12 May 2023
Steps to take control of your finances this Mental Health Awareness Week
Earlier this year UK household debt swelled past £2 trillion for the first time in history, and one in four adults say they are borrowing more money or relying on more credit despite rising interest rates. With the cost-of-living crisis making the front pages daily, it is little wonder that so many are facing anxieties around money.
New data from the Mental Health Foundation reveals that one in ten UK adults feel hopeless about their financial circumstances, and the ongoing cost-of-living crisis has no doubt exacerbated this as rising energy and food costs have put real pressure on our everyday finances. Our mental health and financial wellbeing are inextricably linked, with money and debt related worries often being a key contributor towards poor mental health.
For those struggling with their mental health, tackling their financial worries head on can be a daunting task, but it is vital to do so sooner rather than later. This Mental Health Awareness Week, wealth manager Quilter is urging people to take control of their finances to help ease anxieties around money.
Rio Stedford, personal finance expert at Quilter, explores three ways people can take control of their finances to help support their mental health and wellbeing. She says:
“This Mental Health Awareness Week is focused on the theme of anxiety. While numerous things can lead to feelings of anxiety, money worries can be a key contributor.
“The recent findings from the Mental Health Foundation, PwC and the ONS all clearly show the cost-of-living crisis has only added to the strain for many people and have led to many relying on borrowing money, so it is important to work towards taking back control of your finances.”
1. Talk to someone and seek help if you need it
“Money worries can be incredibly overwhelming, and our personal finances can often be viewed as a sensitive, private topic, but it is vital to open up and ask for help if you need it. Anxieties around money can be a huge burden to carry alone, and you do not need to. There is a great deal of help available and speaking to someone about your concerns is often the best place to start.
“While discussing your worries with a trusted friend or family member can be helpful, there is also a wide array of financial guidance and support available which can be very beneficial. The government backs several key services such as MoneyHelper, as well as charities such as StepChange and Citizens Advice – all of which offer free support.”
2. Create a budget and stick to it
“The cost-of-living crisis has seen our everyday spending increase significantly, and you may be left feeling overwhelmed. If this is the case, it is important to get back on top of things.
“Creating a budget can make a big difference when it comes to taking control of your finances as it will allow you to see exactly how much you spend, where you spend it, and if there are any areas you could cut back. There are many free online budget planners that will help you get started.
“While creating your budget, it is a good idea to take stock, review your expenditure and reprioritise. For example, many subscription fees have increased in the last few years so you should take this opportunity to ensure they are still meeting your needs. Often you will be able to switch to a better deal to help reduce costs, so it is worth taking the time to shop around.”
3. Manage your debts and boost savings where possible
“Having an emergency cash savings pot to fall back on is very important, particularly when our finances are stretched more than usual. However, before you look to start saving you should aim to ensure any debts are paid off first, beginning with those with the highest interest rates. Debt can have a negative impact on your mental health, so you should address these issues as soon as possible to help reduce stress.
“Once you have settled any debts, you should look to boost your cash savings where possible. The cost-of-living crisis may make it more difficult to put money aside but having some cash in reserve is critical as it provides a buffer to fall back on should you need it. Even if you can only save a small amount each month, something is always better than nothing.
“If you have an adequate pot of cash saved, you may wish to consider investing for the longer term. With inflation still at very high levels, cash savings will effectively decrease in value over time. An ISA can be an excellent tax efficient option for your savings, and you can choose between saving in cash or investing in stocks and shares.
“For those who are able to put some money away for the longer term, a stocks and shares ISA is a great way to take the first step into investing which will provide a better long-term return than you will be able to achieve with cash savings. There are many off the shelf, ready-made diverse portfolios to choose from that will align with how much risk you are willing to take, so it is worth exploring the options available to you.”
Mental Health Awareness Week runs from 15 to 21 May and more information can be found here.
