23 Jul 2021 | Posted In Money advice news

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Christians Against Poverty’s (CAP UK) latest report, Shipshape or sinking ship?investigates the factors that harm and limit the wellbeing of people in financial difficulty.

Rachel Gregory, Senior Policy Manager, CAP UK, says:

“Financial and mental wellbeing are both essential to allow us to feel secure, in control and connected to others. Without these central planks it is impossible to leave problem debt behind and stay afloat in any storms the future will bring.

“Financial inclusion — having access to financial products and basic financial knowledge — is like having a boat. You can set sail with a small boat, but it’s not going to stop you from being shipwrecked if you face any storms.

“Financial wellbeing is concerned with the structural integrity of the boat, with making sure you can sail high enough in the water to make it safely to your destination.

“It’s our financial wellbeing that allows us to have control over our day-to-day finances, meet future goals, and have both the financial freedom to enjoy life and the capacity to absorb shocks.

“Being in problem debt makes it impossible to navigate a safe course to your intended destination. All attention and resources are diverted to bailing out water as the bills come in thick and fast. All elements of someone’s financial wellbeing are wiped out.

“Likewise, there are myriad ways that being in debt impacts someone’s mental wellbeing and vice versa. Debt causes social isolation and is known to reduce productivity at work, reducing how optimistic and useful people feel.

“We surveyed nearly 900 people who were either beginning to address their debts with advice from CAP or were currently in a Debt Management Plan.

“The results showed that debt advice helps people increase financial wellbeing, especially ‘present security’ and ‘future freedom’. 30% rarely or never felt like they were now struggling financially or that they would never have the things they wanted in life because of their money situation.

“However, the majority still answered negatively to indicators of financial wellbeing. 51% always or often felt their finances control their life, 47% rarely or never had money left over at the end of the month, and 42% always or often felt concerned that the money they had saved will not last.

“The average mental wellbeing score of CAP clients was also five points lower than the average for the UK population, at 21 out of a maximum of 35. The biggest contributors to this were rarely or never feeling relaxed (30%), not feeling close to other people (23%), and rarely or never feeling useful (23%).

“Becoming debt free is not an automatic switch between poor and good wellbeing. There are substantial social and economic constraints that stop people from achieving high levels of wellbeing, which prolong feelings of stress, not being useful or not being close to others.”

Read her full blog here.