A major study by the new Money and Mental Health Policy Institute has found more than 70% of those with mental health problems believe their condition has hit their finances – and almost 60% have taken on additional borrowing as a result.
The Money and Mental Health Policy Institute, set up by MoneySavingExpert.com founder Martin Lewis earlier this year, aims to tackle the toxic relationship between financial difficulties and mental health problems.
Over 5,000 people with mental health problems were surveyed for the institute's flagship Money on your Mind report, published today, making it the largest study of its kind. Among its key findings:
- 72% of those surveyed said that their mental health problems have made their financial situation worse, and that's not just as a result of having less money to spend.
- 93% say they spend more when they're unwell.
- 92% find it harder to make financial decisions.
- 74% put off paying bills when they're unwell, and 71% avoid dealing with creditors.
- 59% have taken out a loan that they wouldn't otherwise have done.
- Of those who have taken out new credit in the last year, 38% said their mental health at the time left them unable to remember what they had been told about the loan.
- 53% have ended up seriously behind on payments for at least one bill or loan agreement.
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'Mental health problems can devastate finances'
Martin says: "We know financial difficulties can have a serious detrimental impact on mental health, but this report now shows conclusively that it goes both ways – mental health problems can devastate our finances too.
"It's clear from the study that people with mental health problems are spending more when they are unwell, finding it harder to make financial decisions and in the worst cases, actually taking on new credit that they otherwise wouldn't have done.
"This is extremely worrying. Our vision is of a world where mental health problems don't lead to financial difficulty, and where problems with money can be managed without long-term impacts on our mental health.
"To get there, we need the financial services industry, health and policymakers to take this issue as seriously as we do with practical solutions. This is my personal call-to-arms for them to please join us and fix this toxic relationship for good."
How was the survey carried out?
The Money and Mental Health Policy Institute conducted an online survey over five weeks in March and April, receiving 5,413 responses – all from people who self-identified as having experienced a mental health problem.
What is the Money and Mental Health Institute?
Launched in March this year and funded by a donation of at least £2 million from Martin, the Money and Mental Health Institute is dedicated to researching and finding solutions to the link between mental illness and money problems.
Its mission is to conduct research and develop policies for banks, lenders, regulators, the health service and Government to help people with mental health problems protect themselves from financial difficulties and get out of debt.
Polly Mackenzie, the institute's director, says today's study offers "unprecedented insight".
"Some progress has been made in recent years to improve how people with mental health problems are treated once they are in debt, but little attention has been given to preventing this happening in the first place," she adds.
"The financial services and retail industries need to recognise that a quarter of their consumers have a mental health problem every year – and they may need extra support or protection to stay financially healthy. People with mental health problems do not deserve to be written off to a life of financial difficulty."
For detailed help and tips, see Martin's free Mental Health & Debt guide. In brief:
- Speak to a non-profit debt help agency. If you're in debt crisis, Citizens Advice, StepChange, National Debtline and Christians Against Poverty can help.
- Can you cut the interest rate? The lower the interest, the more of your repayments clear the actual debt itself. For example, balance transfer credit cards which can shift debt to 0% for up to 40 months may help.
- Consider informing your bank. Once a lender is aware that a customer has a mental health condition, it has to make adjustments. The Lending Code, a voluntary code of practice which sets standards for financial institutions, says banks should consider keeping a debt in-house rather than passing it to debt collectors, and they should make court action a last resort. Telling your bank is a decision to discuss carefully with a caseworker or debt counsellor though.
- You can't be discriminated against for your mental health. In other words, if the fact you've declared your illness to a bank affects your ability to get other products with it, such as a mortgage, this would likely breach the Equality Act.
- Know the early warning signs. Even when people plunge into debt, depression doesn't bite overnight. Dr Rob Waller, consultant psychiatrist and director of mental health organisation Mind and Soul, advises working out your warning signs, such as tension headaches, arguments at work, back pain or bad skin. This is the time to take steps to keep on top of debt and depression.
- Banking control if you have bipolar disorder. A few banks have minor procedures to allow you to register your mental health issues and stop your overdraft going beyond a certain amount. Bipolar disorder sufferers, who may be prone to overspending during a manic episode, could consider discussing this with their bank (it's worth chatting through with a debt counsellor or caseworker first).
- Consider adding a note on your credit file. If you overspend when unwell, you can volunteer to add information on mental health problems to your credit files in what's called a 'notice of correction'. This alerts potential lenders so they don't lend further credit. This can be added or removed whenever you want, but it may stop you borrowing when you're well.
- Consider paying bills by direct debit. These automatic payments can help simplify your finances, helping you to budget and ensure bills get paid when you're ill. But you should keep checking your bank statements and ensure you have the cash. Watch out though – while direct debits for gas and electricity bills, home phone and broadband can save you money, home and car insurers charge you interest on monthly payment schemes that can be catastrophic.
- Prioritise heating and eating. Sticking to the right order of repayments is particularly important for people with mental health issues. So prioritise 'heating and eating', not just the people who harass you the hardest.
- There's no such thing as an unsolvable debt. For as long as Martin's been doing this, he says he's never once once seen a debt case that isn't solvable. It may not be easy, it may not be quick, but it's always doable. If you start to sort it out, it does get better.
'Loans felt like they were free'
A number of people suffering with mental health and financial problems have shared their stories with the Money and Mental Health Policy Institute.
Paul suffers from mental health problems including bipolar disorder, which began after he was sexually abused as a child. He says these problems have always affected his finances, leading him to borrow money recklessly. Ultimately he racked up £60,000 in debt from loans, overdrafts and credit cards. He says he only survived because of the support his parents gave him.
When Paul went to university he was overwhelmed by suddenly having easy access to money. He said his student loan felt like it was free, so he would spend it on things he didn't need without thinking about his living costs.
After he'd maxed out his overdraft, his bank called and offered him a loan, which he accepted without thinking about it. When the loan ran out, he took out credit cards, which he used to buy expensive cars, luxury holidays and fancy clothes when he experienced manic episodes.
He says his mental illness didn't just affect his judgement – it also prevented him from earning money. When depressed he was unable to leave the house, and the medication he was on made his mind cloudy. Being pursued by creditors made his illness worse. He says asking him to work at this time would have been like asking someone with broken legs to run.
Now 36, Paul is training as a therapist, is working and paying back his debts. He buys everything on debit cards so he can scrutinise his bank statements and keep track of his spending. But he wishes there was more of an 'early warning' system in place at his bank, so it could alert him and a nominated person when his spending patterns become erratic.
Mark, also 36, used to work but is now unemployed. He suffers from anxiety and depression, and knows working too hard can make it worse.
He receives disability benefits, which mean he can just about get by, but he says he can't plan for the future or manage his money effectively. He has only avoided falling into debt by moving in with his parents.
Mark would like to work, live more independently, start a relationship and have a family, but says it's hard to break the interconnected cycles of poverty and poor mental health.