Financial anxiety is nothing new. But as inflation has taken root and living expenses have increased without keeping up with inflation. More and more individuals are beginning to worry about their finances. For billions of people, including individuals who have never before experienced the extreme pressure, financial dread has taken hold.
Although you may not be familiar with the term, clinical psychologist and Kove co-founder Jenna Vyas-Lee describes it as “the stress, worry, or unease people experience due to their financial situation. Including concerns about money, debt, expenses, and financial stability”. Anyone, from those on the bottom end of the social range who live paycheque to paycheque to those more generally seen as “well-off,” can experience financial concern.
According to Kerry Papps, an economist at the University of Bradford, School of Management UK. “Unemployment has been remarkably low since the pandemic. Most of the economic pressure comes from incomes not keeping pace with inflation, rather than people losing their jobs.” As a result, even though many people are still working, their earnings are not enough. The consequences are felt all across the world. But the UK is the hardest hit, with prices expected to climb 7.2% faster there than in any other major economy in 2023. Mortgage rates have increased as the Bank of England utilises interest rates to combat inflation. Causing many people to see significant increases in their monthly expenses.
Contrarily, inflation in the US is declining more quickly, but according to Papps, financial worry is widespread in that country as well, especially among those at the lowest end of the income scale because of a lower minimum wage than in the UK.
Financial emergencies, such as job loss or unforeseen expenses, can make financial worry worse. It may potentially result in additional dysfunctional behavioural habits that worsen existing financial problems: For example, Vyas-Lee claims that some people use gambling as a secondary source of income. It may also undermine one’s general mental health. According to a recent Creditspring research of 2,000 British citizens, 30% of respondents said their mental health had gotten worse since the onset of the economic crisis. The worst rates are reported by those between the ages of 25 and 34, where they reach 48%.
In the US, a Bankrate poll from April 2023 found that insufficient emergency savings was the most frequently stated financial problem that negatively impacted mental health, cited by 52% of the more than 2,300 US people surveyed. 29% of respondents who reported financial stress said they worried about it every day.
Negatives of Financial Anxiety
People may find it challenging to concentrate on their regular chores as a result of their financial concern. “I have observed in the clinic how this can lower chances of promotion or finding a better job at work, or how it can impair a student’s academic performance. The emotional strain can cause people to become angry or withdraw at home, which can lead to conflict in relationships, according to her. She continues by saying that financial stress “takes huge tolls on personal relationships, with money worries and troubles as one of the leading reasons for divorce”.
The pervasive problem of financial concern won’t go away given the current state of the economy. “At our clinic, we have seen an uptick in the number of adults as a result of financial stresses. And expect this trend to continue as inflation continues to rise and put further strains on individuals”.
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