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 expenses.
“When I say, ‘OK, we can’t buy anything this week, otherwise we’re going to be overdrawn’ – he says, ‘No, what are you talking about? We both work. This shouldn’t happen,” Ms. Alvarado said.
Soaring food prices mean there are no more impromptu trips to McDonald’s. Branded cereals and other little luxuries are also out. Gasoline prices, which have recently hovered around $5 a gallon, are also chipping away at their budget.
“Every time I fill up our van, I’m flabbergasted,” said Ms. Alvarado, who sometimes only sees $100 in her family’s checking account. “I’m still worried,” she added.
Her husband, who works in a factory, decided to take the night shift because it pays more by the hour. But her family has always fallen behind on their housing payments.
“I can defer the mortgage for two weeks,” said Ms Alvarado, 38, who follows the family’s budget. “But then it becomes two more weeks, and then all of a sudden they call you.”
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 ago, with some of the largest price increases in commodities. necessities such as food, rent and gasoline. The added financial stress is not only hard on bank accounts, but it can also lead to feelings of depression, shame, anger, or fear.
A study of older adults published in 2017 found that how someone perceives and reacts to financial pressure can have implications for their mental wellbeing. Those who were upset about their economic situation were more likely to have higher depression scores than those who were also financially stressed but not as bothered by it – even controlling for other factors, like health and Income.
Fortunately, “there is a lot we can do to manage and overcome this stress and emotion,” 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 with financial experts about how to deal with the emotional fallout of money worries and have productive conversations about finances with family members.
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Disturbing prospects. Against a backdrop of persistently high inflation, rising consumer prices and falling spending, the US economy is showing clear signs of slowing, fueling concerns about a possible recession. Here are eight more metrics that signal upcoming issues:
Embrace self-reflection and communicate with empathy
When couples disagree about how to manage their finances, each partner usually tries to convince the other to change their minds, said Rick Kahler, co-founder of the Financial Therapy Association which collaborates on a book for couples with money problems.
Instead, Kahler suggested, think about how you react when discussing your finances. What is triggered by your past? Are there any stories or scripts you follow when it comes to 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 of spending that money?” or “What is your fear of cutting this article?” said Mr. Kahler.
Both partners may eventually realize that they want the same things – for example, that they each want what is best for their family.
Amanda Clayman, a financial therapist in Los Angeles, noted that when communicating around differences, any requests should be specific. So instead of saying, “We need to save more,” say, “Let’s find ways to save an extra $200 every month.” And try to use “I” statements when possible, such as, “I’m not comfortable with the amount we pay for entertainment subscriptions and wonder if we can cut it.”
For this to work, Ms Clayman added, both partners need to feel their needs are taken care of and have a say in it, no matter who is more anxious or who makes more money.
Spend wisely, but don’t deprive yourself completely
Whether you live alone or manage finances for a large family, it’s important to think about goals before aiming to solve money problems, says Megan McCoy, a licensed marriage and family therapist who teaches planning classes. Finance at Kansas State University.
Why are you saving? What do you need to cover on a limited budget? Write that down. Then think about potential reductions, but try to keep the things that bring you joy.
Ask yourself, “What can I cut that won’t negatively affect my mental health?” says Dr. McCoy. “I think people tend to restrict too harshly.”
For Sarah Davis, 36, essential (but costly) expenses include mental health therapy and her beloved cat, who has developed health issues.
“He’s like my little furry kid,” she said.
To better afford such things, she left Boston, where she works as a project administrator, and now lives about 25 miles north of the town of Lawrence, Mass. Rent is cheaper there, she said, but still “grossly expensive.”
Understanding inflation and its impact on you
What keeps her awake at night is the possibility that something is wrong and she doesn’t know how long prices will continue to rise.
“I’m really one bad tire change away from being in dire financial straits,” said Ms Davis, who lives on her own with no other income to rely on.
There has been so much uncertainty over the past two years that it “perpetually creates anxiety”, Dr McCoy said. But having a plan you’re working on, whether it’s building up 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 to move in with her mother five years ago, in the house where she grew up in Boulder, Colorado. This allowed his mother to age in place and for them to stay in the town they loved. She and her husband, both teachers, do not have the means to become owners.
“It’s a great mutual benefit for all of us,” said Ms Hersh, 53, a mother of two.
Although they are saving money on housing costs, Colorado currently has some of the highest inflation costs in the country, and rising prices have squeezed their budget significantly. To pay the bills for her youngest daughter’s recent hospitalization, they will have to dip into Ms Hersh’s retirement fund, “which is depressing”, she said.
But, she added, it better get his stress level to pay him back sooner rather than later. “I really hate having this debt over my head,” she said.
Discover the different types of professional help
Consulting a financial advisor can be helpful for anyone looking to gain financial knowledge. Perhaps, for example, you need advice on budgeting or want to learn the basics of investing. If cost is a concern, the Association for Financial Counseling and Planning Education is offering a free virtual financial coaching session for anyone experiencing financial uncertainty.
Financial therapy is another type of counseling that can help people understand their thoughts and beliefs about money, especially when they feel stuck.
“The question becomes: what is going on internally? What unfinished business from the past needs to be finished? said Mr. Kahler.
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 did not believe 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 a bankruptcy.
Talking with a financial therapist can help people get to the root of their feelings about money and understand long-held beliefs, which “frees us up to start adopting new behaviors that are in our best interests.” “said Mr. Kahler.
Worrying economic prospects mean that the rising cost of living is largely beyond our control. But if you know you should be making smarter financial decisions, and you’re not, then “that’s when we need to look under the hood,” he said.
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