Financial Strain Amplifying Mental Health Challenges Across The UK

Increasingly, mental health struggles can be linked to financial difficultly and debt. With Mental Health Awareness Week beginning, Equifax UK shares advice on getting on top of your finances, whilst managing your mental health.

Increasing financial strain due to the cost-of-living crisis is pushing more consumers towards credit reliance, and ongoing pressure is taking its toll on the mental health of individuals nationwide.

Analysis from Equifax UK in its latest Financial Health Report highlights a surge in credit utilisation and the adoption of Buy Now Pay Later schemes, with credit card debt alone rising by 9.7% last year to reach £67.4 billion by year-end. This comes alongside a concerning increase in active cards exceeding their credit limits,1 as well as the depletion of consumers’ savings buffers2.

Beyond the immediate financial impacts, growing debt levels can lead to emotional distress and diminished physical wellbeing. Equifax research reveals that consumers facing rising debt repayments feel anxious (41%), depressed (33%) and frustrated (32%)3 – while over half (53%) of Brits have said they felt anxious about rising interest rates affecting their mortgages.4

Acknowledging the challenges posed by debt, recent findings emphasise a growing preference for online debt management solutions5, with digital platforms offering added convenience and accessibility to help alleviate the stress associated with financial management.

Financial pressures can have an adverse impact on the nation’s mental health. As the cost-of-living crisis continues, it’s important that lenders maintain an accurate view of customer affordability to boost financial inclusion and help consumers steer clear of unmanageable debts.

For those experiencing financial difficulty, a number of steps can help with getting back on track – all the way from reviewing monthly budgets, to seeking out free expert guidance. Keeping on top of debt can be a particular strain but encouragingly, new digital pathways are boosting convenience and flexibility with making payments, creating affordable repayment plans, and accessing support – leading to better outcomes all round.

Top tips from Equifax UK to alleviate stress and keep on top of finances:

Take advantage of your credit report

To minimise stress, checking your credit reports can help you better understand your credit history and the status of your accounts. You can receive multiple Equifax credit reports with a free myEquifax account.

Budget wisely

Keeping track of your spending and monthly habits can make it easier to manage finances. Budgeting can be an effective way to manage debt or even stop it from happening, and doing this can help you feel more in control. It might also help you identify whether you can save a bit of money, perhaps for covering unexpected life challenges, such as replacing an expensive household item. Consider creating categories for what you spend each month such as housing, groceries, transportation, and personal expenses. You could also include another category for the minimum amount that you owe on your debts.

Online tools such as the Money Advice Service’s Money Helper can also provide support for those struggling.

Speak out

An effective way to alleviate mental health struggles is to have a community. Talking to your family and friends is a great way to get extra support and find a solution. There are also a number of helplines and services available which offer free expert guidance to anyone struggling, such as Money and Mental Health, the National Debtline and StepChange. It’s important to share when you’re struggling and not face financial difficulty alone.

Take an honest look at your spending and debt

Putting a halt on items which may cost you extra in the long term such as holidays, a new phone or weekly shopping trips could help with your monthly budget and allow you to save for emergencies and pay off debts more quickly. Review each of the debts you owe, including the interest rates and any history of late payments. Then make a list of how much you owe on each debt and when each minimum payment is due, to help structure your repayment process.

Be kind to yourself

Money problems can feel all encompassing, so self-compassion is key for mental wellbeing. If you’re struggling, sometimes it helps to take a step back to assess your situation and realise that some things might be out of your control. By doing this, and establishing good habits, you will find it easier to take control of your money and make positive changes.

For more information and to download the Equifax 2024 Financial Health Report click here