This article is one of four published to mark the Money and Pensions Service’s Talk Money Week 2023. (Updated in October 2024.) Its theme is Do One Thing and Clean Slate* is calling on all stakeholders to encourage people in financial hardship to take the Quids in! Future-Proof Finance Quiz. (A handy shortlink is available: qimag.uk/quiz). This plain English survey asks 25 simple yes/no questions to generate a customised action plan with ways for participants to reduce their spending, increase their income, reduce their borrowing and increase their savings.

Money and wellbeing

Improving the financial wellbeing of people on low incomes not only builds economic stability but also shores up mental and general wellbeing. The link between financial stress and mental health is well established, making addressing financial challenges a pre-requisite if we are to combat health inequalities. This article explores how providing financial guidance, enhancing financial literacy and driving up financial wellbeing among low-income individuals can profoundly impact their mental and general wellbeing, potentially staving off thoughts of suicide and despair. Efforts to ‘level up’ are, we argue, compromised without these essential ingredients.

Over time, this became hope… a belief that help was out there

During the pandemic, one commissioner asked us to deliver money guidance to benefit claimants in crisis. A 12-week programme of financial triage and coaching triggered average gains of around £2,500. Our active listening process engendered a trusting rapport and participants who previously mentioned suicidal thoughts began to think about the future, notably talking about planting gardens and looking forward to things in the future. Over time, this became hope, a belief that help was out there, and a sense of agency that in turn led to plans to find employment.

1. Being better off means less financial anxiety and access to healthier choices
   Limited budgets often exacerbate mental health conditions or trigger new ones. According to the Mental Health Foundation, financial stress can contribute to anxiety, depression, and other mental health issues. People are ground down by continuously having to worry about being able to afford the basics like feeding the family, the cost of running a home and travelling to important appointments. In its 2023 Cost Of Living Survey, Quids in! found 53 per cent of low-income households felt frightened, anxious or depressed on account of money worries. Clean Slate finds guidance leading to income maximisation and reduced expenditure, a savings buffer and less reliance on credit, positively impacts wellbeing. With more money, choices like more nutritious meals, purchasing supplements or equipment, or even attending appointments, become viable.
2. Regaining control
   Tackling financial uncertainty by exploring money management tips and habits puts people back in control, creates a sense of security and alleviates anxiety and stress. Dr Brad Klontz, a financial psychologist, noted: “When individuals gain control over their financial situation, they experience reduced stress and anxiety, leading to a positive impact on their mental health.” This is echoed by Dr Sonya Britt-Lutter, a certified financial planner, who said: “Understanding finances provides a sense of empowerment and control, crucial elements for overall wellbeing and mental health.” Clean Slate finds that even when participants find few options to increase their bottom line, just knowing they have looked in all the right places is reassuring.
   
   With space to breathe, created by taking stock of their situation and their options, and a renewed sense of agency, people are more able and likely to access support with other areas of their lives, including health. Financial literacy enhances decision-making abilities. As the help available becomes apparent, hope begins to emerge. Learning to take stock, prioritise and take action for themselves, participants in money guidance are empowered to make informed choices about their finances, health, and lifestyle. According to a study published in the Journal of Consumer Affairs, financially literate individuals are more likely to engage in positive health behaviours. It is also possible to make practical links between individuals’ finances and expensive, negative habits like smoking. It can open up discussions about long and short-term choices like choosing cheap ultra-processed foods at the expense of long-term health, their ability to earn and their quality of life.

3. More money reduces isolation and improves relationships
   Financial difficulties strain relationships, contributing to emotional distress and negatively impacting mental health. Learning to navigate financial challenges reduces relationship stress and ultimately improves mental wellbeing. Dr Amanda Robson, a relationship expert, emphasises: “A stable financial foundation contributes to healthier relationships and a more positive outlook on life.” Quids In’s Cost of Living Survey found money worries led 21 per cent of people on low income to have arguments with friends and relatives. Financial guidance can enable people to meet their basic needs and pursue fulfilling activities. Dr Chris Jones, a mental health advocate, notes: “Financial stability creates a conducive environment for individuals to focus on personal growth and happiness, improving their overall quality of life.” Financial difficulties often lead to social isolation and feelings of exclusion. Quids In’s Cost of Living Survey found money worries meant 56 per cent of people on low incomes missed out on events and occasions. Removing a sense of stigma around money helps individuals reintegrate into social networks.
4. Compound benefits: Employment
   For those who are able to work, employment is not only a source of income but also provides a sense of purpose, community and structure to daily life. The Mental Health Foundation notes: “Stable employment can significantly impact mental health, fostering a sense of self-worth and social inclusion.” Clean Slate finds many who feel the value of financial gains and come to recognise that there is help out there go on to consider employment as just another step towards financial independence. But it brings additional benefits to their wellbeing too. As individuals gain control over their financial situation and develop employment-related skills, their self-esteem and confidence levels rise, positively impacting their mental health.
5. All the above can help to stave off feelings of despair and suicidal thoughts
   Suicide prevention involves addressing various factors, including financial stress, according to the World Health Organisation. Financial instability can exacerbate feelings of hopelessness and despair. Clean Slate’s financial guidance service nurtures trust through active listening and sources ‘quick wins’ wherever possible. People struggling with financial challenges say they value the support network and start to find hope. Participants with suicidal thoughts start talking about planting gardens (expecting to see them grow) and finding employment. Individuals develop coping skills and resilience. Dr Richard McKeon, the Chief of the Suicide Prevention Branch at the Substance Abuse and Mental Health Services Administration in the US, says: “Coping strategies acquired through financial guidance can build an individual’s capacity to deal with crises and adversity.”

Empowering individuals on low incomes through financial guidance and coaching is a crucial step towards improving their mental and general wellbeing. By reducing financial stress, fostering a sense of security and control, enhancing decision-making abilities, and improving relationships, financial literacy acts as a catalyst for positive change. Ultimately, this approach can contribute to suicide prevention by mitigating the factors that exacerbate mental health issues and despair, leading to a healthier, more resilient society. The practical benefits of healthier budgets immediately make healthier lifestyles achievable that, combined with a more positive outlook, self-esteem and a sense of agency, are harder to resist.

Do one thing

*Clean Slate helps people on low incomes become better off. We do this by helping them re-organise their money and maximise their income, find work or better work, and get online. Quids in! is our money guidance initiative and in 2024, its materials – magazines, guides, personal finance emails and interactive tools – reached 175,000 people on low incomes across all nations of the UK. People we engaged one to one enjoyed financial gains on average of £1,328.

Image: Centre for Ageing Better