Stop Financial Stress from Ruining Your Well-being

From March 18th to 24th, debt advice charity StepChange hosts Debt Awareness Week (DAW), which aims to highlight the importance of financial well-being. Yet, for many, managing finances can be a constant source of stress. This stress can significantly impact mental health, creating a vicious cycle that can be difficult to escape.

This article explores this connection and offers practical strategies to manage both financial stress and mental health.

The lived experience of financial difficulty in the UK is far from uncommon. A recent survey by Money and Mental Health found that:

“86% of respondents to a Money and Mental Health survey of nearly 5,500 people with experience of mental health problems said that their financial situation had made their mental health problems worse.”

These issues stem from various sources, including debt, job insecurity, and the rising cost of living, which puts a strain on household budgets. And these financial burdens can have a profound impact on mental well-being.

Studies have shown a significant correlation between financial problems and mental health issues. Another finding from the Money and Mental Health survey revealed that:

“People experiencing mental health problems are three and a half times more likely to be in problem debt than people without mental health problems.”

The Impact of Financial Stress on Mental Health

The constant worry about money can take a significant toll on mental health. Financial stress can manifest in various ways, including:

  • Anxiety: The constant pressure to pay bills and meet financial obligations can lead to chronic anxiety. Everyday tasks can become overwhelming, and the future may seem uncertain.
  • Depression: Feeling trapped in a cycle of debt and unable to see a way out can contribute to feelings of hopelessness and helplessness, potentially leading to depression and thoughts of suicide.
  • Sleep problems: Financial worries can make it difficult to relax and fall asleep, leading to fatigue and difficulty concentrating during the day.
  • Strained relationships: Financial stress can create tension and conflict within relationships, impacting communication and emotional well-being.

These mental health challenges can, in turn, make it harder to manage finances effectively. Depression can lead to a lack of motivation, making it difficult to stick to a budget or seek employment opportunities. Sleep problems can impair judgment and decision-making, potentially leading to impulsive spending.

Common Sources of Financial Stress

Several factors commonly contribute to financial stress in the UK. Debt, a major concern for many, can take various forms:

  • Student loans: The burden of student loan debt can weigh heavily on graduates, impacting their ability to save for a mortgage or other financial goals.
  • Credit card debt: High-interest credit card debt can quickly spiral out of control, leading to significant financial strain.
  • Mortgages: While homeownership is a dream for many, high mortgage payments can leave little room for error in household budgets.

Beyond debt, several other factors contribute to financial stress:

  • Job insecurity: The fear of losing one's job or facing volatile income can create significant anxiety.
  • Rising cost of living: Increases in essential expenses like housing, food, and energy bills can make it challenging to make ends meet.
  • Unexpected expenses: Unexpected events like car repairs can throw even a well-managed budget off track.
  • Low income: For individuals and families on low incomes, even basic necessities can feel out of reach.

Strategies for Managing Financial Stress and Debt

The good news is that there are positive steps you can take to manage financial stress and debt:

Creating a Budget and Tracking Spending

Knowing where your money goes is crucial. Popular budgeting methods like the 50/30/20 rule (allocating 50% to needs, 30% to wants, and 20% to savings and debt repayment) can help you plan your spending. Many budgeting apps and online tools can simplify tracking income and expenses.

Debt Management

If you are struggling with debt, there are strategies to help. The snowball method involves paying off the smallest debts first to gain momentum and a sense of accomplishment. The avalanche method prioritises debts with the highest interest rates to save money in the long run. Debt consolidation can simplify repayments by merging multiple debts into one loan. Remember, there is no shame in seeking professional help from a debt counsellor. They can provide personalised guidance and support to develop a debt repayment plan.

Furthermore, open communication with creditors about your financial situation can also be beneficial in exploring repayment options. The most important thing is that you take action. Creditors are not going to go away, and you can end up owing more and more depending on the creditor's method of reclaiming the money you owe.

Mental Health Practices for Financial Well-being

Financial stress can take its toll on mental health, but there are ways to cope:

  • Stress Management Techniques: Techniques like deep breathing, meditation, and regular exercise can help reduce anxiety and improve overall well-being.
  • Building Financial Literacy: Empower yourself by increasing your financial knowledge. Consider attending financial education workshops offered by employers or exploring free online courses provided by organisations like the Money Advice Service.
  • Setting Achievable Goals: Break down large financial goals like saving for a house into smaller, more manageable steps. Celebrating milestones along the way can boost motivation and keep you on track.
  • Self-Compassion: Financial difficulties are a common experience, and blaming yourself won't solve the problem. Practice self-compassion and focus on positive affirmations.

Supporting Mental Health in the Workplace

Employers can play a significant role in supporting employee mental health, especially during times of financial stress. Offering financial wellness programs or workshops can equip employees with budgeting and debt management skills. Furthermore, creating a supportive and understanding workplace culture that acknowledges the challenges employees may face can go a long way in reducing stress and fostering overall well-being.


Financial stress and mental health are intricately linked. However, by implementing proactive strategies to manage finances and prioritising mental well-being, you can break this cycle. Remember, resources are available to help. With the right tools and support, you can achieve financial security and good mental health.


Whether you need support with finances or your mental health, these services are free and some are even available 24/7.

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