7 ways to cope with financial anxiety amidst rising costs of living

By Nihal Anabel

Uncertainty about the future is a built-in feature of the human condition. In recent times however, such apprehensions are reaching new heights. In several parts of the world, essential costs are rising faster than wages amidst soaring inflation and energy bills. As a growing number of people experience financial difficulties, numerous surveys indicate that concern over the resulting cost of living crisis is causing a decline in mental health. 

Around three in four adults in the UK (77%) reported feeling very or somewhat worried about the rising costs of living. It is further estimated that around half of the adults (50%) who were very worried about the rising costs of living felt those worries nearly every day. 

What is financial anxiety?

While financial anxiety is a common concern, it is not a clinical diagnosis. When we look up terms like “money anxiety” or “financial stress”, the focus is often on the element of uncertainty in the equation and less on our capacity to tolerate the state of uncertainty. This often leads us down the path of seeking security and examining ways to force the uncertain to be more certain. This is akin to applying a band-aid on something that requires a deeper examination. It is impossible to eradicate uncertainty from our lives, but we can teach ourselves to be resilient and muster up the courage to wade through uncharted waters.

How can it affect you?

Financial anxiety impacts mental well-being in several ways. One study underlined the significant impact the cost of living crisis was having on mental health and found high levels of anxiety and fear for the future, which were likely to increase as the crisis deepens. People also felt a lack of control over their lives and worried about an uncertain future. There are also reports of more people struggling with insomnia and cutting back on their expenses on socializing outside home, gym and sports memberships and therapy — all activities that benefit mental health. The cost of living crisis is also causing stress among children, with more kids feeling anxious and self-harming.

How to cope with financial anxiety

Our financial situation is closely connected to our mental health and the ongoing crisis can make many people feel overwhelmed, alone, helpless and ashamed. It is important to learn how to manage this anxiety. Here are some tips on how to deal with financial stress and improve your mental health:

1. Focus on things you can control

A substantial chunk of human energy is expended on extrinsic concerns that we have  little control over. In fact, our perception of control can determine how we may interpret these circumstances, which in turn impacts our well-being.

The degree to which people believe that they, as opposed to external forces, have control over the outcome of events in their lives is called “locus of control.” People who have a strong internal locus of control believe that they are the captain of their fate and feel responsible for whatever happens in their life. In the midst of a financial crisis, they are likely to crumble with anxiety when the gap between their expectations and reality gets too intolerable. Whereas people who have a strong external locus of control believe that they don't own the remote control of their lives. Hence, they are passive and feel like a log in a river. When they don't like where the river is taking them, they can feel quite miserable and are prone to depressive symptoms.

As with most things in life, a middle ground between the two has to be discovered for the individual to be resilient amidst uncertainty. A smidgen of Stoic wisdom from ancient Greece can be illuminating here. The Stoics believed that the challenges individuals encounter in their lives are tests imposed by nature to facilitate their growth. They assume that setbacks are not simply undeserved tribulations but rather a test of our resilience and ingenuity in approaching them. The question is no longer about how much control we have over our future. Instead, it shifts to a mindset that is accountable for variables we can manipulate and is accepting of those that fall outside our realm of control. Adopting such a mindset requires the courage to act and the vulnerability to embrace our setbacks and challenges. Practice affirmations like the following that can aid in reinforcing this way of thinking and coping with financial anxiety:

• I am responsible for what I can control.
• I am thankful for waking up today.
• What is the most virtuous course of action I can take right now?
• What I cannot control does not require my attention or time.
• I am defined by how I react and not by my circumstance.

2. Review your expenses and create a budget

Knowing is half the battle. Financial literacy can be a game changer in helping us navigate through periods of uncertainty. Take out some time to assess your financial health, savings, income and expenses on a regular basis. It’s never too late to learn about budgeting and if you find it to be too tedious a topic, there are numerous personal finance apps that do the brunt work for you.

3. Find creative ways to reduce spending

Managing your personal finances doesn't have to be forceful. It doesn’t necessarily mean suppressing your desires and urges and stopping yourself from getting on the apps. Think instead of how you can create a net positive via your spending habits. For instance, if you care about the environment, a net positive would be using public transport more often. If you live in an area where that is not feasible, think of driving your vehicle 50-70% of the way and walking for the rest. The net positive here is for your health and the environment. We can use this mindset in other aspects like food, clothing, etc.

4. Talk to friends and family for support

Asking for help when we need it is easier said than done. Growing up, we may imbibe certain ideas from our social circle, such as “asking for help shows that you have accepted defeat” or “don’t burden and inconvenience others by asking for help.” Additionally, discussing their financial situation with others may seem taboo to many people. 

We don’t have to be slaves to these narratives. It is okay to share your money worries with people you love and trust and ask them how they are coping with their own financial anxiety. In this Ted Talk, singer Amanda Palmer speaks in length on how we can make the action of asking beautiful and human.

5. Stop doomscrolling

The ‘shock value’ of news content has a significant impact on our well-being. It not only exacerbates our own anxiety, but may also contribute to empathic distress, wherein our concern for others is heightened and we feel a shared sense of suffering. Remember to switch from social media and news when it starts having a negative effect on you and adds to your financial anxiety. Avoid doomscrolling, which is the tendency to constantly surf through negative news online. If you must know what’s going on out there in the world, rely on long form content instead of social media.

6. Practice gratitude

Two people buy the same phone at the same time. One of them is truly grateful that they have the means to buy that phone. The other one takes it for granted or considers it normal to own the phone. A few months down the line, both of them face issues using the phone. The first person thinks, "oh, I have to fix it", while the second one thinks, "I need to get rid of this and get a new one”

Now apply this difference in decision-making and attitude towards every little expenditure. It can make a huge difference. We can practice gratitude by making it a regular habit to look at what we have and appreciating it. You can do this by writing in a daily gratitude journal or with a short meditation. Over time, practicing gratitude can boost your mood and ease financial anxiety. 

7. Reach out for help

In times of uncertainty, appropriate mental health support is a strong protective factor against mental illness. At Wysa, we have a team of professionals who are trained to provide you the support you need to help you not just cope but thrive. You can also explore Wysa’s self-care tools to aid you in overcoming anxiety. Wysa has a tool-pack specifically for help with managing financial anxiety which contains exercises based on visualization, deep breathing and meditation. Another tool-pack for anxiety contains a tool for “Observing Thoughts”, which is aimed at teaching you to embrace anxious thoughts without judgment as a third-person observer. Acceptance is not far away when we can approach the unpleasant with equanimity. You can check out the services provided by Wysa by visiting us at https://www.wysa.io/for-individuals and https://www.wysa.io/for-employers

Photo by Elisa Ventur

Photo by Mikhail Nilov