Racial/ethnic Variations in the Association Between Financial Strain and Well-Being: Evidence from the United Kingdom Household Longitudinal Survey

Abstract

Financial strain is a major social stressor that adversely affects well-being, yet few studies have comprehensively examined whether its association differs by race/ethnicity. This study investigates whether the relationship between financial strain and two key outcomes—mental health and life satisfaction—varies across racial/ethnic groups using longitudinal data. Drawing on 13 waves of the United Kingdom Household Longitudinal Survey (UKHLS), spanning 2009–2010 to 2021–2022 and comprising 58,029 individuals and 417,766 person-years, we apply fixed-effects regression models to assess within-individual changes over time. Results show that financial strain is consistently associated with poorer mental health and lower life satisfaction. However, racial/ethnic variation emerges only in relation to mental health. Specifically, Black adults experience a stronger adverse association between financial strain and mental health compared to White adults. Subgroup analyses reveal further nuance: relative to White adults, African adults exhibit a more pronounced adverse association, whereas the association is not significant among Caribbean adults. Among Asian adults, financial strain is more strongly associated with poorer mental health for Indian individuals but less so for Chinese individuals. These findings highlight the need for tailored financial and mental health support initiatives that account for differences across both broad and specific racial/ethnic groups relative to the majority population. Targeted interventions may help mitigate the unequal burden of perceived financial stress and promote more equitable well-being outcomes.