During Mental Health Awareness Week, observed from 12th–18th May, the spotlight is on the intricate relationship between financial concerns and mental wellbeing. Research from Shepherds Friendly, a mutual insurer, underscores how financial insecurity can exacerbate stress and anxiety, with 1 in 6 Brits (15%) feeling stressed when navigating their finances. This figure rises sharply to 26% among 25–34-year-olds, a demographic often juggling early career pressures and financial commitments.

Income protection insurance, which provides financial support if someone is unable to work due to illness or injury, is a critical tool for mitigating such stress. Yet, Shepherds Friendly’s data reveals that only 14% of Brits have this coverage, leaving 86% vulnerable to financial hardship if they cannot work. This gap is particularly stark among certain groups. For instance, just 15% of 35-44-year-olds, the age group most likely to have a mortgage, have income protection. Gender disparities also exist, with 11% of women compared to 17% of men holding such policies, meaning women are more exposed to financial risk.

Young adults face unique challenges. Wider studies show that 34% of 18-24-year-olds took time off work last year for mental health reasons, more than double the rate of those over 55 (15%). Despite this, income protection remains underutilised, with 29% of Brits later regretting not having taken out a policy. A common misconception is that income protection only covers physical injuries. In reality, it can replace part of an individual’s income if they are off work due to mental health conditions, alleviating both financial and emotional strain.

Caroline Payne, Acting Head of Sales at Shepherds Friendly, emphasises the broader implications: “During Mental Health Awareness Week, it’s important to remember that protecting your income is also protecting your wellbeing. Income protection can ease the financial pressure if you’re ever unable to work due to mental health challenges.”

To help individuals feel more in control of their finances, Shepherds Friendly suggests several practical steps. These include the following.

1. Set realistic spending and saving goals. Take time to review your income and essential expenses, then create achievable monthly goals for saving and spending. Breaking your finances into manageable chunks helps you stay in control and avoid feeling overwhelmed.
2. Use ISAs to make the most of tax-free saving opportunities. Individual Savings Accounts (ISAs) let you earn interest tax-free, helping your money grow faster. Whether it’s a cash ISA for easy access savings or a stocks and shares ISA for long-term growth, taking advantage of your annual ISA allowance can make a real difference.
3. Prioritise protection like income protection insurance. Financial setbacks can cause huge stress. Income protection insurance ensures you still receive a regular income if you’re unable to work due to illness or injury, helping you maintain financial stability when life throws a curveball.
4. Build an emergency fund. Aim to set aside three to six months’ worth of living expenses in a secure, easily accessible place such as a savings account. Knowing you have a financial cushion for unforeseen events like car repairs or unexpected utility bills can bring real peace of mind.
5. Track your spending. Using budgeting apps or simply checking your statements regularly can help you spot patterns, cut back on non-essential expenses, and stay focused on your goals. Small savings add up over time.
6. Automate your savings. Setting up automatic transfers to your savings account each payday means you’re prioritising saving without even thinking about it. It’s a simple way to stay consistent and grow your savings painlessly.
7. Tackle high-interest debts first. High-interest debts like credit cards can be a major source of anxiety. Focus on paying these down first, either by paying more than the minimum payment or consolidating debts into a lower-interest option if possible.
8. Talk to a financial adviser if needed. Sometimes a fresh perspective can help. Financial advisers can help you form a tailored money-management plan that fits your situation, spot opportunities you might have missed, and reassure you that you’re on the right path.

By adopting these measures, individuals can reduce financial stress and bolster their mental resilience, aligning with the goals of Mental Health Awareness Week.