Article by Harriet Shepherd, Financial Wellbeing Manager, St. James’s Place Wealth Management
Whilst some people were able to save money as spending opportunities were vastly reduced, for many others the loss of jobs and income were a harsh reality.
According to research by the National Centre for Social Research (NatCen), those who experienced sudden and significant drops in household income during the crisis suffered the sharpest increases in mental illness. If ever you needed proof of the relationship between financial difficulties and mental-health issues, this is it.
The Money and Mental Health Policy Institute have reported that almost half of people in problem debt also have a mental-health problem. It found that 86% of respondents to its survey of nearly 5,500 people with experience of mental-health problems said their financial situation had made those problems worse.
People with mental-health problems were also found to be disproportionately affected by any loss of income due to the pandemic and were more exposed to financial hardship, research shows. Certain conditions can make it harder to manage finances effectively, too. For example, 42% of adults with poor mental health, low mental capacity or cognitive difficulties find dealing with customer services on the phone confusing or difficult, according to a 2020 survey by the Financial Conduct Authority (FCA).
The research also shows that just over a third are anxious when shopping around for financial products and services; a third put off dealing with financial matters, such as ignoring warning letters, and 29% had fallen into debt because they had not wanted to deal with difficult financial situations.
It’s common for financial difficulties to arise from emotionally challenging life events.
A financial life event may only occur once or twice in your life but are often linked to personal circumstances and have an emotional connection. These include buying a house, dealing with a close family bereavement and having to work on wills and probate.
With no prior experience of dealing with these matters, it’s unsurprising that it’s often stressful and complex. There’s never an appropriate time to prepare yourself the first time around, which is why it’s vital to have a support team in place to help you through such circumstances.
A support team might include friends and family members, as well as official forms of support. For example, if debt is an issue, free advice services such as StepChange Debt Charity and Citizens Advice can be helpful, while Money Helper is a valuable source of free, impartial guidance and information.
To deal with mental-health difficulties and navigating your way through challenging life events, GPs, counsellors and psychotherapists may also have an important role to play in helping you. You can find a local counsellor on the British Association for Counselling and Psychotherapy website or at Counselling Directory, while there may be local services offering access to free or affordable counselling.
You could also consider working with a financial coach if day-to-day money management is an issue, while a traditional financial adviser can provide planning and advice services and help you to focus on dealing with whatever you’re going through in life.
Some financial advisers are now qualified as coaches to help with issues around money and mental health, while a number of firms provide resources for advisers working with clients they identify as being vulnerable.
Health, life events, financial resilience and capability are the four key drivers that an adviser will consider ensuring the most appropriate and relevant assistance.
When enlisting a financial adviser or coach, not only will they help you with the issue, they can also offer you the head space to process what you’re dealing with to ease the stress of the situation.
It’s worth identifying that support team before anything happens, so you know who to call on when you need to.
For further reading on this topic, please visit https://www.sjp.co.uk/news/5-things-you-could-be-doing-to-support-your-employees-financial-wellbeing
Harriet is a strong believer that everyone should have the financial confidence and information to be able to make informed financial choices. She has developed a passion for strategic thinking and change management from her role leading the Workplace Financial Education programme at St. James’s Place which she has held for the past two years. She now focusses on financial wellbeing as a broader topic, also applying the learnings from her ongoing part-time Masters in Management and Leadership to this role.