Worrying about finances is nothing new. But as inflation has taken hold, and the cost of living has spiked without wages keeping pace, more and more people are starting to panic about their money. Financial anxiety has set in for billions of people – including some who haven’t felt the acute pressure before.
The term may not be familiar, but you might know the feeling: “the stress, worry or unease people experience due to their financial situation, including concerns about money, debt, expenses and financial stability”, says Jenna Vyas-Lee, a clinical psychologist and co-founder of mental-health clinic Kove. Financial anxiety can affect anyone from those on the lower end of the socioeconomic scale living paycheque to paycheque, 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, a professor of economics at the University of Bradford, School of Management UK. So, while many people are still employed, they find that their salaries are stretched.
The ripple effects are manifesting around the world, but the UK is bearing the brunt of this problem, with prices set to rise faster in Britain than any other advanced economy in 2023, at 7.2%. As the Bank of England uses interest rates to fight inflation, mortgage rates have ticked up, with many people seeing huge increases to their monthly outgoings. In the US, in comparison, inflation is falling faster, but Papps says financial anxiety is rampant in America as well, particularly among people at the lower end of the earning scale, due to a lower minimum wage relative to the UK.
The uncertainty these situations breed is textbook anxiety, says Vyas-Lee: “Not having a plan, not being able to execute a plan and not being where you wanted to be with respect to your own goals can cause severe anxiety, irrespective of how much money you have, or your social standing.
Although all anxiety can be tough to grapple with, Vyas-Lee says financial anxiety can be particularly acute, since money-focused cognitions often feel catastrophic in nature and predictive of financial ruin and destitution. “This can link closely with self-image and self-esteem – and the lack thereof,” she says. “It can be highly damaging, as there is a high level of shame associated with financial anxiety. People would rather keep any issue related to self-worth very private for fear of judgement.”
