MENTAL HEALTH BLOG WEEK. StepChange Debt Charity provides free debt advice online and over the telephone. Grace Brownfield works in the policy team, campaigning for changes to regulation, law and practice, to reduce the risk of problem debt and the harm it causes. Here she looks at the link between debt and mental health, especially among young people
At StepChange Debt Charity, we help people in financial difficulty every day – around 620,000 people contacted StepChange for help in 2017.
We know that, for many people we help, their debt problems are not the only issue they face. We’re increasingly seeing, and understanding, more and more about the links between people’s finances and their mental health.
Cause or effect?
Evidence suggests that around half of people in problem debt have a mental health problem. The links between the two run both ways: being in debt can impact on your mental health and having a mental health problem can affect your finances.
In 2017, 40% of StepChange clients who disclosed they had a mental health problem said that this was their main reason for falling into debt – highlighting the clear link between the two. During periods of poor mental health, people may experience difficulties in making financial decisions or see changes to their spending patterns.
There can also be wider factors at play: people experiencing mental health problems are less likely to be in paid employment, and when they are it is more likely to be low-paid – both of which can increase people’s vulnerability to falling into debt. StepChange clients who had a physical or mental health problem were less likely to be working than other clients and had lower incomes on average. They were also more likely to be behind on their household bills, like their rent or energy bills.
On the flip side, many people in debt report this having a negative impact on their mental health. The evidence here is quite shocking: people with problem debt are twice as likely to develop major depression as those not in financial difficulty. We frequently hear from people who report experiencing anxiety and depression as a result of their debt problems.
“I was having panic attacks and not sleeping and, you know, all the classic things that you see on the adverts for people with debt worries and things like that.” (StepChange Debt Charity client)
Many young people are worrying about debt
There’s been an increasing focus on young people’s mental health in recent years, so it’s interesting that, at StepChange, we’re also seeing an increasing number of young people seeking help with debt problems.
In the first half of 2018, nearly 15% of those we helped were aged 18–24, a rise from 13% in 2014. This means young people are over-represented amongst StepChange clients compared to the general UK population (where 11% are in this age range). Our recent research also suggests that our clients with particular housing issues are also more likely to be young – highlighting that some young people are facing a multitude of challenges.
Given what we know about the links between people’s finances and their mental health, there is no doubt this is affecting young people too. In fact, research by the Money Advice Service found young people were particularly at risk of experiencing poor mental health linked to money worries – for those aged 18–34, nearly three-quarters (72%) have at some point experienced mental health or well-being issues linked to money.
What can be done to help?
Whilst the problem might seem daunting, the good news is that there are things we can do to help break the link between debt and mental health problems. This includes making sure that those who are talking to people about their finances – such as staff within banks or debt advisors – have a good understanding of mental health issues, and are able to make people feel comfortable to disclose when they are experiencing poor mental health so they can get them the right support.
Lenders need to make sure they understand how mental health problems might impact someone’s ability to make financial decisions about borrowing money and consider how their actions could impact someone’s mental health.
More broadly, we need to improve the welfare system so that people experiencing poor mental health, especially where this impacts their ability to work, get the right financial support to help them stay afloat and to prevent them falling into debt.
These are big challenges, but the increasing focus on mental health, including amongst young people, and how this links to people’s finances, is welcome and provides reason to be positive that we can make further progress.