Covid’s impact on our mental health: how you can cope financially

With far more people experiencing some form of depression now than before the pandemic, Katie Binns shares some great advice for making better decisions about your money.

One in six people in Britain experienced depression over the summer, according to latest research by the Office for National Statistics (ONS). This represents a slight fall since January to March 2021 (one in five) but is still above the pre-pandemic level of one in 10. 

Shockingly, younger adults and women were more likely to experience some form of depression, with one in three women aged 16-29 and a fifth of men the same age reporting symptoms between July 21 and August 15.

The research found that of adults experiencing some form of depression, almost three-quarters (74%) reported that the coronavirus pandemic was affecting their well-being.

Unsurprisingly, alongside young adults, those who were disabled, clinically extremely vulnerable, unemployed or unable to afford an unexpected expense were more likely to experience depression.

How can you cope with money worries and build resilience? 

Money worries and poor mental health go hand in hand. At a time when household finances are being squeezed by rising food and energy costs and taxes, the general outlook for many is not encouraging.

If you are struggling with debt, practical and emotional support is essential - and available for free. StepChange and the National Debtline provide confidential advice to anyone worried about debt, while Turn2us helps you access state benefits and charitable grants if you are in financial hardship.

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If you have managed to save over the last 18 months thanks to cutting back on going out and commuting, keep putting money by if possible. 

Investing offers protection against rising inflation and living costs. If you have spare cash in an account that pays a paltry interest rate and can stay invested for the next five years, consider investing it. Research shows that investing has been delivering higher returns than cash deposits for well over a century.

And if you invest in the stock market via small amounts rather than a big lump sum in one go – regular investing - you lower the risk of getting badly burned if shares suddenly fall. The end of business and travel restrictions means share prices, some still battered by the pandemic, now have a chance to recover, meaning there is an opportunity for investors - but only if you can afford it.

While many American tech stocks have risen sharply following the pandemic, there are lots of UK stocks still playing catch-up with international peers.

Beyond this, reassess your priorities. While you may have planned to throw a big wedding or take a trip of a lifetime, now may be the time to postpone such plans to focus on protecting - or increasing - your income.

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Money worries affect your sleep and your physical and mental health, which in turn can lead you to make worse decisions with your money. Be kind to yourself; practise some self-care, whatever that looks like to you.

Remember that money and wealth are different. Wealth can be found in all sorts of places such as your close relationships, looser social connections, hobbies that bring you pleasure, access to green spaces and learning, a job that brings you satisfaction, your health and home. Leaning on these sources of wealth when you have less money can help you stay positive. So give time to the relationships and pastimes that bring you joy.