How Financial Stress Can Affect Your Mental Health

In this section

How Financial Stress Can Affect Your Mental Health

According to the Royal College of Psychiatrists, “debt can cause – and be caused by – mental health problems.” Money problems can make people feel uncomfortable, guilty or even hopeless. As tempting as it is to avoid talking or thinking about your finances, sorting problems out will make you feel better.

The keys to managing stress brought on by financial worries include the following:

  • The importance of practical financial skills in combating debt, knowing what leads us to overspend and how to manage the effects of money pressures.
  • Understanding how to budget, analyse our spending habits, where to save on household expenses, how to deal with debt and how to make money management a habit.
  • Other useful information and links to external resources to help develop practical financial skills and healthy habits around money.

 

Tips for managing the effects of money pressures

Recognising when you or someone else needs support isn’t easy. If you’re worrying about whether your financial decisions may be linked to how you’re feeling, think about following these steps:

  • Ask someone you trust to look after your mail if you can’t face the thought of opening bills, 
  • Don’t ignore your creditors. Make sure you talk to them about what’s going on.
  • Consider temporarily blocking websites you might spend money on.
  • Think hard about taking out payday loans and look closely at the interest rate being charged. 
  • Understand your spending patterns and think about what triggers your spending. Having a clearer insight could make you feel more in control.

 

Understanding why you might overspend

It’s common for people to shop while they feel down in an attempt to improve their mood. 

Understanding what you’re spending money on and what sparks the purchase:

  • Look for spending triggers (situations, feelings, thoughts). Keeping a diary might help. Identifying these triggers can highlight ways to change.
  • What are your reasons for spending? If low mood is triggering the spending, maybe it would be useful to get help from your GP or a mental health professional.
  • Sometimes spending is triggered by feelings of loneliness, so try asking a friend or relative to visit you rather than heading for the shops.
  • Use parental controls to turn off internet shopping and TV shopping channels if these are a particular temptation.

 

Practical financial skills to take control of your finances

Owing money is normal.  Most of us need to rely on lines of credit for day-to-day living. It can be extremely stressful if you’re struggling to repay money you owe and are being chased for money. 

Manage your finances

Many of us are never taught how to manage our finances and mistakes can be costly. So where to start? Firstly, make a list of how much you’re spending and what money is coming in. Once you’ve got all this information, ask yourself:

  • Where could I reduce my outgoings?

It’s possible to save on most of your monthly expenditure such as your mortgage, power and phone bills. Make enquiries and use comparison sites to see if you can reduce what you pay. Do you need all your TV packages?

  • Could I reclaim any money?

It’s easy to assume it couldn’t happen to you, but many people have had money taken without them knowing in things such as in lost shares, life insurance and bank accounts. You can check for free here if you have any unclaimed money.

  • Can I change any payments to direct debits?

Where possible, consider switching your bills to direct debit. The amount will be paid automatically from your account on a certain day. Not only does it make sure your bills are paid on time, it can help with budgeting – knowing exactly when you pay what. 

How to make a budget

To create a budget, there are three main steps:

  1. Work out how much money you have coming in.nThis will be your normal salary or wages, as well as any welfare benefits or tax credits.
  2. See what you’re currently spending your money on. It’s easier if you break this down by:
  • Household bills
  • Living costs
  • Any loans or insurance you have
  • What you spend on family and friends
  • Travel
  • Leisure – your social costs on going out or what you spend on hobbies.

 

    3. Work out the difference between the two.

    4. Create a budget. If you have money left at the end of the month, don’t stop looking for ways to cut back costs            further. You could still save money on bills. 

 

For more useful information about how to handle financial stress and manage money, read this useful article on Finty.