Financial anxiety: the alarming side effect of inflation

Worrying about finances is nothing new. But as inflation sets in and the cost of living rises without wages keeping pace, more and more people begin to panic about their money. Financial anxiety has set in for billions of people, some of whom have never felt this acute pressure before.

You may not be familiar with the term, but you may be familiar with the feeling: “the stress, worry, or unease people feel because of their financial situation, including worries about money, debt, spending, and financial stability,” says clinician Jenna Vyas-Lee. psychologist and co-founder of the Kove mental health clinic. Financial anxiety can affect anyone, from the lower end of the socioeconomic scale, living paycheck to paycheck, to those considered more traditionally “well-off.”

“Unemployment has been remarkably low since the pandemic, so most of the economic pressure comes from incomes not keeping pace with inflation, rather than people losing their jobs,” says Kerry Papps, professor of economics at the School of Management at the University of Bradford. UNITED KINGDOM. So even though many people still have jobs, they find their wages are strained.

The knock-on effects are playing out across the world, but the UK is bearing the brunt of this problem, with prices expected to rise faster in Britain than in any other advanced economy in 2023, at 7.2%. As the Bank of England uses interest rates to combat inflation, mortgage rates have risen, and many people have seen their monthly expenses rise significantly. In the United States, by comparison, inflation is falling more quickly, but Papps says financial anxiety is also endemic in the United States, particularly among people at the lower end of the income scale, in due to a lower minimum wage than in the United Kingdom.

The uncertainty caused by these situations is classic anxiety, says Vyas-Lee: “Not having a plan, not being able to execute a plan, and not being where you want to be in relation to your own goals can cause severe anxiety, regardless of the level of anxiety. the money you have or your social status.

While any anxiety can be difficult to manage, Vyas-Lee says financial anxiety can be particularly acute because money-focused cognitions often seem catastrophic in nature and predict financial ruin and misery. “It can be closely related to self-image and self-esteem, as well as the lack thereof,” she says. “This can be very damaging because there is a high level of shame associated with financial anxiety. People prefer to keep any issues related to self-esteem very private for fear of being judged.”