Friday HighlightAug 12 2022

Tackling financial stress before it manifests into ill-health

twitter-iconfacebook-iconlinkedin-iconmail-iconprint-icon
Search supported by
Tackling financial stress before it manifests into ill-health
56 per cent of UK adults said their finances are now the greatest cause of stress in their lives. (FT montage/Dreamstime)

With energy bills rising sharply, food costs continuing to soar and inflation hitting 9.4 per cent – its highest rate for 40 years – it is no surprise more people are finding themselves under significant financial stress.

Indeed, the vast majority (63 per cent) of workers have seen their financial situation deteriorate since the start of the year, according to Mintago’s recent survey of 1,024 UK adults in full-time employment. That number will only rise in the months to come. 

We cannot underestimate the knock-on effects of financial stress.

In fact, Mintago’s research showed that almost a third (32 per cent) of employees are struggling to complete day-to-day tasks because they were worried about their financial situation.

It underlines the well-established connection between one’s financial wellbeing and mental health.

This is perhaps best demonstrated by the fact 56 per cent of UK adults said their finances are now the greatest cause of stress in their lives, while more than a fifth (23 per cent) admitted to losing sleep as a result of financial anxieties.

The causes of financial stress

That our finances are such a significant source of stress may not surprise many. But knowing what exactly causes financial stress – beyond worries about having enough money – and how to combat these triggers is far more important. 

Firstly, a lack of understanding about one’s financial situation can create significant amounts of stress.

Half (51 per cent) of UK adults have not carried out a detailed audit of their finances recently, and the proverbial ‘head in the sand’ approach typically exacerbates feelings of stress, fuelling concerns and uncertainties about how to counter potential issues. 

Tackling financial stress requires a considered, multi-faceted approach.

Similarly, as a third (33 per cent) of respondents to Mintago’s aforementioned survey said they do not know where to find help with managing their finances.

This is a common, longstanding issue: many people feel isolated in their struggles and have no one to talk to. As such, financial worries can very easily mature into stress, anxiety and other mental health issues.

As a result of this lack of understanding and support, many people will begin to feel like they have lost control of their finances.

Indeed, with 70 per cent of people worried their financial situation is going to deteriorate further in the future, and 82 per cent admitting that they are financially unprepared if their employment status were to suddenly change, it is clear that action needs to be taken before this issue becomes more acute. 

Addressing the causes of financial stress

Tackling financial stress requires a considered, multi-faceted approach.

For example, only two-fifths (41 per cent) of UK adults have spoken to their friends, family or colleagues about their money worries in 2022.

Clearly, money remains a taboo subject in many households, workplaces and social circles. So, more direct engagement is required to ensure that more open conversations occur regarding financial wellbeing. 

It is hard to imagine a more difficult economic landscape for individuals to be navigating than the one we are currently facing.

While discussing financial concerns with a confidant might not immediately alleviate stress, being able to talk through any issues and developing a plan will almost certainly help individuals feel more in control.

It is often the all-important first step to tackling issues; telling a manager, adviser or close contact that they are worried about being able to pay bills or afford day-to-day essentials can feel like lifting a heavy weight off the shoulders, and it can get the ball rolling on how to address the problem.

Coming back to the earlier statistic, carrying out an audit of one’s finances will also help to alleviate stress.

If individuals have a better idea of their overall financial situation, then they will be better equipped to make more informed decisions about their money.

Being able to track outgoings and incomings, first and foremost, can help individuals budget for their short, medium and long-term financial obligations.

Again, in doing so they will feel like they are in greater control of their finances and can respond to future financial difficulties with greater ease, hopefully reducing stress further.

Finally, with only 23 per cent of UK adults using online support or debt charities to help manage their financial concerns, people need to be more aware of where they can turn for help.

Stress often results from lacking or losing control.

For instance, some platforms like Mintago allow individuals to see lots of financial information – such as their pensions and various banking accounts – in one place, as well as providing financial guidance to those who need it.

As a result, individuals will increase their overall understanding of their finances and can make better informed decisions about their money.

Of course, it is hard to imagine a more difficult economic landscape for individuals to be navigating than the one we are currently facing. However, refusing to address financial concerns can result in difficulties in other aspects of people’s lives. So, tackling money issues head on will help individuals to reduce stress and maintain positive mental health.

Giving people back control

The key word that keeps emerging is control. Stress often results from lacking or losing control. Of course, each individual must take responsibility for their own finances, but more support is needed to empower people to keep in control of their finances.

Employers must directly engage with their teams, creating safe spaces for them to discuss concerns and seek support. Financial advisers can support by helping assess clients’ finances and providing additional services, such as tracking down lost pension pots.

There are ways in which financial stress can be addressed and prevented.

There are £20bn worth of unclaimed pensions in the UK – the average unclaimed pot is worth around £13,000. Never have these lost pension savings been more needed, and there are platforms that allow financial advisers to add pension hunting as a value-added service to their clients, also enabling them to advise on what action to take once new pension pots are uncovered.  

Ultimately, there are ways in which financial stress can be addressed and prevented.

Often, asking for help, using financial wellbeing platforms or simply mulling over any issues with another human being can make a world of difference.

As such, if people can take such action, people can retake control of their finances, improve their financial wellbeing and protect their mental health, even in this harsh economic climate.

Chieu Cao is chief executive of Mintago