Easing the worries

Sep 24, 2018

By James Williams, Head of Social Impact, HACT

By using the UK social value bank and using its recommended questions to understand of the impact of financial circumstances on wellbeing, we may then be able to get to the source of a problem

Most people experience financial worries at some point in our lives. For some it may be the burden of a mortgage debt, finding money for Christmas or birthday presents, or paying off student loans. For others, it might be paying the rent, an overdue electricity bill or juggling the constant demands from children and families.

For others, financial worries might be caused by changes to benefits, the introduction of Universal Credit, family break up, relationship break down, poor health, bereavement or being a victim of crime.  

In some cases, people resort to taking out loans from illegal money lenders. Or they enter into unfavourable credit agreements for household goods. Or they might max out credit cards.

It is sometimes difficult to know when to stop the spiralling debt or where to get help. Many of us are probably embarrassed to ask for help. Final demands for payment, bailiffs repossessing goods, poor credit ratings and house repossession or eviction surely do not offer a sustainable solution. The effect of financial worries on people’s wellbeing is damaging.

Some of us might have got lucky on the property market or benefited from an inheritance. For them, this should mean no or little financial worry. Not surprisingly, in general, their wellbeing is likely to be higher.

The reality is two people living similar lives can be dealt very different hands in relation to their finances and subsequent level of wellbeing.  

Some of us are good at budgeting or making rational decisions on whether we need something. Everyone knows someone who can get two-for-one deals or cheap train/plane tickets. You probably know people who are good at planning ahead financially. Some grow their own food or are lucky enough to live in a property with low energy use or some fit comfortably into leading a simpler, less consumerist lifestyle.

Nonetheless, it is still all too easy to run into money trouble. The problem may be compounded as advertisers know how to manipulate our feelings, subconsciously encouraging us that buying that sofa or taking that holiday will be the answer to our problems. Peer pressure is also difficult to cope with when others are seemingly enjoying themselves and you are missing out.

Overspending can lead to a situation where individuals are unable to pay for a bus to work, heat their homes, feed their families, or deal with high interest payments. A downward debt cycle can be quick to establish, but difficult to escape from.

This situation might seem strange for those who are good at budgeting or earn enough to pay the bills. Maybe even harder to understand are those who earn medium to high incomes but are still unable to make their basic outgoings. Of course, the reality of life and what it brings for people is more complex and unpredictable.

An effective way to understand debt and its impact is by showing empathy for feelings and needs. This understanding is especially important in organisations which provide services for those in debt. By beginning to understand we start to find a solution. Some financial inclusion and capability staff at housing associations may have been there themselves. They might be able to empathise with the financial worries and experiences their tenants are experiencing.

For those who are helping people deal with the consequences of debt, putting yourself in the other person’s shoes will help to achieve better results in breaking the cycle of debt. Statistically we know that reporting you are free from the burden of debt is an extremely crucial factor that will affect your life satisfaction.

This is one of the key determinants of wellbeing, as embodied in the UK social value bank. This provides the largest collection of social values ever produced, including information on the key drivers to individual wellbeing. It is a nationally recognised tool used by thousands of people across the UK.

By using the UK social value bank and utilising its recommended questions to understand of the impact of financial circumstances on wellbeing, we may then be able to get to the source of a problem. We will be better able to help deal with the worry of debt leading to lasting change.

The housing and voluntary sector, including credit unions, run many extremely effective financial capability projects which help people with debt and encourage helpful financial habits.

No housing association ever wants to evict people for non-payment of rent. None want to see properties inhabited by tenants without heat or unable to clothe or feed their families. Progressive housing providers want to understand the financial needs and problems of their tenants. One way they can do this by adopting a different impact measurement framework as well as the more traditional methods such as reduction in arrears as shown in a rent account.

Forward thinking housing associations and organisations want to understand the psychological impacts on debt reduction on wellbeing, they know that there is more to the person than a negative £ figure on a computer screen.

In my experience financial inclusion and capability teams that make a real difference think about debt and evaluate their work in wellbeing terms. Three examples spring to mind. One is Leeds City Council where they have adopted a wellbeing approach. Staff who were asking their clients wellbeing-based questions to assess impact felt they were making a real difference to the problems being encountered. The wellbeing approach allowed them to identify problems much earlier in the support process.

By using a person-centred wellbeing approach, mental health issues and debt were identified as being the real drivers behind not paying the rent. Senior management also liked the straightforward evidence of impact they were presented with. Staff reported that this approach also acts as a real ice breaker. After all, generally people like being asked how they are feeling and take comfort knowing that the questioner is listening, understanding and empathising.

In terms of working with younger people the organisation MyBnk has recently evaluated their money works programme. The programme targets those who are broadly categorised as vulnerable across England and Wales. By asking participants questions around the wellbeing benefits of the services they have received key evidence of the effectiveness of their programme. As a result, MyBnk have gained valuable insight into the effectiveness of their programme and a benchmark by which to measure wellbeing impact of their future programmes.

The third example is in an evaluation for London based A2Dominion’s Dosh project. This found that putting wellbeing at the heart of the project is crucial in delivering success. Success was defined as being able to demonstrate that practical budgeting skills and financial confidence were improved. Taking an interest in the individual, providing services and employing techniques which show empathy was shown to make a statistically significant additional positive impact to these project outcomes.

Tenants who were offered psychological support through the skill/will coaching model produced successful outcomes in the programme. Emotional factors such as worry was shown to reduce and confidence was shown to increase. There was found to be a statistically significant beneficial effect on optimism, dealing with problems, feeling close to people, thinking clearly and feeling relaxed than those who didn’t receive this service.

The evaluation found that this person-centred approach is the most effective way of supporting people with financial difficulties.

Financial issues will continue to be an issue for people. Universal Credit, benefit sanctions, insecure and low waged employment set against rising fuel bills and unexpected life events mean we can never be rid of these issues. By combining practical support with therapeutic person-centred interventions that put wellbeing considerations firmly at the centre of service delivery, we will deliver better and more sustainable results in the long term.

One case study from the Dosh project sums up the importance and impact of taking a wellbeing approach. The project used trusted mentors who enabled participants to open up fully to them. Despite the statistical analysis and the prioritisation of wellbeing, the testimony below clearly shows the impact that wellbeing focused projects can have:

“I became more confident…I actually did begin to feel more confident, and I did things to budget more, so it [DOSH programme] did help…it was more of a help, sort of talking really [to Mentors]”.

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