The symbiotic relationship between financial and mental health is ever-present, with one’s decline often having an effect on the other. With the cost of living crisis destabilising many people’s finances, the impact of financial stress on our mental health becomes even more apparent. Whilst we may not be able to boost the economy or reduce the cost of living, we can highlight the importance of the money and mind relationship and the ways we can protect both our financial and mental health.


Paying the mental toll 

Mental health can be impacted by a multitude of factors including our physical, mental and emotional wellbeing and external environments. In a world where money affects everything, our financial stability or instability will undoubtedly impact all of the above but particularly mental health. In the UK, 46% of people in problem debt have mental health problems. Money problems can shape new mental health problems, like depression and anxiety, but can also exacerbate existing ones – 86% of people with mental health problems said their finances had made their mental health worse. People with financial issues can have a harder time recovering from mental health issues too – in fact they are 4.2 times more likely to have depression 18 months longer than those without. 

Financial problems affect all of us, they aren’t exclusive to those from socioeconomic backgrounds. Whether it’s debt, homelessness, unemployment, or anything else, poor finances may increase stress, anxiety and a feeling of hopelessness. The stigma surrounding debt means that many won’t reach out for support, consequently worsening their mental health struggles. People with financial problems may have trouble sleeping, guilt about spending/borrowing money, and anxiety when checking their bank balance or mail. These struggles can culminate and have horrific effects on our mental wellbeing and personal relationships.

A two-way street

Just as financial problems can create bad mental health, the reverse is often also true. Sadly, these two aspects can often get caught in a cycle, with both taking hits to each other. People with mental health problems are three and a half times more likely to experience problem debt, and 72% of people said that their mental health has made their financial situation worse. Financial difficulties can be hard to manage at the best of times, but poor mental health can exacerbate this.

When suffering from stress, anxiety, and depression, things in your life can spiral out of control. It can be hard to motivate yourself to find employment or stay in a job. ‘Retail therapy’ can be a method to improve mental health, but if you don’t have the money to fund your shopping, it can leave you with a longer list of things to stress about. It’s integral to seek help to break out of self-destructive behaviour, but using therapy or medication often incurs additional costs. These can leave a gradual impact on your financial situation, advancing the cycle further.

When you also take into consideration that some mental illnesses are especially vulnerable to poor money management. The financial and mental health bond only strengthens. Bipolar disorder, for example, can result in impulsive and risk-taking behaviour which can make it hard to stabilise finances. People with bipolar disorder are four times more likely to have severe gambling problems. They are also more likely to engage in compulsive spending, which is often goal focused and the result of a specific fixation. Recognising this link is crucial to addressing them head on and reducing the stigma surrounding financial struggles.

The Cost of Living

Considering the impact of poor financial health, it’s unsurprising that those with financial difficulties are more vulnerable to suicidal thoughts. The contributors to suicide are multifaceted and diverse. However, long-term financial issues can slowly wear away emotional stability, and debt collection can trigger suicidal feelings. Problem debt can make people three times more likely to have considered suicide within the past year.

Unfortunately, another factor that contributes towards suicide can be mental illnesses; for example, the rate of suicide for those with bipolar disorder are 10-30 times higher than the general population. Given their poor money management skills due to their illness it’s no doubt a contributing factor to that staggering rate. 

That’s the true cost of living crisis we are experiencing as a nation. It’s not just about the cost of housing or food, it’s the cost to our mental well-being and for some that’s one cost that’s completely unaffordable.

The Economy and Our Mental Wellbeing

Economic declines have historically correlated by a rise in suicides, and this is particularly relevant in recent times. In a 2023 survey, 80% of people said that their mental health had been affected by the current cost of living crisis. If you’re struggling with money, social activities and little luxuries to improve mental health become much harder to indulge in. Cutting back on heating or food to pay bills will have particularly severe effects.  The cost of living crisis is something ever-present in people’s minds, generating anxiety as well as real financial difficulties.

However, there are ways to support people when the economy is unreliable – countries with social and employment support tend to suffer the least from rises in suicide during economic crisis. The COVID-19 furlough scheme is one such example of protecting people from unemployment and debt during collective hard times. These measures prevent further hits to people’s mental health from financial problems. In today’s cost of living crisis, however, 91% of people struggling financially believe the government does not realise how badly it is affecting them. People struggling with finances do not feel supported – 80% of these people are feeling negative about the next year due to rising costs, and 39% of social housing tenants cannot sleep because of these worries.

Background Base Rate 

Those in deprived areas, from minority groups, or earning lower wages will be most affected by the fluctuations of the economy. In turn being more likely to be affected by money anxiety. These groups are also more likely to be vulnerable to socioeconomic obstacles, social exclusion and discrimination. Children from disadvantaged backgrounds are more likely to suffer from mental health problems, with those from the lowest 20% income bracket two to three times more likely to develop them. Due to factors such as peer social exclusion, an inability to access resources, or absorbing the stress of their parents, children living in debt are five times more likely to be unhappy than other children. The current cost of living crisis is likely to make this worse for those children.

Nevertheless, there is certainly truth in the saying, ‘money can’t buy you happiness’. Research has indicated that lottery winners may have higher life satisfaction after winning, but are not necessarily happier long-term. In fact, wealthier countries tend to have a higher rate of depression than lower-income countries. 15% of people in higher income countries have experienced depression, compared to 11% in other countries. Due to a pressure to achieve and isolation from successful parents, the children of wealthier parents can be more vulnerable to certain mental illnesses and substance abuse. 

The fact is being wealthy doesn’t make you healthy! Once wealth is achieved there’s an overwhelming pressure to keep the status or it creates an appetite for more. Which comes with stress, depression, anxiety, impostor syndrome, parental guilt, the list goes on. There two sides of a coin but whichever way it lands, in this case it doesn’t break the bond between mental and financial health. 


Breaking the cycle

The impact of financial concerns on mental health is something that affects us throughout our whole lives. Our financial health and mental health are inextricably linked, and one’s suffering often risks the other one’s. Fortunately, though, the opposite can also be true; the more we care for our mental health and develop mental resilience, the better our position is to look after our finances. The stigma around debt and poverty means that the impact of our finances on our mental health is often hidden. Nevertheless, acknowledging their connection and seeking specific support can contribute towards escaping this cycle and helping others do the same.

Because it’s not money that makes the world go round, its people. Without people to earn it, spend it, invest it …money is worthless. People with or without money are always worth investing in, and as with anything education is key. If we teach the link between mind and money and give children the education they need to look after both only then can the cycle be broken.