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For Ellie Alvarado, a teacher and mother of three in Elgin, Illinois, the question of how to pay the bills has become a source of anxiety and tension, especially when she and her husband argue about how to save.
“When I say, ‘OK, we can’t buy anything this week or we’re going to overdraft’ — he’s like, ‘No, what are you talking about? we both work That shouldn’t be happening,'” Ms. Alvarado said.
Rising grocery costs have eliminated the need for impromptu visits to McDonald’s. Branded cereals and other small luxury items are also out. Gas prices, recently hovering around $5 a gallon, are also eating into their budgets.
“Every time I fill up our van with gas, I’m amazed,” said Ms. Alvarado, who sometimes only sees $100 in her family’s checking account. “I always worry,” she added.
Her husband, who works in a factory, chose the night shift because it paid more per hour. But her family still defaulted on their housing payments.
“I can defer the mortgage for two weeks,” said Ms. Alvarado, 38, who keeps tabs on the family’s budget. “But then it’ll be another two weeks and then they’ll call you all of a sudden.”
Inflation is now at its highest level in 40 years, forcing many families to live on less. According to data released this month by the Bureau of Labor Statistics, the consumer price index rose 9.1 percent from a year earlier, with some of the biggest increases in prices being seen in basic necessities like groceries, rent and gas. The added financial stress not only takes a toll on bank accounts, but can also bring depression, shame, anger, or anxiety.
A 2017 study of older adults found that how someone perceives and responds to financial stress can impact their mental well-being. Those who were upset about their economic circumstances were more likely to have higher depression scores than those who were also under financial stress but didn’t care as much — even when other factors such as health and income were taken into account.
Fortunately, “there’s a lot we can do to manage and manage 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 to financial experts about how to manage the emotional fallout of money worries and had productive conversations about finance with family members.
Rely on self-reflection and communicate with empathy
Typically, when couples disagree on how to manage their finances, each partner tries to persuade the other to change their mind, said Rick Kahler, co-founder of the Financial Therapy Association, which is collaborating on a book for couples struggling with money.
Instead, Mr. Kahler suggested, think about how you react when you talk about your finances. What is triggered by your past? Are there any stories or scripts you live by when it comes to your finances — like the idea that hard work always comes with rewards?
Approach your partner with empathy and ask, “What are you hoping to gain from spending this money?” or “What is your fear of cutting this item?” said Herr Kahler.
Both partners may eventually realize that they want the same thing — for example, that they both want the best for their families.
Amanda Clayman, a financial therapist in Los Angeles, noted that when communicating about 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 every month.” And try to use “I” statements whenever possible, such as: “I’m uncomfortable with how much we pay for entertainment subscriptions and wonder if we can save on that.”
For this to work, Clayman adds, both partners must feel that their needs are being met and that they have an equal say in the matter, regardless of who is more anxious or who makes more money.
Spend wisely, but don’t deprive yourself completely
Whether you live alone or manage the finances of a large family, it’s important to think about goals before attempting to solve financial problems, said Megan McCoy, a licensed marriage and family therapist who teaches financial planning courses at Kansas State University teaches.
What are you saving for? What do you need to 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 back that won’t negatively impact my mental health?” said Dr. McCoy. “I think people tend to limit too much.”
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 administrator, and now lives about 25 miles north of the city in Lawrence, Massachusetts. Rents are cheaper there, she said, but still “disgustingly expensive.”
What keeps her up at night is the possibility that something will go wrong and she doesn’t know how much longer prices will keep going up.
“I’m really one bad tire replacement away from being in financial distress,” said Ms. Davis, who lives alone and has no other income to rely on.
There’s been so much uncertainty in recent years that “fear keeps popping up,” said Dr. McCoy. But having a plan to work towards — whether it’s building your savings or taking steps to pay down debt — can instill a sense of power and control.
Orly Hersh and her family made the decision five years ago to move in with her mother in the home where she grew up in Boulder, Colorado. It allowed their mother to age in place and them to stay in the city they loved. She and her husband, who are both teachers, cannot afford to own a home.
“It’s a great mutual benefit for all of us,” said Ms. Hersh, 53, a mother of two.
Despite saving on housing costs, Colorado currently has some of the highest inflation costs in the country and rising prices have eaten a large chunk of their budget. To pay the bills for their youngest daughter’s recent hospitalization, they have to tap into Ms Hersh’s pension fund, “which is depressing,” she said.
But, she added, it’s better for her stress levels to pay off as soon as possible. “I really hate having this debt hanging over my head,” she said.
Discover different types of professional help
Visiting a financial advisor can be helpful for anyone looking to gain financial education. For example, maybe you need tips on creating a budget or you want to learn the basics of investing. If cost is an issue, the Association for Financial Counseling and Planning Education offers 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’re feeling stuck.
“The question is: What is going on internally? What unfinished business from the past needs to be done?” said Mr. Kahler.
For example, one of his clients insisted on spending all the money that had come into his checking account. During financial therapy, he realized that he had developed this behavior because he didn’t 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 during a bankruptcy.
Talking to a financial therapist can help people get to the bottom of their feelings about money and understand long-held beliefs, which “frees us to embrace new behaviors that are in our best interests,” Mr. Kahler said.
A worrying economic outlook means 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 “we need to look under the hood,” he said.
Audio produced by Kate Winslett.