How to avoid stress when prices keep rising

For Ellie Alvarado, a teacher and mother of three in Elgin, Illinois, figuring out how to pay the bills has become a source of anxiety and tension, especially as she and her husband discuss how to cut spending.

“When I say, ‘Look, we can’t buy anything this week, otherwise we’ll get the overdraft,’ he says, ‘What are you talking about? We’re both working. This shouldn’t happen,’” Alvarado said.

Rising food costs have led to a decrease in unscheduled trips to McDonald’s.

Branded cereals and other small luxuries were also left behind. Gasoline prices, which recently hovered around $5 a liter in the United States, are also eating into your budget.

“Every time I fill up our van I’m horrified,” said Alvarado, who sometimes has only $100 in the family’s checking account. “I’m always worried,” she added.

Her husband, who works in a factory, decided to work the night shift because he pays more by the hour. But the family is still behind on the house payments.

“I can defer the mortgage in two weeks,” said Alvarado, 38, who manages the family budget. “But then it becomes two more weeks, and all of a sudden, they’re calling to collect.”

Inflation has now reached its highest level in 40 years, forcing many families to settle for less. According to data released this month by the Bureau of Labor Statistics, the Consumer Price Index rose 9.1% from a year earlier, with some of the biggest increases in necessities like food, rent and gasoline.

The added financial stress is not only hard on bank accounts, it can also cause feelings of depression, shame, anger, or fear.

A study of seniors published in 2017 found that how someone perceives and reacts to financial strain can have implications for their mental well-being.

People who were troubled by their economic circumstances were more likely to have higher depression scores than those who were also under financial pressure but weren’t as bothered by it — even when controlling for other factors such as health and income.

Fortunately, “there’s a lot we can do to manage and work through this stress and emotions,” said the paper’s lead author, Sarah D. Asebedo, director of the School of Financial Planning at Texas Tech University in Lubbock.

We talked to experts about dealing with the emotional consequences of financial worries and had productive conversations about finances with family members.

Embrace self-reflection and communicate with empathy

When couples disagree about how to handle their finances, each partner often tries to convince the other to change their minds, said Rick Kahler, a co-founder of the Financial Therapy Association who is collaborating on a book for financially challenged couples.

Instead, suggested Kahler, think about how you react when you talk about your finances. What is being provoked by your past? Are there stories or scripts that you relive when discussing your finances? For example, the idea that working hard will always lead to rewards?

Approach your partner with empathy and ask, “What’s your hope in spending this money?” or “What’s your fear in cutting this item?” Kahler said.

Both partners may eventually realize that they want the same thing – for example, that each wants what is best for the family.

Amanda Clayman, a financial therapist in Los Angeles, noted that when communicating about differences, any requests must be specific. So instead of saying, “We need to save more,” she says:

“Let’s find ways to save an extra $200 a month.” And try to use “personal statements” when possible, such as, “I don’t like how much we pay for entertainment subscriptions and I wonder if we can cut something.”

For this to work, Clayman added, both partners must feel that their needs are being included and that they have an equal voice in the matter, regardless of who is more anxious or who earns more.

Spend wisely, but don’t deprive yourself completely

If you live alone or manage the finances of a large family, it’s important to think of goals before trying to solve any financial problems, said Megan McCoy, a couples and family therapist who teaches financial planning courses at Kansas State University.

What are you saving for? What do you need to cover on a limited budget? Write this down. Next, think about possible cuts — but try to stick to the things that bring you joy.

Ask yourself, “What can I cut that doesn’t negatively affect my mental health?” Dr. McCoy said. “I think people tend to restrict themselves too much.”

For Sarah Davis, 36, essential (but expensive) expenses include mental health therapy and her beloved cat, who has acquired health problems.

“He’s like my furry son,” she said.

To better pay for these things, she left Boston, where she works as a project manager, and now lives about 40 kilometers north of the city, in Lawrence, Massachusetts. Rent is cheaper there, she said, but still “extremely expensive.”

What keeps her up at night is the possibility of something going wrong and not knowing how long prices will keep going up.

“I really am one step away from being in financial trouble,” said Davis, who lives alone with no other income to depend on.

There has been so much uncertainty in the past two years that it “perpetually creates anxiety,” McCoy said. But having a plan you’re working towards — whether it’s increasing your savings or taking steps to pay off debt — can give you a sense of power and control.

Orly Hersh and his family made the decision to live with her mother five years ago, in the house where she grew up in Boulder, Colorado. It allowed her mother to age in place and for them to stay in the city they loved. She and her husband, both teachers, cannot afford to buy a house.

“It’s a great mutual benefit for all of us,” said Hersh, 53, a mother of two.

Although they save on housing costs, Colorado currently has one of the highest inflation costs in the country, and the rising prices have taken a big bite out of their budget.

To pay the bills for their youngest daughter’s recent hospital admission, they will have to use Hersh’s retirement fund, “which is depressing,” she said.

But it’s best for your stress level to get paid off as soon as possible, he added. “I really hate having this debt hanging over my head,” she said.

Explore different types of professional help

Consulting a financial advisor can be helpful for anyone looking to gain knowledge in the area. For example, maybe you need tips on budgeting or want to learn the basics of investing.

If cost is a concern, the Association for Financial Counseling and Educational Planning is offering a free virtual financial coaching session to anyone with uncertainties in this field.

Financial therapy is another type of counseling that can help people understand their thoughts and opinions around money, especially when they are feeling stuck.

“The question becomes, what is happening internally? What unfinished business from the past needs to be completed?” Kahler said.

For example, one of his clients insisted on spending all the money that came into his checking account.

During financial therapy, he realized that he had developed this behavior because he didn’t trust his money to be safe if he kept it. This stems, in part, from his childhood, when his parents took all the money out of his savings account after they lost their own money in bankruptcy.

Seeing a financial therapist can help people get to the root of their feelings about money and understand old beliefs, which “frees us up to start adopting new behaviors that are in our best interest,” Kahler said.

A worrying economic outlook means that the rising cost of living is often out of our control. But if you know you should make wiser financial decisions, and you’re not, “that’s where we need to look below the surface,” he said.

Translated by Luiz Roberto M. Gonçalves