Debt can cause – and be caused by – mental health problems. The continuing cycle of debt and mental health issues is a fact of life for many, and its often extremely difficult to escape. Debt is not always the singular cause of anxiety or depression, but it can play a significant contributory part. According to a recent YouGov poll, money was the most common worry across the UK last year with almost half of all callers to the Samaritans’ helpline naming it as their main concern.
Debt and mental health have closely related links in both directions. People who have debt problems are twice as likely to develop a common mental disorder. Similarly, people with mental illness are more likely to develop a problem debt. The debt charity Step Change has highlighted the extent to which debt affects mental health. It revealed that last year it spoke to an average of 5,000 people a month who were suffering from financial problems coupled with either anxiety or depression.
The close relationship between debt and mental health presents a worrying future, particularly when the squeeze on household incomes looks set to continue. The Governor of the Bank of England recently acknowledged that ‘real household incomes’ – that is income set against the cost of living – has suffered its biggest drop in over 30 years. This is likely to lead to a further increase in debt problems, as people turn to credit to maintain an acceptable standard of living.
While the link between mental well-being and financial issues grows ever stronger, the question of how to slow down the wheels of this cycle becomes more prevalent. Financial education should play an integral role. Equipping people with a fundamental working knowledge of personal finance will give them a better chance of avoiding problem debt, potentially splitting the mental health/debt problem in half. The fundamentals of personal finance should be embedded from an early age, and should continue as a lifelong learning project. In this way, the close relationship between mental health and debt can at least reduced if not eradicated.