Why is it so bad right now?
Before you beat yourself up about your finances impacting your self-worth, take a look at the current economic climate. You may realize that you can at least partially blame outside circumstances for your financial uncertainty.
Inflation may have cooled since it hit a 40-year high of 9.1% in June 2022, but the cost of living remains high. The Bureau of Labor Statistics' most recent numbers, released Feb. 13, show a 3.1% year-over-year increase in the cost of all consumer items.
Freddie Smith, an Orlando-based realtor, argues in his own TikTok video that $50 is the new wage to be considered middle class, once you account for the higher costs of housing, food and child care.
Financial health can look different depending on which generation you belong to, as needs change over time. But if the cost of basic goods remains high, it’s no wonder people attach their mental health to things such as sticking to a budget or saving money.
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What can you do about it?
If you’re feeling down on yourself because of your finances, there’s a an industry specifically designed to help you: financial therapy.
The Financial Therapy Association explains that practitioners use “therapeutic and financial competencies” to help you build a different emotional and behavioral relationship to money as a way to improve your overall well-being. This can range from understanding how past experiences and your beliefs shape the way you treat your finances.
If this all sounds woo-woo to you, learning behavior economics may be easier to swallow.
Behavioral economics is the study of human psychology as it relates to decision-making — including within the realm of finance. Understanding how emotions impact financial decisions can help you identify common behavioral patterns and improve your judgment. This often includes acknowledging biases that can cause you to misjudge something's true value.
It may seem counterproductive to shell out more money for things like therapy to fix your money mindset. But it’s okay to seek out help if you need it, especially during uncertain times.
With files from Moneywise contributor Vishesh Raisinghani
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