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Finances and mental health during the COVID-19 pandemic

Woman working out finances
Published: April 2021

The second output from this research project is a briefing paper investigating how job and financial insecurity is related to mental distress amongst employees across the UK, and the impact the UK government’s furlough scheme has had on this.

 

Findings

  • There were six distinct financial experiences of the pandemic: people whose finances were largely unaffected (the “Undisrupted”); people whose finances improved (“Beneficiaries”); those who managed to cope with loss of income with little change to their lives (“Self-supporters”); people who used their savings to cover shortfalls (“Copers”); those who sought help from self-employment support schemes and Universal Credit to cover losses in income (“Helpseekers”); and people who faced multiple financial struggles who took advantage of many different types of non-work-based financial support (“Multi-strugglers”).
  • People’s financial experiences differed by age. People who were “Undisrupted” tended to be aged 60 or older and less reliant on work-based income, while “Help-seekers” and “Multi-strugglers” were slightly younger than other groups.
  • People from Black, Asian and Minority Ethnic backgrounds were twice as likely as White people to be “Help-seekers” who accessed new forms of financial help to cover their income losses.
  • “Multi-strugglers” had the highest levels of mental distress before the pandemic began (39%). Following the onset of the pandemic in April 2020, this increased further to 54% before returning to prepandemic levels in January 2021.
  • “Help-seekers” experienced the largest and most sustained increases in mental distress – 42% of people in this group reported being in poor mental health at the beginning of 2021, an increase from 29% before the crisis.
  • Around 14% of “Multi-strugglers” had a new mental health diagnosis between May 2020 and January 2021, significantly higher than the 4% of people who benefited financially during the pandemic.
  • Further evidence draws on two focus groups with 14 members of the Money and Mental Health Research Community, a group of 5,000 people who have lived experience of mental health problems or of caring for someone who does. Participants were recruited through an online survey between 22-25th January 2021 and focus groups were carried out one week later.
  • These focus groups discussed COVID-specific government interventions and services designed to mitigate the financial harm of the pandemic on individuals’ incomes and household finances.

About the research

This research investigates how the COVID-19 pandemic has impacted people’s mental health and financial situation, and how this differs among different groups of the UK population.

Find out more about the research project here.

Download the briefing paper

Download the data tables