Fortnightly financial 5 minutes #10 Laura Peters

Can you tell our readers about the background of Mental Health & Money Advice as an organisation and your role there?  

One of the things brought to the fore by the cost of living crisis is the strong link between our mental health and our finances. The charity Mental Health UK launched Mental Health and Money Advice in 2017 to help people understand, manage and improve their mental wellbeing and financial situations. Our website provides free and detailed advice on a range of issues, such as budget management, accessing benefits, paying off debt and more. We also run a referral-only phoneline for those in need of more intensive, personalised support.   

I head up Mental Health and Money Advice and am responsible for the successful delivery of the service.   

In episode 2 of our podcast FSCS explored the link between money and mental health, can you give us more background on that from your perspective?  

Our mental health and our finances go hand in hand. For example, experiencing financial issues such as debt can be incredibly stressful and have a devastating impact on our mental wellbeing. Meanwhile, the symptoms of a pre-existing mental illness can sometimes make it more difficult to manage money, backed up by recent polling which shows that people living with a mental illness are twice as likely not to have any savings.    

The people we speak to often describe becoming trapped in a vicious downward spiral, where money worries impact their mental health, and the resulting anxiety or low levels of focus or motivation makes it harder to address their financial situation. Given all the worry and sleepless nights involved when someone is struggling with money, it’s not surprising that sometimes people want a break and start ignoring important-looking letters or avoiding taking steps to try to improve the situation. But then problems pile up, overwhelming us when we finally have to face them.   

Many clients tell us they wish they’d tackled their finances sooner. It might feel daunting, but just know that there is free, impartial advice from organisations like Mental Health and Money Advice to help you.   

The holiday season can be a joyous and wonderful time of year, but for some, it can also mean additional money anxieties and mental health worries. What advice would you give on how to approach this time of year?  

First of all, you could set a Christmas budget using the jam-jar method. Break down your money into pots, such as for your essential bills, Christmas food and presents. This will help you keep better track of your spending and know your limits. It can be difficult to do this if thinking about money is making you anxious. But avoiding the problem will only make it worse further down the road.  

Make a list of the things you need for Christmas and stick to it. Consider whether you really need each item and whether it’s affordable before writing it down on your list. Try to avoid spending on impulse. Be mindful of businesses trying to convince you to put something extra in your basket at the checkout. Know your consumer rights, keep receipts, and don’t immediately remove tags and packaging, so you can return items if you change your mind.  

Be open with close friends and family and feel comfortable setting boundaries. It can be tempting to spend too much on gifts and big social occasions at Christmas time. Letting others know that money is tight and emphasising that the true meaning of Christmas is spending time together can empower you not to overspend.  

And finally, take time to appreciate yourself. You might experience low self-esteem at Christmas if you aren't able to buy all the gifts you want for other people. Make a list of all your good qualities and remember that your friends and family love you for who you are, not the gifts you buy. 

What other tips and advice would you like to share in terms of managing mental health and money worries?  

Our finances might feel daunting, complicated and messy. A household budget is a really useful way of being able to clearly see what money is coming in and going out every month. It will help you work out what you need for household bills, calculate how much you can afford to pay off in debt if you have any and plan or save for the future. MoneyHelper has a useful budget planner, which you can save and come back to later.   

Poor mental health can make it more difficult to manage your finances. Break things down into small, manageable chunks and approach tasks in a way that works for you. For example, if you struggle with anxiety and avoid making phone calls, choose a time and day when making a call will be easiest, and write down what you want to say beforehand. You may also be able to use webchat or send an email instead.  

Remember to seek help for your mental health too. If you’re feeling anxious and low almost all of the time, you should consider visiting your GP. You can contact charities like Rethink Mental Illness, which provides advice and information on living with a mental illness. There are also online communities like Clic where you can connect with others facing the same challenges as you are.   

As you look forward to 2023, what would be your top tip for the new year and everyone’s finances?  

As the cost of living crisis continues, it can feel like there’s so much out of our control, and with the country entering a recession, things will likely be tough for a while yet. There was a real community spirit during the pandemic which helped many people through difficult times, and it looks like that same attitude is taking hold in the current crisis.

We’ve heard of people sharing work or school commutes to reduce travel costs, parents taking on some childcare so other parents can pick up a few extra shifts, and people swapping their goods and services. Being part of a community and helping each other is also really good for wellbeing. Check local Facebook groups or noticeboards at the post office or library or consider organising some initiatives yourself.    

Most importantly, don’t suffer in silence. Speak to a close family member or friend, and reach out to charities providing support. Remember that a problem shared is a problem halved.   

Thanks very much Laura for all those insights. We also encourage our readers to talk to family or friends and seek support.

For more information on what FSCS protects, see our What we cover page.

The content of any discussions shouldn't be taken as an indication of future FSCS policy positions. The views expressed by guests are their own and don't reflect the views of FSCS.