How to deal with financial stress?

How to deal with financial stress?

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 when she and her husband argue over how to cut spending.

“If I say, ‘Okay, we can’t buy anything this week, or we’ll be in the red,’ he says, ‘No, what are you talking about? We are both at work. That shouldn’t happen,” Ms. Alvarado said.

Rising food costs have meant that there are no more spontaneous trips to McDonald’s. Branded cereals and other small luxuries are also out. Gas priceswho recently hovered around $5 a gallon also eat into their budget.

“Every time I fill up our van, I’m stunned,” said Ms. Alvarado, who sometimes sees as little as $100 in her family’s bank account. “I’m always worried,” she added.

Her husband, who works in a factory, decided to take the night shift because it pays more per hour. But her family was still behind on their housing payments.

“I can defer the mortgage for two weeks,” says Ms. Alvarado, 38, who keeps track of the family budget. “But then it will be two weeks and then they suddenly call you.”

Inflation has now reached its peak highest level in 40 years, leaving many families with less. According to data released this month by the Bureau of Labor Statistics, the consumer price index rose 9.1 percent from a year ago, with some of the biggest price increases for necessities such as food, rent and gasoline. The added financial stress is not only hard on bank accounts, but can also cause feelings of depression, shameanger or fear.

A study of older adults published in 2017 found that the way a person perceives and responds to financial pressures can affect their mental well-being. Those who were distressed by their economic conditions were more likely to have higher depression scores than those who were also under financial pressure, but who were not affected as much — even when controlled for other factors, such as health and income.

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

We spoke to financial experts about how to deal with the emotional impact of money worries and have productive conversations about finances with family members.

When couples disagree on how to manage their finances, each partner tries to convince the other to change their mind, says Rick Kahler, a co-founder of the Association for Financial Therapy that is contributing to a book for couples with money problems.

Instead, Mr. Kahler suggested, think about how you respond when you discuss your finances. What is triggered from your past? Are there any stories or scripts you live by when it comes to your finances – for example, the idea that hard work will always lead to rewards?

Approach your partner with empathy and ask, “What are you hoping to spend this money on?” or “What are you afraid of cutting this item?” said Mr. Kahler.

Both partners may eventually realize that they want the same thing, for example that they both want the best for their family.

Amanda Clayman, a financial therapist in Los Angeles, noted that when communicating differences, all requests should be specific. So instead of saying, “We need to save more,” instead say, “Let’s find ways to save an extra $200 each month.” And try to use “I statements” whenever possible, such as, “I’m not comfortable with how much we pay for entertainment subscriptions and wonder if we can cut corners there.”

For this to work, Ms. Clayman added, both partners need to feel that their needs are taken into account and have an equal say in them, regardless of who is concerned or making more money.

Whether you live alone or manage the finances for a large family, it’s important to think about goals before trying to solve money problems, said Megan McCoy, a licensed marriage and family therapist who teaches courses in financial planning at Kansas City. State University.

What are you saving up for? What should you cover on a budget? Write that down. Then think about possible cuts – but try to keep the things that bring you joy.

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

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

“He’s like my little furry kid,” she said.

To better afford such things, she left Boston, where she works as a project manager, and now lives about 25 miles north of the city in Lawrence, Massachusetts. Rent is cheaper there, she said, but still “sickeningly expensive.”

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

“I’m really one bad tire replacement away from being in major financial trouble,” said Ms Davis, who lives on her own with no other income to rely on.

There has been so much uncertainty in recent years that it “creates fear forever,” said Dr. McCoy. But having a plan you’re working toward — whether it’s building your savings or taking steps to pay off debt — can provide a sense of power and control.

Orly Hersh and her family made the decision five years ago to move in with her mother at the home she grew up in in Boulder, Colorado. This allowed her mother to age in place and they could stay in the city they loved. She and her husband, who are both teachers, cannot afford to become homeowners.

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

While they save money on housing costs, Colorado currently has some of the highest inflation costs in the nation and rising prices have taken a big bite out of their budget. To pay the bills from her youngest daughter’s recent hospitalization, they have to dive into Ms. Hersh’s pension fund, “which is depressing,” she said.

But, she added, it’s better for her stress level to pay it off as soon as possible. “I really hate that this guilt hangs over my head,” she said.

Seeing a financial advisor can be helpful for anyone looking to gain financial knowledge. For example, maybe you need tips on making a budget or want to learn the basics of investing. If cost is a concern, the Association for Financial Counseling and Planning Education offers: a free virtual financial coaching session for anyone experiencing financial insecurity.

Financial therapy is another type of counseling that can help people understand their thoughts and beliefs about money, especially if they feel stuck.

“The question becomes: what is going on internally? What unfinished business from the past still needs to be completed?” said Mr. Kahler.

For example, one of his customers insisted on spending all the money that went into his checking account. During financial therapy, he realized that he had developed this behavior because he did not trust that his money would be safe if he put it aside. This stemmed in part from his childhood, when his parents withdrew all the money from his savings account after losing their own money in bankruptcy.

Speaking to a financial therapist can help people get to the heart of their feelings about money and understand long-held beliefs, which “liberate us to adopt new behaviors that are in our best interest,” said Mr. Kahler.

A troubling economic outlook means that the rising cost of living is largely beyond our control. But if you know you need to make smarter financial decisions, and you don’t, then “we need to look under the hood,” he said.