It’s terrible for our state of mind, awful for our health, and can have an impact on every aspect of our lives from work to our finances.
Anyone glued to rolling news and finding new and terrifying things to worry about every day, can add ‘worrying about the impact of all this anxiety’ to the list.
At times of acute stress, it can push us into knee-jerk reactions. This is hardly surprising: we’re hardwired to react to stress with fight or flight, so it can be incredibly difficult to do nothing at all. Anyone who looked at their investments in the early days of the pandemic, or indeed in any of the more volatile days since then, could be panicked into over-reacting.
However, experience has shown that as long as you have a diverse portfolio, the best approach in these situations is to remember that you have invested for the long term, and sit tight.
But it’s not just acute stress that can lead us into financial mistakes. For the past two years, the anxiety has been unrelenting. We’ve not only had to deal with the ongoing stress of repeated waves of the virus, but the emerging cost of living crisis too.
This has all kinds of negative effects on our brains. Many of us are finding it harder to concentrate and remember things, so thinking through financial problems, like putting together a monthly budget or working out how we’re going to cover the cost of rising bills, becomes much tougher.
After a while, the stress and worry will feed into low moods too, which can make it incredibly difficult to motivate yourself to deal with money. You might find yourself putting off jobs like shopping around for cheaper insurance or haggling for a better broadband deal, because you just can’t face it.
There’s also the risk that we try to cheer ourselves up with the endorphins we get when we spend. This is where the old cliché of retail therapy comes from, and it’s incredibly unhelpful. While it may feel good in the moment, it will feel truly awful when you get your credit card bill.
The causes of this stress aren’t going to go anywhere, and there’s every chance that things will get worse before they get better. We’re already living with horrible price rises: figures out this week showed that 81 per cent of us have seen our costs rise in the past month. And this is a long way from over. Disruptions to world trade as a result of war are expected to push inflation well past earlier predictions of 7.25 per cent in April to 8 per cent and beyond.
It means we need to find a way to manage stress, so we can overcome low moods and lack of motivation in order to face these challenges with a clear head. Of course, in some cases, the problem will have gone beyond self-help and strategies. If the situation has triggered severe anxiety or depression, then the most sensible option is to seek help from a qualified professional, and it’s worth seeing your GP as soon as possible.
However, if your problems are less severe there are three steps that can help.
1 Set aside an hour on a weekday evening every week to sort just one financial job.
If you’re struggling with motivation, this will give you a specific time to focus on something manageable. You can tackle a couple of ongoing maintenance tasks each time – like checking your bank balance and making sure you have the cash to cover forthcoming expenses.
You can also set one single financial job you need to get done – like checking your pension is on track or shopping around for insurance. If you’re worried you’ll just put it off when you get there, build some reward into the process. So if there’s a TV show you really want to watch, for example, you could save it for straight after your admin hour.
2 Ask a friend to be a buddy
If you’re struggling to stick to your plans, it can help to work together with a buddy. Even if they just offer a bit of moral support for that hour as you both crack through your financial tasks, it can help enormously. For some issues it can also help to talk to someone you trust. They might be willing to set aside some time to go over your monthly budget, for example, and help you see the wood for the trees.
3 Don’t be afraid to ask for help
If you need more expert help, there’s support out there for that too. If you’re struggling with debts, charities like Step Change or National Debtline are a great place to start. If you’re worrying about any other aspect of your finances, Citizens Advice can be a huge help, as they know every-thing from the energy support system to the benefits process like the back of their hand.
Don’t feel bad about needing help. You’re dealing with three once-in-a-generation crises all at the same time. After fighting fires for two years, you might just need a bit of support, and there’s enormous strength in recognising that.
Sarah Coles is a personal finance analyst at Hargreaves Lansdown