There is no doubt that the cost-of-living crisis is having a damaging effect on wallets and bank accounts, but perhaps less attention is paid to the harmful effect it can have on health.
There are two key causes to this problem: firstly, the direct impact that such added stress can have on our mental and physical health, and secondly, the indirect impact that changes in behaviour can cause in the longer term.
While it has been intensified by the crisis, the link between wealth and health is not new. Indeed, research conducted by YouGov prior to the pandemic in 2019 found that a third of adults (34%) felt their household’s current financial situation was negatively impacting their mental health.
When asked the same question in 2022, the proportion of respondents in agreement rose to half (48%), underlining how many people were forced to navigate difficult financial waters during the pandemic years. In its wake, the war in Ukraine has been a major contributing factor to escalating rates of inflation, which stood at 3.1% in September 2021 and rocketed to 10.1% a year later.
Rising tide of bills
This has led to households having to deal with rising costs for food, while also absorbing dramatic increases in the cost of energy. After a rise of 54% in April, bills are expected to increase by a further 27% year-on-year in October 2022, with uncertainty hanging over the scale of future rises after the two-year Energy Price Guarantee promised during Liz Truss’ short-lived reign as Prime Minister was cut to six months.
The Truss regime’s mini-Budget compounded the squeeze on budgets for many by adding momentum to rising interest rates. After a decade at historical lows, the rate has jumped by almost three percentage points so far in 2022, leading to costlier credit card debt, more expensive loans and higher monthly mortgage payments as people come off fixed low-rate deals.
Together, all of these factors have conspired to create a difficult financial backdrop, which can trigger worry, anxiety and fears that things are out of control. These feelings can then transfer from the psychological to the physical in the form of impaired sleep and poor regulation of mood. People can be left feeling unmotivated to manage their finances or they can seek to avoid money matters altogether – something that is particularly prevalent among younger generations, such as Generation Z and millennials (aged 18-41).
Furthermore, in the case of individuals who are already receiving professional help, the cost-of-living crisis only adds to the existing issues they face. According to research from the British Association for Counselling and Psychotherapy (BACP), two thirds of its members (66%) reported that cost-of-living concerns are causing a decline in mental health, and the majority of therapists (61%) say clients are anxious about whether they can afford to pay household bills.
Help to make healthy choices
Laden with money worries, people are then making decisions and adopting behaviours that can exacerbate the problem. This can manifest itself as poor dietary choices, including eating fewer healthy meals and more processed foods. A troubling eight in ten (81%) of UK employees surveyed by Health Shield Friendly Society also admitted to reducing spending on healthcare costs, including optician appointments, dental services and physiotherapy, as a result of the current economic climate.
Private medical insurance, health cash plans or discount vouchers can make a significant difference to employees facing these challenges. Cash plans provide workers with refunds for essential routine treatments – up to a certain level of cover – where, in many cases, there is no free alternative treatment available. PMI, on the other hand, can help provide peace of mind that if further treatment is needed, then it can be accessed quickly where covered by the policy in question.
At an already stressful time, healthcare benefits such as these can go some way to easing the worry that help is financially out of reach. This can encourage individuals to address any physical and mental health issues rather than face the risk of them deteriorating through neglect. As such, it is one of the valuable levers that employers can pull to protect their workers and help them weather the current economic storm.
The information contained within this communication does not constitute financial advice and is provided for general information purposes only. No warranty, whether express or implied is given in relation to such information. Vintage Health or any of its associated representatives shall not be liable for any technical, editorial, typographical or other errors or omissions within the content of this communication.