Some 40% of people have suffered mental-health-related problems caused by their financial situation, a new study by wealth manager St. James’s Place has found.
The firm’s financial health report found that money issues are affecting people’s daily lives, with mood and anxiety about the cost of going out being two of the most common mental-health side effects of money worries.
In the survey of 6,000 people, 38% said their finances had impacted their physical health. Around one in six (17%) said financial pressure had caused increased grey hairs or wrinkles, while 16% said they were forced to buy cheaper, less healthy food which was impacting their weight and sleep.
Alexandra Loydon, group advice director at St. James’s Place, said: “Over the past five years, households have faced successive crises and challenging economic conditions, from higher mortgage costs to rising energy and food bills.”
This has taken a toll on people’s mental and physical health, as well as their financial resilience. Indeed, millions of Britons lack a financial safety net, she noted.
The research found almost two in five people have less than £10,000 in savings, investments and physical possessions. Around 14% of respondents said they had no wealth at all.
One in five (21%) UK adults described themselves as struggling financially, while almost three in 10 said they do not feel financially resilient or able to cope with an unexpected financial shock.
These figures track with research from Scottish Friendly Assurance Society, also released today, which showed that around one in five people do not have a long-term financial goal or plan. This rose to 30% of lower earners but fell as wage bands increased.
Kevin Brown, savings expert at Scottish Friendly, said: “It is concerning that nearly one in five people have no clear idea of what they want their finances to achieve. It is hardly surprising, yet no less concerning, that this rises to almost one in three among those on lower incomes.
“Long-term direction is not only for those with substantial sums to save, since where budgets are tighter, being clear about future priorities can matter even more – even if immediate costs leave little room to act.”
Making a plan is one easy way that people can start to get their finances back on track, according to Loydon. “Our research shows those with a financial plan are more likely to feel financially comfortable and able to cope with financial shocks,” she noted.
The first step is to stop ignoring the reality of the situation. When things get difficult, some may feel inclined to avoid the situation and put off tackling the problem.
“This only makes matters worse, both financially and emotionally, and it’s important to confront your financial worries as soon as you can and make a plan of action,” said Loydon.
“Finances can be a difficult topic to discuss, but people should not feel they have to manage these concerns alone. Seeking support from family and friends, debt advice charities, financial advisers or mental health professionals can provide valuable guidance and reassurance during difficult periods.”
Next is to create a budget. During times of financial stress, it is imperative to check monthly outgoings and avoid unnecessary spending.
“Firstly, make a note of your necessary outgoings such as mortgage repayments and utility bills, accounting for any upcoming price hikes. Next, consider additional expenses, such as recreational activities, and see how much money you can allocate for these activities and where you might be able to reduce spending,” she said.
People should start to build an emergency fund when budgeting, factoring in how much can be set aside each month. Overall, people should aim for around three to six months’ worth of spending – a figure that will differ for each person and can only be calculated based on monthly budgeting.
This offers people protection in the event of a financial emergency and provides a buffer for those in between jobs or facing higher living costs.
“But it’s important to note that emergency savings are designed to offer short-term support, so it is important to review and rebuild the fund after using it,” she said.