The Link Between Debt & Mental Health

  • There is a correlation between debt problems and poor mental health
  • Over half of the UK adult population were in debt in 2020
  • In addition to mortgages, there is an increasing volume of people with personal debt including overdrafts, credit cards and loans

Debt Problem in the UK

It is no secret that the events of the coronavirus pandemic hit the economy hard. By the end of the 2020/2021 financial year, the public sector net debt was around £2,142 billion, equating to around £32,000 per person in the United Kingdom. 

When breaking this down at an individual level, research from revealed that 63% of the UK adult population (around 27 million) were in debt in 2020. 

According to data from December 2020, the average debt for UK males was £11,581; even higher than the average debt for women which was £7,016.

Around 9 million people across the UK reported personal debt anywhere between £2k – £10k whilst nearly a fifth of respondents revealed that their debt was in excess of £10K.

What Type of Debt Do Britons Have Most of?

Of this 27 million in debt, around 5 million owe more than £10k in credit and loans. According to the poll, the most common form of debt was credit card debt  – 38% of respondents reported that they had a balance payable.

The average credit card debt was just under £3k and men, on average, owed £300 more than women.

As well as credit card debt, a large proportion of the population have a mortgage debt, with the average UK mortgage debt of 2020 equating to £137,934. 

Causes of Personal Debt

When we think about debt, it is easy to think about excessive or extravagant spending. However 40% of those polled said that their personal debt was a result of normal living expenses. A further 19% and 18% claimed it was due to holidays and luxury items, respectively.

63% of 16-64 year olds living in the UK entered 2021 with a form of personal debt, excluding mortgages. These include bank overdrafts, credit cards and personal or payday loans.

Cause & Effect of Mental Health and Debt

There is a clear correlation between mental health and debt though what is less clear is the cause and the effect. Reports suggest that one in two adults with debts have a mental health problem. Additionally, one in four people with a mental health problem is also in debt.

It has been widely reported that people with mental health problems are also likely to be in financial trouble, for a range of reasons including cognitive issues, inability to work or lack of ability to track finances. The statistics suggest around one in five people with mental health problems are in problem debt. Similarly, people with mental health problems are over three times more likely to be in this kind of financial trouble than people without mental health problems.

Debt’s Negative Impact on Mental Health

However, what comes first? Those who find themselves in debt are more likely to suffer a negative impact on their mental health. According to a 2010 study by the Royal College of Psychiatrists, around half of UK adults in problem debt are also suffering from poor mental health. This label encompasses everything from diagnosed mental health disorders to cases of anxiety and low moods.

A wealth of research suggests that those in debt have higher rates of mental health problems than those who are free of debts. This includes anxiety, depression and even thoughts of suicide. Other common problems as a result of this are digestive problems, headaches, weight gain and disrupted sleep.

Where You Can Get Help

There are many resources available to help those struggling with their mental health as a result of financial problems. Shelter, the Debt Support Trust and Citizens Advice Bureau all offer a free advice service. National Debtline also offers free impartial advice to help get you out of debt, with the option of remaining anonymous.

Mind Charity can help people improve their mental health by offering specific practical tips on money management. Additionally, Step Change is a charity set up to help those in financial problems manage their finances and create a comprehensive debt management plan or individual voluntary arrangement.


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