In an age where economic instability is a reality for many people, the impact of financial strain on mental health has become an increasingly pressing concern.
The negative effect on mental health
With the cost of living skyrocketing, largely due to inflation and wages struggling to keep pace, financial anxiety has become a common affliction affecting people from all walks of life. This phenomenon, characterised by stress, worry, and unease over financial situations, is not limited to those at the lower end of the socioeconomic spectrum; it extends to individuals who might be considered financially stable under normal circumstances.
The effects of financial anxiety are profound. According to Jenna Vyas-Lee, a clinical psychologist who spoke to BBC Worklife, this type of anxiety can lead to severe mental health issues, including chronic stress and depression.
It often feels catastrophic, linking closely with one’s self-image and self-esteem, and is marked by a high level of shame due to societal stigmas surrounding financial struggle.
The fear of judgement makes many reluctant to seek help or even discuss their financial woes, exacerbating the problem.
The UK’s inflation problem
Economic indicators show the gravity of the situation. In the UK, for example, inflation rates are projected to rise faster than in any other advanced economy, with significant repercussions for household budgets.
This economic strain is not unique to the UK; in the US, despite a quicker fall in inflation rates, financial anxiety remains prevalent, particularly among those at the lower end of the income scale.
The consequences of financial anxiety are not limited to mental distress; they manifest in physical ways, affecting individuals’ daily lives, work performance, academic success, and personal relationships.
A study by Creditspring revealed that 30% of British participants reported deteriorating mental health due to economic pressures, with younger individuals aged 25 to 34 being the most affected. Similarly, a survey in the US highlighted that over half of the respondents felt that money negatively impacted their mental health, citing lack of emergency savings as a primary concern.
Given the nature of financial anxiety, it’s crucial to address it proactively.
Here are some strategies to help alleviate financial stress and improve mental well-being:
Set Clear Savings Goals: Establishing realistic savings goals can provide a sense of control over your financial future. Start small and gradually increase your savings rate as your financial situation improves.
Sell Unnecessary Items: Take stock of your possessions and consider selling items that you no longer need or use. You can do this either online through DePop and Vinted, or through online pawnbrokers for more valuable items.
Seek Professional Advice: Don’t hesitate to consult a financial advisor or a mental health professional specialising in financial stress. These experts can offer personalised financial advice and strategies to manage your financial situation more effectively.
Create A Budget: A well-structured budget can help you track your spending, identify areas where you can cut back, and prioritise your financial goals. This visibility can reduce anxiety by providing a clear plan of action.
Educate Yourself: Increase your financial literacy by reading books, attending workshops, or taking online courses on personal finance. Understanding financial concepts and tools can empower you to make informed decisions.
Build An Emergency Fund: Aim to save enough money to cover at least three to six months of living expenses. This can provide a financial cushion in case of unexpected events, reducing stress and anxiety.
Financial anxiety is a significant issue with widespread implications for individuals’ mental health and quality of life.
By acknowledging the problem and taking proactive steps to manage finances, individuals can mitigate the impact of financial stress and work towards a more stable and secure future.
