Our economy is going through an inflationary whiplash.
The prices of our everyday goods have reached an all-time high. According to the Pew Research Center’s study of 44 advanced economies, nearly all of them are experiencing substantial increases in consumer prices since pre-pandemic times (1). This feels like a blow especially since we’re just recovering from the pandemic.
You probably know this - inflation is beyond a monetary phenomenon. The uncertainty and stress that comes with it also create a long-lasting impact on our mental health. Fortunately, it’s not all doom and gloom. With sufficient understanding and strategic action, we can minimize inflation anxiety and maximize your return on life
What is Inflation Anxiety?
“Inflation Rates Have Doubled For Advanced Economies Around The World”
“Inflation Accelerates to 9.1%, Once Again Exceeding Forecasts”
You’ve seen headlines like these everywhere lately. And they’re likely stirring up waves of unsettling emotions. That’s because they induce something called inflation anxiety.
But inflation anxiety is more than just worrying about money. Our decisions on how to work, invest, consume, and live are disrupted as a result of market uncertainties. It adversely impacts income levels and worsens poverty, particularly in developing countries. This is especially when wage growth is not keeping up with the pace of inflation.
As research shows, the psychological repercussions of these economic woes also put people in a vicious cycle. Those who are anxious or stressed tend to engage in costly financial behaviors, such as borrowing from high-cost financial services and withdrawing cash from retirement accounts (2). Therefore in times like these, we need to shift our focus on the strides within our control to create buffers not just for our finances, but also for our mental health.
Four Ways to Calm Inflation Anxiety
Expensive groceries and rising gas prices are forcing us to stretch our dollars. Hence, to alleviate the stresses of this financial pinch is to double down on what’s within our control. And here are a few things you can do to manage your inflation anxiety:
1) Broaden your financial knowledge
Anxiety is generally about the fear of the unknown. Therefore one way to tame it is to educate yourself about the issue from a trusted source.
Seeking out resources (just like this one!) that teach you smart money habits and managing your money psychology can help combat feelings of uncertainty. You may also engage in discussions with a financial planner or utilize tools that increase your financial wellbeing. Employers can also provide employees access to webinars related to financial health as well as employee wellbeing services to manage emotional stress.
2) Make smart tradeoffs
Amid price surges, many of us are forced to cut back or reduce expenditure on certain things. But making sacrifices doesn’t have to be all that miserable. Think about it making minor adjustments to your lifestyle temporarily so that you can have better peace of mind in the long term. Here are some things you can do to make these tradeoffs easier:
Meal planning: Thinking ahead about your meals for the week significantly reduces pricey restaurant visits and overspending on groceries.
Refrain from add-ons: Make a list and avoid adding anything extra to the cart.
Review monthly subscriptions: From magazines to streaming plans, decide which you use regularly and which you could do without.
3) Plan for fun alternatives
Being cautious of our spending doesn’t mean we should cut out “fun” entirely, this can certainly take a toll on your mental well-being. Instead, fill your calendar with free or low-cost activities that still spark joy.
For instance, you could do weekly picnics at the park, visit free exhibitions around town, or organize a paint-and-sip at home. This keeps your spirits high, and you’ll also be less tempted to splurge on events that could blow up your budget.
4) Tame the money-stress
When we’re emotionally overwhelmed, it’s harder to make rational decisions. Hence, it is essential to tame our money stress and anxiety before making any decisions. We recommend activities like meditation, yoga, journaling, exercise and financial journaling.
Staying connected with people you love and who will ground you also helps remind you that, while money matters, it shouldn’t be all that matters.
Inflation takes a toll on our mental health as much as it does on our finances. We feel anxious because we’re unsure of how bad it will get or when it will end. But instead of focusing on the unknown, be proactive in making those small adjustments that can lead to future wins.
With knowledge, strategy, and self-compassion, you can gain financial and mental clarity even after the highs and lows of the pandemic. However, if you find that your stress is difficult to manage on your own, don’t be afraid to seek out professional help.
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