By Shilpa Ganatra
It’s no secret that money and mental health are inextricably linked 1. Money can be a cause, symptom, or knock-on effect of mental health issues – worth remembering when one in four people will experience a period of mental illness at some point 2.
But how exactly does mental health impact money matters? Sarah Murphy, Associate Director for Advice, Information and Training at Rethink Mental Illness, explains the common scenarios she’s seen in her 15 years working in the field.
“You could be ticking along in life and then something unexpected happens, like the death of a loved one, job loss or splitting from your partner,” she says.
“We call that income shock: you have the same bills to pay but suddenly with less income. If you can’t afford every bill, it becomes more stressful when people chase you for money. It's shocking how people can spiral quite quickly from having that income shock to struggling with their money, and with their mental health.
“Stress in itself isn't a mental illness, but prolonged stress can certainly trigger illnesses like anxiety and depression, could even potentially trigger underlying serious mental illnesses.”
Some mental illnesses make it harder to look after your money. It could be post-natal depression, where money management falls to the wayside just as outgoings rise, or illnesses that make financial decisions appear confusing.
“Schizophrenia is a condition which is often quite misunderstood, and there are certain symptoms where the decision-making process gets very muddled,” adds Sarah, who’s also part of Mental Health and Money Advice. “We’re talking seemingly simple decisions like ‘if I spend this £5 that I've got today, that means I'm not going to have £5 tomorrow’.”
There’s also bipolar disorder, where the sufferer goes through manic and depressive episodes. The manic phases can be tricky when it comes to money management, as it’s about impulsiveness.
When you’re manic, what you want is what you must have – there’s no reasoning with your brain.
“I knew someone who, when they were in their manic phase, believed they were Jesus and took all their money out and handed it out on the street, which left them with nothing,” says Sarah. “I've also known people who bought sports cars and had absolutely no desire or means for a sports car.”
That’s all too familiar to Dee Watkins, 52, who was diagnosed as bipolar when she was 25. Her manic episodes weren’t as extreme, but a combination of income shock and the existing bipolar disorder caused her to rack up debts of £35,000 in 2011.
“When you’re manic, what you want is what you must have – there’s no reasoning with your brain," she tells us.
“I bought designer clothes, handbags… nothing I actually needed. I could just about make the books balance when I was working, but when mobility issues stopped me working, I kept spending but I couldn’t pay my credit card bills.”
At the time, the only organisation available to Dee was the Citizen’s Advice Bureau, which helped her apply for the correct benefits and enter a debt management programme, where she committed to low monthly payments. Now, there’s a range of places to get help, and it’s better woven into the system.
Seek help with debt
Jane Tully, Director of External Affairs at the Money Advice Trust, the charity that runs National Debtline, has one major piece of advice: “I would encourage anyone worried about money to seek free, independent debt advice as soon as possible. Four in 10 of the people we help wait more than a year before contacting us at the National Debtline, during which time their situation can worsen,” she explains.
Banks have a duty of care to their vulnerable customers.
Depending on the situation, speaking to your GP, family or employer as early as possible can also make a difference. Financial institutions should be seen as approachable too. Many insurers, including us, are now trained to speak to people with mental health issues sensitively.
Dee explains that back when she was going through tough times, her illness was made worse by “sleepless nights, a lot of telephone calls, scary brown envelopes”, but now, banks have a duty of care to their vulnerable customers.
“Creditors have to comply with the law, which may include making reasonable adjustments based on your circumstances,” says Jane. “This could include putting debt collection activity on hold so that you’ve got extra time to gather information. They could also agree to contact you at set times only.”
The government are currently thinking about strengthening these laws , which is a sign that these positive changes are likely to continue.
What other actions can an affected individual take? Even before seeking advice, Sarah from Rethink Mental Illness suggests that working out the money coming in and going out is helpful – that way, the extent of the problem will be a little clearer.
Health and income protection
There are preventative measures too. At Aviva, people unable to work because of mental health issues are the largest group to claim income protection 3. The cover means they’re still guaranteed money coming in as they recover, and that’s useful support when mental health is one of the leading causes of absence at work in the UK 4.
When it comes to treatment, mental health issues are covered with upgraded medical cover, so cost won’t be a concern for those looking to get better. We also have a free 24-hour stress helpline as part of its standard health insurance.
To control spending, little hacks can go a long way. Dee explains that while she’s had no choice but to rein in her finances as she can no longer get credit, her friends help her with money management. “When I've got a spare £20 or £30, I give it to a close friend to keep, and she'll only give it to me in emergencies. But, I know everybody's not in a situation to do that.”
If not, Sarah has a more formal solution, “You can use what we call jam jar accounts, where you have different accounts set up. One is where you keep all the money for essential things – it’s where the direct debits come out of and the bills are paid, and you can’t touch it. Then there’s a separate bank account for spending – just make sure there’s no overdraft on it.”
Today, Dee lives a much happier life on a houseboat in Gloucestershire, which she bought outright with some inheritance money.
“I still can’t keep money or save it, but I’ve turned a corner,” she says. “I don’t have the means to excessively spend, and my lifestyle has changed. I used to live in an affluent town with lots of posh shops, but now the nearest shop is 15 minutes away, and it definitely doesn’t sell designer goods. Also, I started new medication two years ago and that’s made a significant difference to my bipolar."
“Now I live a modest life on a houseboat with my cats and I’m much happier. I live within my means, and the only luxury I’ll allow myself is a new lipstick now and then. I reckon that’s allowed!”