Cost of living crisis: how to protect your money and mental health
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Cost of living crisis: how to protect your money and mental health

As the cost of living increases, we’re looking at how you can mind both your money and your mental health

Cost of living crisis: how to protect your money and mental health

Recently, it’s felt like we’re stuck in a stream of mounting pressure, as we’ve faced one thing after another. And with the cost of living on the rise, many of us will be worried about the immediate future.

The Resolution Foundation Think Tank estimates that an extra 1.3 million people will fall into absolute poverty in 2023, including 500,000 children – and middle-earners will likely also feel the strain as bills and monthly outgoings rise.

It goes without saying that this is going to have an impact on our mental health, as financial wellbeing and mental health are connected. In a survey of more than 1,000 people by the mental health charity Mind, 73% reported that when their mental health is poor, they struggle more to manage their money, and 74% also said that difficulty managing money then went on to affect their mental health.

“If you live with mental illness you may be on a reduced income, face increased costs, or find it hard to budget, while money worries can also place pressure on your mental health, leading to increased stress, worry, and anxiety,” Laura Peters, head of mental health and money advice at the charity Mental Health UK, explains. “This can create a worrying cycle that can impact other aspects of your life, such as your relationships, work, or where you live. Improving your financial security and understanding the best way to manage your money can have a hugely positive impact on your mental health.”

Money where your mouth is

But, truth be told, even just talking about money can be difficult, let alone taking steps to manage it. Of course, speaking about it is the first step to getting help – both practical tips and emotional support – but our fears and anxieties are often an additional barrier.

“There are lots of reasons why people find it hard to talk about money worries,” Laura says. “Parents or carers might feel pressure to support loved ones who rely on them. Some of us might feel like we want to keep up with friends, even though we can’t afford to match their spending habits. And many people in debt tell us they feel a huge amount of shame and stigma around their situation.”

In research by the Money & Pensions service in 2020, which surveyed more than 5,200 people across the UK, researchers found that nearly half the adult population (48%) say they have worried about money once a week or more in the past month. It would be fair to say that that number may have risen in 2022, but the survey also looked into the most common reasons why UK adults avoid talking about their money situation, finding ‘Shame/embarrassment’, ‘Not wanting to burden others’, ‘It’s not how they were brought up’, ‘It causes stress or anxiety’, and ‘Thinking they should be more successful than they are’ were among the top causes.

“Money worries can make people feel really isolated, but a lot of people will experience money worries at some point in their lives,” Laura says. “You are not alone, and it’s important to know there’s support available to you. You’ll find lots of helpful tips on the Mental Health and Money Advice website.

“It can also help to open up to friends or family, perhaps out for a walk or over a cup of tea – this isn’t something you want to bring up just before you split the bill for dinner or find it’s your turn to get a round in. If you can share how you’re feeling, not only can they hopefully offer emotional support, but they can also suggest plans so you can spend time together without it costing the earth.”

Dealing with a financial shock

“Financial shocks will look different for all of us,” says Laura. “It might be a costly bill that you hadn’t budgeted for, an essential item that breaks and needs replacing, or a big life event like a relationship breakdown, loss of job, or having a baby.

“You might feel like avoiding thinking about the financial problems this might cause, but we’d always advise someone going through this kind of a shock to address the problem as soon as possible, so you can get help to create a plan which can help you manage the situation.”

In an ideal world, we’d have rainy-day savings to cover these sorts of things. But that’s not always possible for everyone, and when financial shocks crop up, it can be easy to go into panic mode. As tempting as it may be, try to stay away from high-interest payday loans or credit card debt, and instead have a look at your outgoings to see if there’s anything you’re overpaying on (for example, are you paying too much for your phone contract?), or areas you could cut back on until things even out a bit more.

“Also, if you feel comfortable doing so, you might find it helpful to open up to friends or family so that they can help to support you through it, and take the pressure off you from trying to keep up appearances – which won’t help your money situation or your mental health,” Laura adds.

Hard times

As many of us face a tight squeeze on our finances in the coming year, it’s important to be realistic about what’s ahead of us, and the ways in which we might have to adjust. But being realistic also means trying, as best we can, to let go of shame and stigma. Money matters are complex, and rely on many different factors, and so financial struggles are never a simple case of just ‘bad’ management.

And, one final reminder, you really don’t have to face money problems alone. Whether it’s reaching out to your support network, or organisations that can advise your next steps, help is free for the taking.

In practise

Laura Peters, head of mental health and money advice, Mental Health UK, shares the following tips:

"With the cost of living going up, lots of people are feeling worried about their money, and may also be experiencing low mood. Sometimes anxiety and low mood can get us into an avoidance cycle – where we try to avoid the problem, but this only increases our anxiety in the long-term. Completing a budget sheet will help you to get a better idea of your finances. Break it down into smaller tasks if it feels too daunting to start with.

"If you find that you have more going out than coming it, get free, independent advice from MoneyHelper. Find helpful exercises you can do with our mental health and money toolkit.

"If you feel worried almost all of the time, consider speaking to your GP, who might refer you for talking therapies, or prescribe your medication".


If you are struggling with stress due to financial worries, speak to an experienced, qualified therapist, or visit Counselling Directory.

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