How To Prepare For Inflation: Coping With Financial Stress
If inflation is impacting your mental health, you're not alone. A recent survey by the American Psychological Association reports that stress about money is the highest recorded since 2015, and 87% of people in the US count the rise in prices of everyday items like groceries, gas, energy bills, and rent as a significant source of stress.
The cost of groceries rose by 10% in 2020, and the hike seen in airfare, hotels, gas, and rent costs is comparable. If you rent your home, rent rose five times faster in 2021 than it did in 2020 and continued to rise throughout 2022.
With the significant impact of financial strain on well-being, taking care of your mental health can be essential. When coping with inflation, there are several steps one can take to prepare for financial challenges that you may find beneficial.
How to financially prepare for inflation
Inflation is a commonly reported challenge for many Americans. In addition, the Covid-19 pandemic and other global events were significant contributors to the economic and psychological state in the US. Focusing on what you can control can be beneficial because finances and inflation are often out of an individual's control. Below are a few coping strategies for preparing for inflation.
Revisit Your spending habits
Revisiting your budget may be beneficial when looking to prepare for inflation. Many spending habits have changed with the rise in the cost of goods and services. Sit down and determine what you can temporarily cut from your regular spending to make room for essentials such as groceries, transportation, utilities, housing, and other priorities. Try to add entertainment and fun to your budget, even if you struggle with finances. Studies have found that spending money on areas you value and enjoy can increase your happiness.
Learn to look for bargains
If you've never been a coupon clipper before, you might try using coupons and be on the lookout for sales and price-matching policies. Consider purchasing bulk items and choosing generic brands for essentials instead of pricier name brands.
Many grocery stores offer loyalty programs where you can earn points when you shop to apply for future purchases. There may also be loyalty program discounts on certain items that can allow you more savings.
Choose your debt wisely
Studies have found that interest rates are higher than they've been since 2007, so it may be an inopportune time to acquire a mortgage or open a new credit card. If you must open a line of credit, shop for the best rates available with your credit score, and choose credit cards with rewards programs that you can redeem on future purchases, for cash back or travel discounts, among other benefits.
If you have any variable-rate loans, refinancing them into a fixed-rate loan may be valuable before the rates get higher, and if you have multiple high-interest credit cards, investigate consolidating them into a personal loan with fixed payments.
Consider a side job
During the Covid-19 pandemic, many individuals found that their job wasn't enough to cover the cost of living due to inflation. It is common for people to have multiple jobs or side jobs that bring in money, and this may be a necessity. If you can, try to choose a job that works seamlessly with your schedule. Weigh your stress levels when considering options. Many people may take on freelance projects online to work remotely outside their primary job.
Advocate for a raise
If you don't receive timely or adequate raises, it may be valuable to self-advocate and ask for a raise. Lower stress may increase workplace productivity and worker happiness, mutually benefiting you and those you work for or with. For those who set their own prices or are self-employed, it may be helpful to reevaluate your current rates and see if you can raise them to a livable level for you.
Caring for your mental health during times of financial strain
Below are a few popular strategies for caring for your mental health during moments of financial strain.
Establish coping strategies
Coping skills can be a valuable part of daily life but may also be helpful for concerns like inflation and world events. Coping skills include but aren't limited to breathing exercises, exercising creative outlets, enjoyable physical activity, meditation, cognitive reframing, positive self-talk, and others.
When establishing solid coping strategies, it may be necessary to reevaluate your work-life balance, stress levels, and self-care practices. For example, focusing your self-care on nutrition, physical activity, attending doctor's appointments and screenings, and sleep can be valuable.
Working towards building an emergency fund may also reduce your financial stress. As you build a reserve over time, you may notice you are less stressed about money.
Find time for you
Hobbies can be beneficial for your mental and physical well-being. Make time for the activities you enjoy, even when challenging. Look at how much time you've spent on hobbies or activities you engage in strictly for enjoyment and determine ways to put more time into these areas. If you enjoy your job, find ways to partake in your hobbies at work.
Seek social support
There can be several ways to find social support or increase your social support level. For example, you can join support groups, which may exist in person or online. Support groups are often free for those struggling financially, and they may provide peer support. In addition, try to spend time with the people you value that make you feel positive about yourself.
Work with a therapist
Therapy can help individuals cope with life stress, including stress related to finances, relationships, and mental health conditions. For those struggling with finances, there are a few methods to see a therapist at a lower cost, which may ease stress. Working with a therapist who offers sliding scale rates, takes your insurance, or works through your organization or university may offer cheaper options for care. You might also try online therapy.
According to studies, online therapy effectively treats a range of different concerns that can affect mental health, and it's a convenient way to get the care you need. You don't have to commute to an office, and platforms like BetterHelp offer plans that are often more affordable than traditional, in-person therapy services without insurance.
Over 35,000 licensed and independent mental health professionals with various specialties offer therapy through the BetterHelp platform. When you sign up for online therapy, you may take a brief questionnaire to help the team match you with a therapist who fits your needs. In addition, online therapists can practice many of the same modalities as face-to-face providers.
Takeaway
Many people experience financial stress at some point. Raising interest rates and credit card debt often contribute to why people are stressed about money. Inflation and financial challenges can cause stress and mental health concerns.
Learning to wisely choose credit cards and manage card debt may help them deal with financial stress.
If you're living with any challenges related to the country's financial state, you may benefit from contacting a compassionate therapist for further support and guidance.How do you cope with financial stress?
Financial stress can seem overwhelming, but it is extremely common. Here are some tips to help you care for your finances and your mental health:
- Create a detailed budget outlining your expenses and income
- Make a list of priority expenses like housing costs, food, utilities, and other essentials
- Identify areas where you can cut back on expenses, such as shopping, entertainment, and dining out
- Shop for bargains, clip coupons, and look for sales or other discount opportunities
- Ask for a raise at work
- If possible, consider finding ways to increase your income, such as taking on a part-time job or selling items you no longer need
- If you’re struggling to make ends meet, consider reaching out to local organizations or government agencies for assistance
- Seek advice from a financial advisor who can help you plan a financial strategy
- Take care of yourself by getting enough sleep, exercising regularly, and participating in activities you enjoy
- Engage in relaxation techniques like mindfulness, deep breathing exercises, and meditation
- Seek support from friends, family, and loved ones who can provide encouragement and understanding
- Give yourself some grace and remember that financial stress doesn’t have to be permanent
- Seek help from a mental health professional if you’re struggling to cope on your own
What is the root cause of financial stress?
Causes of financial stress and anxiety can vary between individuals depending on their unique circumstances. People may feel stressed because they can’t afford essentials or effectively pay their bills on time. They might not be confident facing future goals like retirement or caring for loved ones or aren’t financially prepared for unexpected expenses. While there is typically no single root cause, there are a few common things that may contribute to money stress:
- Job loss/reduced income
- Food insecurity
- Housing insecurity
- Lack of savings
- Debt
- Taxes
- Healthcare costs
- Foreclosure or bankruptcy
What can I do if I’m struggling for money?
If you’re struggling for money, there are some assistance options you might consider. For example, the government offers programs to help people with groceries, housing, utilities, and unemployment assistance. Reaching out to your debtors may help as well. For example, some student loan companies offer financial hardship payment plans, or if you have credit card debt, consider asking them to work with you on a plan to pay off your debts with a reduced interest rate.
How can you overcome financial struggles?
You can overcome financial struggles by analyzing your expenses and income, prioritizing essential expenses, and identifying areas where you can cut back on spending. Once you’ve created a budget, stick with it and measure your progress.
Why am I struggling so badly financially?
There are many possible reasons you might be struggling with finances. If you aren’t sure why, take some time to review your accounts and identify any potential spending habits that might be draining your finances. If you have debt, find out your interest rates. Review your bank, credit card, and loan statements to ensure there are no charges you don’t recognize or didn’t authorize.
What is money dysmorphia?
While it isn’t recognized as an official diagnosis by the American Psychological Association (APA), money dysmorphia has become a term associated with an individual’s psychological relationship with money. It’s loosely defined as a distorted perception of one’s financial status. It can lead to anxiety when one thinks they’re in more considerable debt or less financially prepared than they actually are or overspending when one perceives they’re more financially secure than they actually are.
What is a toxic money mindset?
A “toxic” money mindset refers to attitudes and beliefs about money that may harm your financial security or cause money-related stress. Some common toxic money mindsets might include believing that money will solve all your problems or that you must compare your financial situation with other people’s.
How do I stop obsessing over money?
Obsessing over money can affect your mental health, interpersonal relationships, and how you function in daily life. However, it is possible to stop obsessing. Here are a few tips:
- If possible, pay all your bills in advance once or twice a month instead of paying them one by one as they arrive. This might help you cut down on the time you spend thinking about your finances.
- Budget a set amount of money from each paycheck and have it automatically transferred to a savings account.
- Don’t measure your financial success by other people’s. Everyone’s financial situation differs, so don’t create stress by comparing yourself to others. It may seem like someone is more financially secure or better off than you, but that might not be true.
- Spend plenty of time doing things that make you happy (and have nothing to do with money).
- Get your priorities in order and spend more time on the things that really matter, like your loved ones and your mental and physical health. It can be easy to lose sight of the things that are most important if you’re obsessing over money.
How do I stop the urge to spend money?
Like most urges, the urge to spend money is likely “triggered” by certain circumstances. It may be a state like boredom or stress, or it could be social pressure. Identifying the triggers can help you address the root cause of your impulse to spend and gain better control of your finances.
Aside from that fundamental step, there are some other things you can do to stop the urge to spend money:
- Make a shopping list: Making a list of items you need before you go shopping (and sticking to it) can help you avoid impulse buying.
- Delay gratification: If you have the urge to buy something, wait for a set amount of time before purchasing it. This can help you consider whether the purchase is necessary or just an impulse buy.
- Find other things to do: Instead of spending money on shopping or dining out, look for free or lower-cost activities to stay entertained. Try cooking something new at home, try a new hobby, or gather your friends or family at home for “game night.”
- Set financial goals: For example, you might save up for a vacation you’ve always wanted or set a goal for paying off your debt. Having goals to work towards can help you avoid unnecessary spending and stay motivated to save.
- Practice mindfulness: Before buying something, pause and consider if you really need it or if it’s just an impulse. This can increase awareness of your spending habits and help you make more intentional choices.
- Remove temptation: Unsubscribe from promotional mail, emails, or notifications from stores or online platforms that trigger your impulse to spend.
- Seek support: Talk to a trusted friend or family member about your struggles with spending. If you’re comfortable doing so, ask them to hold you accountable and stay on track with your financial goals.
Does mental illness cause overspending?
While not everyone with a mental health disorder struggles with overspending, there is a relationship between some mental illnesses and financial mismanagement. For example, people with conditions like bipolar or borderline personality disorder may exhibit impulsive behaviors like reckless spending during manic episodes. In some cases, conditions like anxiety or depression may prompt individuals to spend money as a way to cope with emotional distress (sometimes referred to colloquially as “retail therapy”). Studies also reveal that financial worries can significantly impact an individual’s mental health and well-being.
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