In recent years, many individuals and families have faced growing financial strain. Rising housing prices, increased grocery bills, soaring energy costs — it’s no wonder the cost of living crisis has become one of the defining challenges of our time. But while much of the focus is understandably on bank accounts and budgets, there's another crucial piece of the puzzle we must not overlook: the impact on our mental health.
How Financial Stress Affects Our Wellbeing
It’s important to acknowledge that worrying about money isn’t just “normal stress.” Financial strain has been consistently linked to a higher risk of developing a range of mental health difficulties, including:
Anxiety: Constant worry about how to cover bills, rent, or childcare can keep the nervous system in a heightened state of alert, leading to insomnia, panic symptoms, and difficulty concentrating.
Depression: Feelings of hopelessness, guilt, and worthlessness often arise when financial goals feel out of reach, or when individuals feel trapped in circumstances outside their control.
Relationship strain: Financial worries can increase conflict within families, impact parenting capacity, and place strain on friendships and romantic relationships.
Shame and isolation: Many people feel embarrassed to talk about money struggles, leading them to withdraw socially — exactly when connection would be most beneficial.
A UK study by the Money and Mental Health Policy Institute found that nearly half of adults with debt also experience mental health problems, highlighting how closely financial wellbeing and emotional wellbeing are intertwined.
It’s Not Just About Poverty — It’s About Pressure
Interestingly, research shows that financial stress impacts people across income levels. It’s not solely about having low income — it's about financial insecurity, uncertainty, and pressure.
For example, someone earning an above-average salary may still feel significant distress if they are weighed down by mortgage repayments, childcare costs, and rising living expenses without a safety net. In short: It's about how precarious financial life feels, not just how much you earn.
Who Is Most at Risk?
While anyone can feel the psychological effects of financial strain, certain groups are often more vulnerable:
Young adults entering a challenging housing and employment market
Single parents, especially women, facing increased living costs with limited income
Casual, freelance, or gig economy workers with unpredictable earnings
People with pre-existing mental health conditions, who may already find day-to-day management challenging
The intersection between money and mental health can quickly become a vicious cycle: financial stress worsens mental health, which in turn makes managing money harder, leading to more stress.
How Can We Protect Our Mental Health During Financial Stress?
While we can’t individually change economic systems, there are still steps we can take to support our mental wellbeing:
Acknowledge and validate your feelings.
Financial stress is real stress. Feeling anxious or upset doesn’t mean you’re failing — it means you’re human.
Stay connected.
Talk to trusted friends, family members, or a therapist. Connection reduces isolation and helps counter the shame that often accompanies financial strain.
Access practical support.
Reach out for advice from reputable services like the National Debt Helpline or local community organisations. A small step like creating a realistic budget with professional help can sometimes ease overwhelming feelings.
Prioritise basic self-care.
It can feel counterintuitive, but keeping up small routines — like walking, sleeping regularly, or eating as well as circumstances allow — protects your resilience.
Challenge the stigma.
Remember: your worth is not determined by your bank balance. Needing help — financial or emotional — is not a moral failing.
The cost of living crisis isn’t just about economics — it’s about human wellbeing. Financial stress touches every aspect of our lives, from our mental health to our relationships to our sense of hope for the future.
In difficult times, compassion — both for ourselves and for one another — is more important than ever. Whether through accessing support, staying connected, or simply reminding ourselves that we are not alone, every small act of care matters. If you are feeling overwhelmed, remember: help is available, and things can improve.
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