In the United States, a third of adults have reported a negative decline in their mental wellbeing during the past year. Grief, stress, isolation, and anxiety are some of the more talked about afflictions, but there is a little conversation being had about finances and mental health in the crisis.
Research shows that people around the globe have experienced decreases in their income and savings ranging from 30-80 percent, which could impact people’s livelihoods well into the future. Even more concerning, people with anxiety and depression are three times more likely to be in debt, so the pandemic could potentially spark a vicious cycle where people’s finances shrink, their mental health suffers, their finances worsen, and so on.
However, there is hope. You can regain control, and the cycle can be broken. Mental health is extremely complex and fragile and requires specialized care, but there are simple financial steps that can help alleviate some of the pressure on our mental health. The concept of financial resilience – the ability to cope with unexpected expenses in life – is undoubtedly linked to mental health, and what’s more, anyone can develop and apply financial resilience.
The impact on the economy and individuals
COVID-19 has been a shock to the global economy – its effects are three times worse than the 2008 financial crisis, and has plunged nations into a recession. Everyday people have felt the repercussions hardest – 25% of U.S. adults say they or someone in their household has lost their job in the COVID-19 outbreak, and 46% of lower-income adults say they have had trouble paying their bills since the pandemic started.
On top of that, government measures intended to ease the economic strain of the pandemic are diluting the money that people have put away. The U.S. Federal Reserve has injected the equivalent of over $3 trillion into the economy in an attempt to stimulate spending. But the problem is that by increasing the money supply, inflation is likely to increase – meaning the purchasing power of the dollar falls and the prices of everyday goods go up. This impacts people’s savings because the value of their money drops while they also need a bigger amount to afford the same products or services as before.
The government essentially risks weakening people’s savings at a time when they need them the most. From a mental health perspective, this can be dangerous – people are more likely to grow disillusioned about their financial future and may be prompted to spend recklessly now in order to feel a sense of control. To avoid getting to that point (or to help get out of that point), we have to devote time to our needs and building financial resilience. Here are some simple steps you can take moving forward.
Take control of your emotions, and your wallet
Start by acknowledging your feelings, how they fluctuate, and how often they appear. Talk to people you trust about your concerns – this could be family, friends, or colleagues, so long as you feel safe opening up to them – and welcome new perspectives or ideas. Ask yourself how much of your negative emotions have something to do with money, and the specifics (are we talking salary, savings, family costs, recklessness, expensive luxuries?). Recognition is the gateway to taking a hold of your future, in any area of your life.
Next, look at the aspects of your finances that you can control. Be pragmatic about ways you can reduce unnecessary spending or high-interest debt, even if just for a defined short-term period. Be conscious when you buy things, ask yourself if they will benefit you significantly or just cause new burdens and financial anxiety, and whether they will generate continued expenses or just be a one-time spend. Actively shop around for better prices before committing to the first one you see.
Get external help
If you find yourself struggling to be disciplined, you could also contact a financial advisor who can offer support through government concessions, hardship variations, and other alternatives. It’s worth speaking with your bank, insurance, and utility company too, as they may be able to offer extended deadlines or payment plans during COVID-19.
Branch out with your income
Another option is to diversify your income sources. Tutoring online, picking up freelance projects, and selling unused items can go a long way, and can protect you if your main source of income is suddenly blocked. This is also a great route to learn new skills that can boost your resume in the future and keeps your mind occupied.
Inform yourself more
In the same light, take advantage of any free time you have and educate yourself about your finances. This can be daunting at first, but once you overcome the initial barriers, you’ll be able to approach your recovery in a more organized, calm manner. There are plenty of free online resources to help, including Investopedia and MyMoney.gov, as well as a range of books to better understand money.
Positive reframing plays a big role in financial resiliency. Remind yourself that everything that is happening right now is temporary and that after every economic drop, there is a period of growth. Focus on one day at a time, remember that you are not alone, and use the moments when you do feel happy or relaxed as proof that you will bounce back.
With the world in such an uncertain state, it can be easy to let things spiral out of control. But it’s crucial to remember that we have the capacity to be resilient, whatever comes our way, and in any aspect of our lives. Financial resilience and mental health resilience go hand-in-hand, and although it may be a long journey, by reading this article you’ve already taken the first step towards a more empowered future.