An individual’s financial situation and mental health are strongly correlated, according to a recent study. Your financial situation is most likely to blame if you believe you may be going through mood swings or feel as though you are struggling emotionally.

An analysis of the findings of a rapid evidence review on the connection between money and mental health in the UK, funded by the Money and Pensions Service (MaPS), has been published by the Centre for Personal Financial Wellbeing at Aston University.

The rapid evidence review highlights the link between financial situations and mental health, specifically during the COVID-19 pandemic and the current cost of living crisis, and presents strong evidence of a relationship between individuals with mental health issues and financial hardships.

In 2020, half of those with mental health problems had a gross annual household income of £28,000 or less, compared to only one-third of those who did not. These individuals were more likely to work in low paying jobs and depend on employment support.

According to News Medical, the evidence also demonstrates the degree to which financial hardships can exacerbate mental health issues, as people who were dealing with financial hardships like debt were more likely to have suicidal thoughts or feelings.

The evidence also showed that in the UK, problems with mental health and finances have significantly gotten worse as a result of the pandemic and the rising cost of living.

During the pandemic, one in four people experienced their first mental health issue, and since 2018, the percentage of people reporting mental health issues has increased from 21% to 30%.

The review highlights the vulnerability of certain groups to mental health and financial challenges, with 77% reporting a significant impact on their mental health due to the cost of living. 

While women facing mental health challenges were likely to face financial difficulties, minority groups faced additional mental health burdens like trauma, grief, isolation, bullying, and racism.

Andy Lymer, Director of Aston Business School’s Centre for Personal Financial Wellbeing, highlights the complex cycle between mental health and financial challenges, where chronic stressors deplete psychological reserves, making it harder to overcome future challenges.

He said: “The widely held perception that financial difficulties stem from personal responsibility failure reinforces feelings of blame or inadequacy, adding to the stigma associated with both mental health and financial challenges.”

He added that this evidence review urges UK policymakers, researchers, and healthcare professionals to prioritise mental health and financial wellbeing, considering the link between money and mental health. 

He suggests that targeted interventions can alleviate burdens and improve overall wellbeing.

Senior research fellow in the Centre for Personal Financial Wellbeing at Aston Business School, who also co-authored the review, Dr Hayley James’ review reveals that mental health problems have been disproportionately affected by financial issues during and after the COVID-19 crisis. 

According to her, the team found that over half of UK adults experienced negative impacts on their mental health, particularly among those in debt.

“The report emphasises the urgent need for targeted support and interventions for the affected communities,” she said.