Paul Dolan, Professor of Behavioural Science at the London School of Economics and Political Science, discusses the relationship between money and mental well-being alongside the current post-pandemic cost of living crisis.
The word unprecedented has been used an unprecedented number of times over the last few years, especially in relation to the pandemic. We are currently facing an unprecedented cost of living crisis. As the money saving expert Martin Lewis CBE has said, “We are in a crisis, the health panic is being followed by an economic panic.”
Much of this has to do with the huge rise in energy costs, which not only affects home energy bills but hits businesses too, who then must put up their own prices to cover the additional costs, fueling inflation and a cost of living crisis. We are currently seeing inflation hit 10% in the UK with wages increasing at around half this. This represents a real wage cut for most workers. Those out of work, on benefits and pensioners are hit even harder as a greater proportion of their income is spent on energy and basic goods, such as food.
This crisis isn’t just impacting our pockets. It is going to have a significant impact on our mental health too. The impact of financial hardship is likely to increase debt as people struggle to cover basic living costs. Twice as many people in debt have mental health problems (two in five compared to one in five for those not in debt). Some of this difference will be caused by having money worries. Thinking about how to pay the bills etc. is very taxing and causes significant misery. Not knowing what is happening to your finances can cause uncertainty, which is itself associated with mental health problems.
Issues with money and mental health can create a vicious cycle where your mental state negatively impacts your ability to manage your money effectively, fueling the feeling that you can’t keep track of your finances. Financial well-being has a massive impact on mental health, so it’s not surprising that this crisis will keep many people up at night.
One way to improve financial well-being is to try and regain a sense of control over your finances. Here are two simple financial tips that can help improve your wellbeing during
As we enter winter, we may see the onset of a mental health crisis. We may not be able to do much to end the war in Ukraine, but we can mitigate some of the impacts on our own mental health. Having a grasp over our finances will reduce the stress and anxiety associated with increasing prices. Hopefully, amongst the disorder of the world, better financial management can assist in creating some order in our lives.
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