Debt allows people to invest in assets that can increase in value over time, such as real estate, a business or higher education. For example, taking out a mortgage to buy a house can lead to long-term wealth accumulation through property appreciation in value. Similarly, borrowing to invest in education or starting a business can increase earning potential and future financial stability.

However, debt can be a significant challenge for some people and is often accompanied by barriers that prevent them from seeking help. Being in debt and having worries about your personal finances can lead to poor wellbeing, including anxiety and depression, and stress.

It is perhaps not surprising to hear that the number of individuals in debt has increased over recent years, in part due to the cost-of-living crisis and rising inflation. Research shows that over 1.5 million people in the UK are experiencing both problem debt and mental health problems, and only a third of the people in financial debt receive help.

It is imperative to recognise the importance of providing comprehensive counselling to people struggling with financial burdens, and to support employees in financial difficulty.

Here are some strategies for employees for better debt and how to manage it:

• Create a budget: Start by creating a comprehensive budget that outlines income, expenses, and debt obligations. Understanding cash flow is essential for managing debt effectively.
• Prioritise high-interest debt: Focus on paying off high-interest debt first, such as credit card balances. High-interest debt can quickly accumulate and become a significant financial burden if left unchecked.
• Consolidate debt: Consider consolidating multiple debts into a single loan with a lower interest rate. Debt consolidation can simplify payments and reduce overall interest costs.
• Make timely payments: Ensure that all debt payments are made on time to avoid late fees and negative marks on your credit report. Set up automatic payments or reminders to stay on track.
• Communicate with creditors: If you're experiencing financial hardship, don't hesitate to reach out to your creditors to discuss payment options. Many creditors offer hardship programs or may be willing to negotiate more favourable terms.
• Avoid taking on unnecessary debt: Be cautious about taking on new debt for non-essential purchases. Evaluate whether the debt aligns with your long-term financial goals and whether you can comfortably afford the payments.

By understanding the benefits of debt and implementing strategies to manage it effectively, individuals can leverage debt as a tool for financial growth and stability while avoiding potential pitfalls. To avoid problems, it helps by talking to a financial coach.