It’s Talk Money Week, so let’s talk about money and mental health…

The cost of living has risen rapidly in the last few years, with the price of food, house rental prices, and energy costs becoming increasingly expensive. This has left many struggling if their income did not increase at the same rate.

At its’ peak, in October 2022, the consumer price index reached a high of 11.1%, whilst annual wage growth sat at 6.2%. In other words, costs of goods and services were rising almost twice as much as income across the population.

It was widely anticipated that this rise in the cost of living, known as the cost-of-living crisis, immediately following a global pandemic, would lead many to experience worsened mental health.

Financial hardships are often linked to stigma, stress and anxiety, which can contribute to mental health problems, along with psychological distress. Because of this, an individual may withdraw and become isolated or find it difficult to seek support from friends and family or to access services that can help them, creating barriers to improving their financial situation. On top of this, mental health problems can increase the risk of financial hardships through loss of employment (or working fewer hours), difficulties managing money and difficulties engaging in communication around money (e.g., making phone calls to the bank). This could cause a cyclical effect for some individuals, whereby both their mental health and financial hardships worsen over time.

What is the current picture?

Now that we have been living in the cost-of-living crisis for a few years, what is the current picture of this crisis?

Unfortunately, it appears mental health has worsened over the last couple of years, as expected. A poll carried out by the British Association for Counselling and Psychotherapy in February 2024 found that nearly three quarters (74%) of people feel that their mental health has worsened as a result of the cost-of-living crisis, a huge increase from just over half (53%) in 2022, which had been attributed to financial stress. There are some groups who have felt this impact more than others. For example:

• Those between 25 and 44 years old
• Ethnic minority groups
• LGBTQ+ groups
• Those with a disability
• Women

Concerningly, according to the Trussell Trust, use of foodbanks has increased over the last few years, with over 3.1 million people using their foodbank in 2023/24, up from just over 2.1 million in 2021/22. While this may be partially due to a reduction in stigma in using foodbanks, it is also likely a sign that people have been increasingly struggling to afford food.

From this, we can see that many are continuing to struggle with rising costs.

Although, there is some good news! The cost-of-living crisis has begun to slow down, with the rate of inflation (the change in the price of goods and services over time) slowing down to 2% in June 2024, down from its peak of 11.1% in October 2022.1 It should, however, be noted that this does not mean that costs are coming down – just at the rate of which prices are increasing has slowed.

In more good news, wage growth is sitting higher than this, at 4.5%,3 over twice the rate of inflation, suggesting that income growth is beginning to catch up to rising costs.

There is hope for the future as people seem to be adjusting to rising costs. Back in January 2023, a survey by the Financial Conduct Authority found that over a third (36%) were struggling to cope financially, which has since dropped to 28% in January 2024. While this is not a huge jump, and many people are still struggling, it is a shift in the right direction. It is not yet clear how this will impact mental health, but we can hope that a reduction in financial strain and stress leads to subsequent improvements in mental health across the population.

Mental Health Awareness Training

In response to the emerging cost-of-living crisis, between January and March 2023, Healthy Dialogues delivered 10 Mental Health Awareness training sessions for Londoners on behalf of Thrive LDN. Content aimed to build the awareness, knowledge and skills of frontline professionals around mental health and financial hardships, within the context of the emerging cost-of-living crisis.

This training was split into three modules:

• What is mental health and where to find support
• Having conversations about mental health
• How to support someone experiencing a mental health crisis
  

Here’s what our attendees had to say:

“I learnt so much today. It introduced me to a whole range of techniques and strategies which will help me in the future to recognise poor mental help and be able to provide information, support and guidance to the participants“

“Extremely informative with a range of tools I can immediately use.”

“I thoroughly enjoyed all 3 modules and feel so much better prepared to deal with mental health issues. I feel more confident in my ability which will surely help the people I see.“

You can watch the recorded versions of our Mental Health Awareness training for free here to find out more about mental health and financial hardships, and how to support someone experiencing poor mental health and financial hardships.

If you would be interested in further Mental Health Awareness training, please do get in touch!

Where to go for support

If you, or someone you know, needs support around mental health:

• NHS Talking Therapies provides free psychological therapies. Find your local NHS Talking Therapies service here: https://www.nhs.uk/service-search/mental-health/find-an-NHS-talking-therapies-service/
• Good Thinking provide free, digital mental wellbeing support to Londoners, although features can be accessed by anyone in the UK.
  

For support around financial hardships, contact:

• Debt Free Advice offers free, impartial debt advice available in person or via phone, WhatsApp and video chat.
• Citizens Advice offer free, confidential advice online, over the phone, and in person.
• Turn2us support people in financial need gain access to welfare benefits, charitable grants and other financial help – online, by phone and face to face.
  

Key takeaways

There is a clear link between mental health and financial hardships. Throughout the cost-of-living crisis, many people have seen the effects of this link. Positively, there are signs that the cost-of-living crisis is easing up, but the effects on mental health still linger.
Ultimately, when we consider the risk of a mental health epidemic as a result of the cost-of-living crisis, we are certainly not yet in the clear, but there are reasons to feel optimistic for the future.

References

• Office for National Statistics (2024). Cost of living latest insights. https://www.ons.gov.uk/economy/inflationandpriceindices/articles/costofliving/latestinsights
• Office for National Statistics (2024). Consumer price inflation, UK: October 2022. https://www.ons.gov.uk/economy/inflationandpriceindices/bulletins/consumerpriceinflation/october2022
• Office for National Statistics (2024). AWE: Whole Economy Year on Year Three Month Average Growth (%): Seasonally Adjusted Total Pay Excluding Arrears. https://www.ons.gov.uk/employmentandlabourmarket/peopleinwork/earningsandworkinghours/timeseries/kac3/lms
• Broadbent, P., Thomson, R., Kopasker, D., McCartney, G., Meier, P., Richiardi, M., … & Katikireddi, S. V. (2023). The public health implications of the cost-of-living crisis: outlining mechanisms and modelling consequences. The Lancet Regional Health–Europe, 27. https://www.ncbi.nlm.nih.gov/pmc/articles/PMC10068020/
• Money and mental health (n.d.). The Facts. https://www.moneyandmentalhealth.org/money-and-mental-health-facts/
• Jiménez-Solomon, O., Garfinkel, I., Wall, M., & Wimer, C. (2024). When money and mental health problems pile up: The reciprocal relationship between income and psychological distress. SSM-Population Health, 25, 101624. https://www.sciencedirect.com/science/article/pii/S2352827324000247
• NHS (n.d.). Money worries and mental health. https://www.nhs.uk/every-mind-matters/lifes-challenges/money-worries-mental-health/
• British Association for Counselling and Psychotherapy (2024). https://www.bacp.co.uk/news/news-from-bacp/2024/22-may-new-poll-reveals-four-in-five-with-mental-health-issues-are-negatively-affected-by-cost-of-living-crisis
• The Trussel Trust (2024). End of Year Stats. https://www.trusselltrust.org/news-and-blog/latest-stats/end-year-stats/
• Financial Conduct Authority (2024). Financial Lives cost of living (Jan 2024) recontact survey – Summary. https://www.fca.org.uk/publications/financial-lives/jan-2024-recontact-survey-summary