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The Damage of Debt: The impact of money worries on children's mental health and well-being

Building on The Children’s Society’s previous research, the aim of this study was to provide fresh insights on how low well-being and poor mental health in children are linked to household poverty and problem debt; and to explore the views of children and parents who live in low income households with debt problems on how their family's financial situation affects their well-being and mental health. Based on our findings, we provide a series of policy recommendations to address these issues and ultimately to improve the lives of children and young people.

Key findings from the research:

- According to our original analysis of quantitative data, debt and poverty are associated with separate effects on children’s mental health. Children living in low income households are at greater risk of having poor mental health. Separately, the number of debt types – rather than the overall amount of debt a family has – is associated with poorer mental health in children. Children in families with multiple debt types are at greater risk of experiencing mental health problems than children in families with fewer debt types.

- However, this relationship is mediated by financial difficulties and income. Thus, children in families on a high income without financial difficulties appear to be protected from the potential negative impact of number of debt types on their mental health.

- Around 5% of children in households who have no difficulties with debt are predicted to have low well-being, compared to 23% of children in households who have
debt with arrears – this means that children in households who have debt with arrears are five times more likely to have low well-being than those with no difficulties with debt.

- Both parents and children said experiences of debt left them feeling stressed, anxious and depressed – some parents reported specific symptoms like migraines, sleeplessness or losing weight, or had received specific treatment like being on anti-depressants.

- There was an overwhelming sense of shame and embarrassment felt by both parents and children – parents felt ashamed of not being able to manage money effectively; children felt embarrassed by being unable to afford normal things like their peers, and being unable to socialise.

- Children felt guilty, anxious and felt like failures about not being able to help their parents deal with debt – it had an impact on their confidence and feelings of self-worth.

- Debt led to arguments within families between parents, parents and children, and between siblings, and left parents feeling like they were not in control of their lives and could not protect their children.

- Debt meant not being able to go on outings, take part in activities like sports or school trips, missing out on things like birthdays, extended family gatherings or
family holidays – it left parents and children feeling isolated and excluded; debt meant not being able to spend quality time with family members.

- It is difficult to disentangle debt from other money problems as well as from other problems faced by family members, like physical health and domestic violence and existing mental health issues, all of which can further affect children’s well-being and mental health. Nevertheless, it was clear from what parents and young people told us that debt had an important impact on their lives.

- Headline recommendations: Introduce a statutory 'breathing space' scheme to protect families and young people from charges, mounting interest rates and
enforcement action until they can put in place an affordable repayment plan.

- Make sure that all families and young people can access adequate financial support if needed to prevent them from falling into problem debt.

- Make sure parents and young people in poverty and problem debt can access appropriate counselling and mental health support.

A full list of detailed recommendations is available at the end of the report.