Inflation A Driver of “Alarming” Stress Levels, APA Study Shows

Are you feeling a bit stressed out over money these days? If so, you’re definitely not alone. A recent poll conducted for the American Psychological Association found that more adults rated inflation, and issues related to the invasion of Ukraine, as stressors than any other issue in the history of the APA’s Stress in America^TM poll. Top-rated sources of stress for inflation included prices of everyday items, such as gas, energy bills, and groceries (cited by 87%), supply-chain issues (81%), and global uncertainty (81%).

Financial stress certainly isn’t new. In a Capital One CreditWise survey last year, 73% of Americans ranked finances as their number-one stressor, and a study by the Global Financial Literacy Excellence Center and the FINRA Investor Education Foundation showed that even before the pandemic, financial stress was a problem in a substantial number of U.S. households.

It may be tempting to ignore financial stress, but in addition to emotional turmoil, studies show it can contribute to physical, as well as emotional health problems. If you’re experiencing severe financial stress, these steps can help you reclaim your financial confidence:

1. Don’t ignore the problem. Instead, try facing it head-on. A 2021 study showed that over half of Americans who have a written financial plan feel “very confident” about reaching their financial goals. While it’s tempting to ignore or compartmentalize your anxiety about money, dealing with the problem head-on can help put your fears to rest.
2. Embrace transparency. If you have a spouse or significant other, talk to them about what you’re feeling, and tell the truth about your finances if your partner isn’t aware. Money can be a major source of conflict for couples, adding even more stress to the situation. By working together to solve your money problems, you may find your relationship to be even stronger.
3. Get professional help. If you don’t know how to create a financial plan on your own, a financial advisor can help you get your finances on track. As humans, we often hope to find a quick fix to get ourselves out of a financially troubling and stressful situation, but a fiduciary advisor with a holistic approach can help you focus on your entire situation – from assets and liabilities to tax planning and beyond.
4. Don’t wait. Financial inertia – putting off making financial decisions out of fear or ignorance – is real. Behavioral economists Daniel Kahneman and Amos Tversky found, in their study of loss aversion, that individuals feel less regret from the negative consequences of inaction than they do for bad outcomes that result from new actions, so it may seem comforting – at first – to do nothing. However, doing nothing may be what caused your financial stress in the first place!

While financial stress can feel paralyzing, taking steps to get back on track can bring much-needed relief. For some people, it can even be stimulating. Like going on a diet or getting in shape, improving your financial situation will likely require both discipline and patience. Use your financial advisor as a coach, and your spouse, partner, or family as sounding boards and cheerleaders.

With each small success, take stock of your anxiety level. Do you feel better? Worry less? Celebrate the small wins and stay focused on your long-term financial well-being. If we can be of assistance, please let us know.

Jeremy S. Joseph Financial Advisor CFP®, ChSNC®

Jeremy has been involved in the financial services industry since 2006. He earned a bachelor of arts degree in communication studies from the University of Kansas.