control over their financial situation is too many and sure to be affecting the mental health of the people in those households. 

What can we do?

The Trust funds a number of programmes which aim to tackle the mental health problems caused by financial difficulties. 

• Our partners at Money and Mental Health Policy Institute found 50% of those behind on payments say they’ve had suicidal thoughts. They are campaigning to reduce the psychological harm caused by aggressive debt collection practices, finding that up to 2m households are at risk of aggressive council tax collection policies.

• When a family member goes to prison, financial challenges and the mental health challenges for their families can escalate with the loss of a wage-earner, changes in housing, and reduced availability of childcare. Families Outside found women are spending more than half their income supporting someone in prison. The charity produces resources including online and face-to-face information sessions to mitigate the financial impact for families when someone goes to prison. 

• Last year the Centre for Justice Innovation found court fines push people struggling with the cost-of-living further into debt and worse mental health having a disproportionate impact on people already struggling to make ends meet. The Trust is funding the Centre to work with policymakers, practitioners and people with lived experience to develop detailed proposals to build a better framework for setting fines— one more responsive to people’s financial circumstances, which places affordability and proportionality at its centre, and provides clear alternatives for those who cannot afford to pay anything.

• Dealing with bereavement is a time of high stress and anxiety. This can be compounded by difficulties when it comes to funeral arrangements and the associated high costs. Quaker Social Action is working to help those who need to arrange council funerals. They found a postcode lottery for those struggling to navigate the often opaque process and calling for government to introduce statutory minimum standards for council funerals to ensure consistent practice.

What next?

By improving the financial wellbeing of people on low-to-middle incomes we can help tackle various mental health issues experienced by people across the UK. Our next funding round is closing soon for proposals to improve financial well-being, find out more.

Read the latest Tracker