The Silent Struggle: The Impact of Inflation on Your Mental Health

man talking bills out of his wallet

You make your way to the grocery store as you do every week. Your mind won’t stop gabbing about all the bills piling up and how much money you are about to spend to feed your family for the next week. The anxiety creeps in deeper the closer you get to the store. You did your work spending hours clipping coupons from the newspaper ads and downloading every digital coupon you found useful. You just hope you can buy everything your family needs to survive the next week.

Does this sound familiar? You are not alone, my friend. Too many American families are struggling to meet their basic needs right now. Wondering if and praying that there is an end in sight. Inflation is a giant source of stress for so many people. Financial stress is causing feelings of hopelessness and mental exhaustion for millions of people. But what can we do about it? In this blog, I will cover:

  • What is Inflation and What Causes it?
  • Financial Stress And Mental Health
  • Coping Strategies for Navigating Inflation’s Impact
  • How Therapists Can Support Clients During Times Of Inflation
  • Helpful Next Steps and Support

What is Inflation and What Causes it?

Let’s start by learning what inflation is. The Bureau of Labor Statistics defines inflation as a general, continuous increase in prices of goods and services over time. When this happens, the value of the dollar decreases.

For many people, since the COVID-19 pandemic stormed the entire world, money just doesn’t go as far as it used to a seemingly short time ago. As if the pandemic wasn’t stressful enough on its own, the cost of living has skyrocketed over the last few years. A lot of people feel like they have to go to work just to afford the gas to go to work. There is no money left over after you pay the bills to keep a home over your family’s heads, and your stress levels are still at an all-time high.

What Causes Inflation?

Inflation is caused by a variety of factors. Simply put, inflation happens when there is an increase in production costs or an increase in demand for products and services. Economists often discuss different drivers of inflation. Here are some of the primary causes of inflation:

  1. Demand-Pull Inflation: When demand for goods and services exceeds their supply. If consumers are eager to buy more than what’s available, businesses may raise prices to balance the supply and demand.
  2. Cost-Push Inflation: In this case, inflation is driven by a rise in production costs. With higher costs of materials, labor, or other factors of production, businesses often pass those costs on to their consumers by raising prices.
  3. Built-In Inflation: Sometimes, inflation can be self-driven. When workers demand higher wages to compensate for price increases, employers, in turn, raise prices to cover the increased labor costs, creating an ugly cycle of rising prices and wages.
  4. Monetary Policy: Central banks, like the Federal Reserve in the United States, influence inflation through their control of the money supply. If the money supply increases significantly, it leads to more money competing after the same amount of goods and services, causing inflation.
  5. Fiscal Policy: Government spending and taxation policies can also impact inflation. When the government increases its spending, it can stimulate demand in the economy, potentially leading to inflation. Tax cuts can also have a similar effect by leaving consumers with more disposable income to spend.
  6. Exchange Rates: Changes in exchange rates will affect the price of imported and exported goods. A weakening domestic currency tends to lead to higher import prices, contributing to inflation.
  7. The Housing Market: If homes are in demand because the economy is experiencing an expansion, home prices will rise. Housing construction materials, such as lumber or steel used to build homes, might all see increases in demand resulting from higher demand for homes.
  8. The COVID-19 Pandemic: In the beginning, everyone was staying home, businesses were closing their doors, and there were labor shortages and major issues with the supply chain. Since then many people have returned to the workplace, are going out to restaurants, shopping, and traveling. The supply for the uptick in demand is still off balance and the rise in labor costs causes prices to increase.

Financial Stress And Mental Health

stressed out woman at her computer

In the world of mental health, I have seen that financial situations are a significant source of stress for my clients and the clients of my peers. There is a real fear of not being able to afford essential items that can cause serious health impacts. Common mental health issues exacerbated by financial strain are:

  • Chronic stress
  • Anxiety
  • Depression
  • Low sense of self-worth

Who Does Inflation Impact?

Although inflation affects every consumer, there is undoubtedly more strain on some individuals and demographics than on others. Here is a short list of those who suffer the negative impacts of inflation the most.

  • Lower-income Households
  • Fixed-Income and Retired Individuals
  • Working Class and Middle-Class Households
  • Small Business Owners
  • Women and Minority Groups

When the prices of day-to-day basic needs, like housing, groceries, gas, and health care constantly rise, it can make people feel like they’re constantly treading water, struggling to keep their heads above the torrential financial waves.

When people are worried about making ends meet and providing the most basic needs for their families, it hurts their daily lives and even fogs their decision-making abilities. How can anyone be expected to make decisions when they are struggling to eat every day?

Coping Strategies for Navigating Inflation’s Impact

Navigating the impact of inflation can be challenging, but there is hope. There are strategies U.S. adults and families can use to successfully weather economic challenges. Let’s get into some of them now.

Create a Budget:

Write down every essential expense and how much they are, the expenses you have to pay every month to keep living your life. It would be a good idea to use your last three or four bank statements to identify your essential expenses. Here are some of them:

  • mortgage or rent
  • utilities
  • phone
  • insurance
  • healthcare
  • groceries
  • childcare

Make sure these expenses are covered first. If there is still money left over after these are covered, start adding your non-essential expenses and savings and/or investments.

Save Where You Can:

Look for ways to cut down your everyday expenses. You can use coupons and shop discounts, buy the generic version at the grocery store, and meal prep once a week. This helps reduce food waste as well as saves a little money.

Seek Financial Assistance:

There may be government assistance programs you can apply for. Look for resources in your community to help with groceries, housing assistance, and childcare expenses. These programs are designed to help low-income families during hard times.

Many churches and local organizations offer assistance or have resources available.

Find Ways to Increase Your Income:

This can include part-time work, freelancing, or gig work. If you have the time, side hustles can help provide extra financial support.

Educate Yourself:

Knowledge is power. Having at least a basic understanding of personal finance will help you make better financial decisions.

Investments:

Start where you are. You don’t have to be rich to start investing. You can consider a low-cost investment like a savings account or certificate of deposit at the bank. Try not to touch this money.

Plan Ahead:

What are your long-term goals? What can you do now to be in a better financial place one year from now? Maybe consider furthering your education or career development opportunities that can lead to higher-paying jobs.

Seeking Support From Mental Health Providers:

Talk to someone, find support. Life is hard and we are here to help you navigate it. You can find a therapist who can help transform your mindset and teach you crucial tools and strategies for riding the tidal waves.

How Therapists Can Support Clients During Times Of Inflation

Therapists can play a vital role in helping individuals and families who are impacted by inflation in various ways. Here are some ways therapists can provide therapy tailored to economic stressors and support people facing financial challenges due to inflation:

  • Emotional Support and Validation
  • Budgeting and Financial Management
  • Family and Relationship Support
  • Career Counseling
  • Resilience-Building
  • Advocacy and Resource Referrals
  • Self-Care and Stress Reduction
  • Empowerment
  • Long-Term Mental Health Maintenance

With expertise in mental health and emotional well-being, therapists can be a valuable source of support for individuals and families facing mental health problems because of inflation. Guidance and effective strategies can help people navigate financial stressors while maintaining their mental and emotional well-being.

Helpful Next Steps and Support

man handing credit card towards camera

Rising prices on the cost of living are causing hardship and financial strain on so many individuals and families in America. Increasing financial stress has a negative impact on physical health and mental well-being. People are tired and need comfort, rest, and support.

I want you to know that there is support available here. If you or anyone you know is struggling to stay afloat in these harsh economic times, we are here to help you navigate through it.

You don’t have to do it alone. Through in-person or online therapy, we can be a vital part of your mental well-being. We have therapists available for individual, child, teen, and family therapy. We will match you with the perfect fit for your needs.

Contact SMPsychotherapy and Counseling Services today to get the support you need.

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