Financial Well-being

At first glance, you might not consider the link. But when we look closely, we can see just how interwoven the two really are. So with that in mind, we should be hearing alarm bells on multiple levels when we consider the impact of the cost-of-living crisis.

This crisis will impact mental health in terms of treatment, increased external stressors, job insecurity and more; there’s a real threat on the horizon that we can’t ignore.

So in this article, we’ll check in on how people across the UK are currently feeling. Then we’ll look in more detail at the different areas that will be affected.

Emerging research shows that the effects of the cost-of-living crisis are already starting to show.

78% of people say that the cost-of-living crisis is impacting their mental health (this rises to 94% for those with pre-existing mental health conditions) 

25% of people can’t afford social activities that help them stay mentally well

25% of people are having to work longer hours due to the rising cost of living so have less free time

18% can’t afford to travel to their usual support networks in communities

66% of therapists say cost of living concerns are causing a decline in people's mental health

60% of therapists have seen clients cutting back on therapy sessions due to money worries

Almost half (47%) of therapists report clients are cancelling or pausing sessions because they can no longer afford them

The cost-of-living crisis is already making its mark on mental health in many ways. It’s a layered effect that has the potential to compound over time—we’ll look at each of these layers in more detail below.

 The cost of necessities we need is rising fast, and we’re continually exposed to the cost-of-living crisis on some level, whether it's feeling pangs of anxiety after seeing your energy bills, worrying about fuel costs or reducing your food shopping down to all you can afford.

These subtle experiences can accumulate over time, creating worry, anxiety and uncertainty about what the future holds. Increases in any of these emotions can lead to cycles of unhelpful thinking habits, sleepless nights and poor food choices. And once you begin to tread this path, it can be hard to get out of.

These financial concerns will be even more severe for those in financial hardship or debt. If you're having concerns about putting food on the table, having enough money for bills or travelling to work, these situations can be really difficult to deal with. If you're struggling to cope, reach out to Step Change for support.

 Not only is the cost-of-living crisis causing financial worries, but it’s also impacting people’s ability to access support networks and take part in activities that are vital to maintaining good mental wellbeing. We know that good mental health is derived from consistently: 

Doing things that you enjoy
Maintaining good relationships
Eating a healthy nutritional diet
Having things to look forward to
Maintaining a good sleep schedule
Having a good work-life balance

Yet for many people, the cost-of-living crisis is having some impact at each of these levels—we'll look at these more closely below. 

The statistics above highlight that one in four people are currently working longer hours to compensate for rapidly rising inflation rates. Yet stress is a big threat to those working long hours, and this additional stress can lead to physical, mental and emotional exhaustion—often known as burnout.

Burnout causes symptoms like self-doubt, feelings of helplessness and a negative outlook. If you've ever experienced burnout, you'll know it can take a while to recover from, and sometimes time off work is required, which might lead to further financial concerns.

The sun has got his hat on, and summer is finally under way. Everyone loves the sunshine, the warmer temperatures and the longer days. But it can be a very expensive season. And with lockdowns easing globally, people may be ready to spend a LOT of money—which they may not necessarily have.  
For the most part, people are a little more careful with their money in the few months after Christmas. Understandably so—there’s usually much less money in the house after that expensive holiday. So, as soon as the sun comes out, the relief of the brighter climes means spending suddenly becomes much less conservative. And according to data, that spending continues to increase for the whole year.   

 It might not be the most exciting way to spend a holiday—especially after the summer of 2020— but staying local is cheap and can be every bit as much fun. It just requires a little effort. Look for galleries, museums and exhibitions, free sports events and activities nearby. Sometimes a quiet break is what you need.  

 Of course, you need to be careful and strong in order to stay quiet. Even ten years ago, there were only a couple of larger music festivals during the summer—now there are dozens. We’re not saying you should avoid them all, but budget carefully, pick one, and make it a weekend to remember rather than buying a ticket to each and every event. 

 Need to keep cool? Open the windows in the evening, and close them in the morning. Take cooler showers to save on water heating. Think about solar panels—they’re expensive initially, but a sunny summer can help reap rewards.  

It might sound odd to talk about insulation during summer, but it’s just as important as it is during the winter, especially for water heaters. Think about it—if the air is warmer, your tank will stay warmer for longer. If it’s got good insulation, too, then your bills for the showers you’ll need to take to cool off will be lower. It’s a no-brainer.  

There’s no doubt that the average summer is getting a lot hotter than it used to be. You can use this to your advantage—with some care and attention, you can use your garden to feed yourself all summer, for cheap. 

Growing vegetables, tomatoes and fruit isn’t as difficult as you might think. And when the temperatures are as high as they can get these days, a salad in the evening is refreshing. For the more adventurous, the heat is the perfect climate for some of the more exotic chili pepper plants—they might not cool you down, but everyone should try a Carolina Reaper at least once in their life…  

It’s not difficult to make your summer months cheaper and more fun. Just be careful, avoid excessive credit purchases, and enjoy the simple pleasures that sunshine brings.

Financial well-being is about feeling secure and in control. It’s about making the most of your money from day to day, dealing with the unexpected, and being on track for a healthy financial future. In short: financially resilient, confident and empowered.

People who experience financial well-being are less stressed about money. This, in turn, has positive effects on their overall mental and physical health, and on their relationships.

It’s more important now than ever to help your colleagues, customers and community to build financial wellbeing. Maps can help your organisation to start or continue developing ways to do this.  

There are multiple aspects to financial well-being. We break down the UK’s general financial wellness into five key areas:

• Receiving a meaningful financial education
• Saving regularly
• Using credit for everyday essentials
• Accessing debt advice
• Planning for and in later life. 

And here’s why these aspects of financial well-being are so important. Before the pandemic:

• 11.5 million people had less than £100 in savings to fall back on.
• 9 million people often borrowed to buy food or pay bills.
• 22 million people said they don’t know enough to plan for their retirement.
• 5.3 million children didn’t get a meaningful financial education (Financial Capability Survey 2018).

These statistics offer a strong indication of how financial wellbeing (and generally financial literacy and financial capability) is faring in the UK. Improvements in financial well-being can be shown in either a decrease or increase in these key statistics. We survey the nation regularly to keep informed of changes in these personal finance areas. 

A financially healthy nation is beneficial for individuals, communities, businesses, and the economy.

Financial stress – and its knock-on effects on mental health, relationship breakdown and physical health – can have severe consequences for individuals, organisations and communities. The economic impact of Covid-19 has affected the mental health of some individuals, exacerbating a nationwide problem.

 Being a carer for a loved one can be an extremely rewarding role but can also impact the carer physically, emotionally and financially.

Carers often put another’s needs before their own and the role itself can be extremely demanding. Being a carer can gradually impact many aspects of an individual’s life including their physical and mental health, career, relationships and social life. Self-care and awareness of the available support is therefore important to ensure a carer looks after their own wellbeing.

Financial support may be available to those who care for another. The first step towards understanding whether financial support is available from the council is to arrange for a Carer’s Assessment to be completed. A Carer’s Assessment will consider the level of care required for the individual who needs support and how this impacts the carer. The council will then provide information on the support options and financial benefits available. 

Carer’s Allowance is the main welfare benefit available to financially support carers. In the UK, Carer’s Allowance is currently £64.60 per week (April 2018-2019) and is available to those who are:

Aged 16 or above
Caring for a disabled person for at least 35 hours per week
Caring for someone who receives a qualifying disability benefit
Earning less than £120 per week (after deductions), and are not in full-time education.
Visit GOV UK to find out more about Carer’s Allowance and how to claim. If a Carer’s Allowance is not available, a carer might still be eligible for other benefits.

Online calculators can be used to determine if any other benefits are available, such as the Turn 2 Us and Age UK Benefits Calculator.

 Caring for someone can be an extremely challenging and demanding job. ICarers must look after their wellbeing and consider accessing support from friends, family and their GP.

Many charities provide lots of useful online resources that can be accessed at any time, such as advice articles and forums. Local support groups and networks enable carers to talk to others in a similar situation to themselves and share experiences through support and social activities.

UK:
Carers UK

Alzheimer’s Society

Republic of Ireland:
HSE 

Young Carers

 Taking breaks from time to time is also extremely important, as being a carer can be exhausting. Respite provides a break for carers, allowing the opportunity to take some much-needed rest. Respite can be arranged informally, by asking friends and family for support, or by contacting local respite centres. 

 It is an unpleasant fact that with the current financial recession, many people are struggling to pay their debts. Many companies have fallen victim to the recession and either had to make redundancies or close altogether. Interest rates have plummeted so any savings you may have are worth much less. Property prices have fallen and some people may be in the difficult position of having negative equity. It can seem overwhelming to have debts and uncertainty as to how you are going to cope. 

There may be feelings of guilt or failure that you are now in this position but there are things you can do to help to ease the burden. It is very important to share with your family the financial situation. Keeping secrets and trying to pretend that everything is the same as always will only last for so long before the strain begins to show. 

As a family sit down and discuss the situation be open to ideas from all members of the family as sometimes others can come up with really good ideas that you hadn’t thought of. If everyone is aware of the situation you are less likely to have to go through sulking and slamming doors every time your teenager wants the latest designer trainers. 

They may even decide to get a Saturday job to earn more spending money without being reliant on handouts from you. Write down what you spend each week apart from essential bills. 

Do you really need the Latte from the coffee shop on the way to work?

Can you take a flask of coffee instead?

Do you buy lunch every day?

How about taking a packed lunch with you to save money?

You may be very surprised as to how much you spend in a week on non-essential items. Talk to a trusted friend, especially if you are feeling down and are tempted to go out and buy something to make you feel better. If your self-esteem is low and spending money makes you feel better counselling might help. If you can tackle the root of the problem it is easier to deal with the urge to spend.

Instead of spending money to try to make yourself feel better try doing things you enjoy in less expensive ways e.g. listening to your favourite music, pottering in the garden, have a long candle-lit bath. 

It is very important to let your creditors know your situation. They are far less likely to threaten court action if you have contacted them and apprised them of the situation. There are many expert organisations that can offer you free assistance to manage your debts.

But beware there are lots of companies out there who say they can get your debts written off for you, or get compensation for you by claiming that your credit agreements are unenforceable.

Be very careful. Most of these firms charge you large up-front fees for each agreement they agree to check, but with no guarantee that they will be successful in challenging your agreements. In most cases, you will not get your money back if your claim is not successful. 

You can find out further information at: https://www.nationaldebtline.org/EW/Pages 

 Bills are a fact of life; they only become a problem when you become over-committed. Over-committed means that your income can no longer meet the bills coming in.

By careful budgeting and planning and by being realistic about what you can afford, you can avoid debt problems and make the most of your income.

It is easy to become committed; every time you sign up for a new service (e.g., pay TV, gym membership, or a mobile phone contract for example); buy something on hire purchase; or add to a credit card debt, you add to your monthly commitments. Likewise, it can sometimes be all too easy at Christmas to buy now and pay later only to get a huge shock in January when the bills or credit card statements come in.

 A personal budget can help you to plan and make the most of your money. It would be beneficial to calculate your regular income and identify all your spending commitments. Taking a little time to plan this out over the next 3-6 month period will be time worth investing. 

By working out a budget you’ll know how much money you have for essential living expenses and how much you can afford to commit to other plans, for example buying a car, taking out a new mortgage, going on holiday or saving for the future). Once you have set yourself a budget it is important to review your budget regularly, because your circumstances are likely to change.

In the early days, it also helps to keep a check on things on a weekly and or monthly basis to make sure you are keeping to your plans and preparing ahead if you think problems are likely to arise soon. 

A budget will help you to prioritise your commitments to make sure that your basic needs and financial commitments are met. You can then you can decide what else you can afford, and what you may have to save for or do without. Remember a budget is just a plan.

You need to regularly review your plan so that you can adapt how you manage your money should unexpected expenses arise, or should you receive unexpected income. If you are over-committed and have a debt problem, don’t ignore the situation. 

Having rent or mortgage arrears
Taking out new loans to pay off old ones
Only paying the minimum amount on your credit card each month
Using a credit card for day-to-day purchases
Ignoring letters from creditors

By listing and prioritising your debts, developing and implementing a personal budget and talking to your creditors you may be able to sort out any issues you may have. Always consider seeking the advice of an Independent Financial Adviser as they can help you to manage your finances. 

 In a recent survey, 90% of students said that the rising cost-of-living has negatively affected their mental health. 

Achieving financial well-being as a student can be a daunting task. With tuition fees, books, and other living expenses piling up, it can be hard to keep up with the costs. However, there are steps that students can take to ensure their financial well-being and help make it through school with a little more extra money in their pocket.

This article will highlight five essential tips to help students achieve financial well-being. From budgeting to finding other sources of income, these tips will help students stay financially responsible and even save for the future. With the knowledge and preparation, students can make the most of their experience and set themselves up for success.

Financial wellbeing is the ability to manage your finances responsibly and sustainably. It is about having enough money to take care of your essential expenses, such as rent and food, as well as being able to save for the future. Achieving financial wellbeing is not just about having enough money, it is also about developing the skills to manage it and make smart decisions with it. 

 The benefits of financial wellbeing are vast, but most importantly, it can help give you peace of mind. Knowing that you are in control of your finances can be a huge relief and allow you to focus on other aspects of your life. 

Tip 1: Budgeting
Creating a budget is the first step to achieving financial wellbeing as a student. It can be hard to keep track of all your expenses, so having a budget can help you stay on top of your finances. Start by tracking your income and expenses for a month to get an idea of where your money is going. Once you better understand your finances, create a budget that outlines your essential expenses and any discretionary spending. Sticking to a budget can be difficult, but it is the best way to ensure that you are staying on track with your finances.

Tip 2: Setting Financial Goals
Creating financial goals is a great way to stay motivated and keep on track with your budget. Setting realistic goals can help you stay focused and progress towards achieving financial wellbeing. Start by setting short-term goals that can be easily achieved, such as saving a certain amount of money per month or paying off a specific debt. As you progress, you can set bigger goals that help you reach your long-term financial objectives.

Tip 3: Finding another source of income
Finding other sources of income is a great way to supplement your income as a student. Whether it’s tutoring, freelancing, or dog walking, this can be a great way to make extra money and stay financially responsible. Additionally, it can help you gain valuable skills and experience that can be valuable for your future. Before taking on such work, it is important to make sure that you have the time to dedicate to it and that it will not interfere with your studies.

Tip 4: Taking Advantage of Student Discounts
There are a variety of student discounts available that can help you save money. From discounts on textbooks to discounted movie tickets, taking advantage of student discounts can be a great way to save money. Additionally, many companies offer student discounts on their services, such as phone plans and streaming services.

Tip 5: Don’t bottle things up
If you are worried about paying your bills or not being able to afford rent or travel costs – don’t keep it to yourself. When left unspoken, financial worries can build up, leaving you in a worse position than you started.

If you don’t feel comfortable opening up to someone you know, you can speak to your university or college’s wellbeing team. Most will have support advisors or counsellors in place so you can talk to someone confidentially about your worries and get these feelings off your chest.

Managing a budget is a fundamental aspect of personal finance, enabling individuals to achieve financial stability, reduce debt, and work towards their financial goals. However, it can be challenging to create and stick to a budget, especially if you're not familiar with budgeting techniques. To help you gain control over your finances and build a strong foundation for your future, here are five essential tips for effective budget management: 

 The first step in budget management is understanding your financial situation. Take some time to assess your monthly income from all sources, including salary, freelance work, investments, or rental income. Next, gather data on your regular expenses, such as rent or mortgage, utilities, groceries, transportation, and other necessities. Use financial statements and receipts to get an accurate picture of your spending habits. This evaluation will serve as the basis for creating a realistic budget that aligns with your income and financial goals 

 Establishing clear financial goals is crucial for staying motivated and focused on your budget. Determine short-term goals, such as paying off credit card debt or building an emergency fund, as well as long-term goals, like saving for a home or retirement. Having specific targets will help you allocate your resources effectively and make better financial decisions. Remember to make your goals SMART: Specific, Measurable, Achievable, Relevant, and Time-bound. 

 With a comprehensive understanding of your income and expenses, it's time to create a detailed budget plan. Use budgeting tools like spreadsheets, budgeting apps, or pen and paper to list your income and categorize your expenses. Allocate a specific amount to each category, ensuring your expenses do not exceed your income. Be mindful of discretionary spending and avoid unnecessary expenses that don't align with your financial goals. Regularly review and adjust your budget as needed, especially when your financial circumstances change. 

 If you have outstanding debts, prioritize their repayment in your budget. Focus on paying off high-interest debts first to save on interest costs. Additionally, allocate a portion of your income to savings and emergency funds. Even a small amount saved consistently can accumulate over time, providing you with a financial safety net for unexpected expenses. Automate your savings by setting up automatic transfers to savings accounts to ensure consistency. 

 Budget management requires ongoing diligence. Regularly track your expenses to ensure you stay within your budgetary limits. Use apps or online tools that categorize and analyze your spending patterns, making it easier to identify areas where you may be overspending. By being aware of your spending habits, you can make necessary adjustments and stay on track with your financial goals. 

 effective budget management is a fundamental skill for achieving financial stability and pursuing your aspirations. By assessing your income and expenses, setting clear financial goals, creating a detailed budget plan, prioritizing debt reduction and savings, and monitoring your expenses regularly, you can take charge of your finances and build a secure financial future. Remember that budgeting is a dynamic process, and it's okay to make adjustments along the way. Stay disciplined, stay focused, and watch as your financial health improves with each step towards successful budget management.