As energy bills rise and the cost-of-living soars, many people are struggling to make ends meet. You might already be feeling the pressure on your finances, or you might be worrying about how the spiralling cost of living will affect you in the future.
Here, Rowan Harding, from Path Financial, a UK financial advisory firm, outlines advice on how to maintain mental health during the cost-of-living crisis.
Money and mental health go together.
Having worked in the financial services sector for over 21 years, I’ve seen first-hand how money worries can negatively impact on emotional wellbeing.
It can put a huge amount of stress on our lives, our relationships and even our physical health.
In fact, a big part of my job as a financial advisor is listening to my client’s worries and life situation, often helping them see that they have more control than they realise.
Redundancy or unemployment, bereavement, relationship breakdowns, abuse — including financial control or lack of it — all of these things can lead to mental health problems.
And the cost-of-living crisis is only set to make things worse.
According to the Money and Mental Health Policy Institute, people with mental health problems are three-and-a-half times as likely to be in problem debt. Money worries can have an impact on your mental health, and your mental health can affect how you manage your money. It’s a vicious cycle that can have severe consequences.
If you’re struggling with your mental health, finding the energy and motivation to look at your finances can feel like a step too far.
After all, it’s not the top of most people’s priorities list, even at the best of times.
You might not feel up to making phone calls or filling in forms. You might avoid opening bills, checking your bank account, or thinking about money completely.
But actually, taking control of your finances can be a very positive thing.
If you have pension or investments, you can choose to move them out of fossil fuels, climate-damaging industries or move your investments from Russia following the war in Ukraine.
By finding out what your options are, you can make better decisions and have more confidence about your future.
The first thing to remember is that however difficult your situation might be, you are not alone and there is hope.
There is support available to help you with your emotional wellbeing and to secure a brighter financial future for you and your family.
With this in mind, here are 11 simple, practical steps to take if you want to feel more in control of your money and your mental health during times of financial strain.
1. Seek mental health support
Firstly, if you don’t feel that you’re in a place to tackle your finances right now — and if you’re feeling very low or even suicidal — talk to someone in confidence straight away.
It could be your GP, a friend or family member. Alternatively, call the Samaritans on 0330 094 5717, or find mental health support services in your local area via the NI Direct website.
Mental health charity Rethink has a dedicated mental health and money advice website, which is a great resource for people experiencing both mental health and financial problems.
2. Think about your goals
If you’re feeling ready to tackle your finances, the first step is to think about what you want to achieve. Are you trying to get out of debt, build an emergency fund, or find a way to budget your money to manage day-to-day expenses?
Having a clear goal is the first step of your financial journey and this will give you a solid reason to take charge of your money.
3. Get organised
This might seem daunting, but it really is a vital part of getting a grip on your finances. Start with making sure that you have your important financial documents in one place, whether it’s physical paperwork or digital documents, have all your bank statements, payslips, bills and receipts filed in one place that you can access easily.
4. Build a budget
This is key to taking control of your money. Start with your total income (minus deductions for taxes), then list of all the essential things you need to spend money on each month, such as rent, mortgage payments, fuel, energy bills, phone bills and food.
There are lots of free budget planner apps and online tools that can help make this process easier. Try the mental health and money advice’s free budget planner or the money saving expert budget planner tool. Money Saving Expert has lots of other information and plenty of useful money saving tips.
5. Schedule some money time
We all have busy lives and it can be hard to make time, but your finances should be a priority. Allocate a regular time each week to think about any tasks you need to do around money, such as paying bills or checking your bank balance to keep a track of what you’re spending your money on and how much you have left.
It might be helpful to give yourself a further incentive by rewarding yourself with some relaxing time after your money time.
It’s hard to deal with debt, but handling it sooner rather than later will help you to avoid more stress further down the line. If you can afford to, set up a standing order to pay off your debts each month.
If you’re struggling to pay off your debts, there is help available. Every council area in Northern Ireland has a debt service offering confidential, tailored advice and ways to deal with your debt, and they can also negotiate with creditors on your behalf.
There’s also a number of charities and organisations who can offer support, such as StepChange, Financial Wellness Group and PayPlan.
7. Claim additional support
If you’re entitled to financial support or benefits such as universal credit, tax credits, carer’s allowance or free school meals for your child, claim them. People are sometimes put off by the perceived hassle or even the stigma of claiming benefits, but the extra help can be a safety net during times of financial difficulty. Contact the Finance Support Service if you’re in need of short-term help.
8. Speak to your energy supplier
Amid rising energy costs, we’re all bracing ourselves for bigger bills. Being more energy efficient at home is one way to reduce your bill payments.
It’s also worth contacting your energy supplier. Depending on your circumstances, they may be able offer support by reassessing or reducing your bill payments.
The Consumer Council offers an energy price comparison tool to compare electricity and gas tariffs for all suppliers in Northern Ireland.
9. Look after yourself
During times of stress, it can be hard to look after your emotional wellbeing. Maintaining a healthy lifestyle, getting plenty of sleep and keeping physically active, if you can, will help. Try to have a daily routine, enjoy hobbies, connect with friends and family — and importantly — be kind to yourself. Emotional wellbeing and successful financial health really do go hand in hand.
10. Don’t forget your pension
It might be the last thing on your mind right now, but once you’ve handled your short-term goals, it’s time to look ahead and think about your long-term plans.
What do you want your retirement to look like?
You might want to think about your financial security should you or your partner need care in older age, or if your children or grandchildren need financial support.
Thinking about these things now will help to ease the pressure later on.
On average, individuals in the UK will have held 12 jobs by the time they retire, which could also mean 12 individual pension arrangements to keep track of.
Pension consolidation will bring all of your hard-earned savings together, make them easier to manage and improve investment performance.
11. Consider doing good with your money
Looking at your finances is a good opportunity to consider the impact that your money has on the wider world.
Lots of people are looking to align their finances with their personal values right now — we’ve seen a big increase in enquiry volumes at Path Financial recently, with people wanting to avoid investments in things like fossil fuels, mining and extraction, and Russian investments.
A good financial advisor will be able to speak to you about your individual needs and concerns, and then review and adjust your plans accordingly.
