Inflation and Mental Health: Coping with Financial Anxiety in Uncertain Times
According to the Ministry of Statistics and Programme Implementation of India, the annual inflation rate was around 7% as of June 2022, having remained above this rate for several months prior. This exceeds the Reserve Bank of India’s target range of 2-6% for the sixth consecutive month.
Among the most affected are food and related products, followed by transport, communication, health, education, and housing. These are essential for survival — making inflation not just a financial concern, but a life concern. In this article, we explore the connection between inflation and mental health, and how to cope with rising financial anxiety.
Inflation Triggers Financial Anxiety
Financial anxiety isn’t just about being broke. It can exist even when you have a job, investments, or savings. It stems from the fear that no matter what you do, you won’t have enough — now or in the future.
Inflation erodes purchasing power. What ₹100 could buy a decade ago can’t buy the same today. If you’ve spent years saving for the future, but inflation keeps eating away at that value, you start feeling anxious, helpless, or even defeated.
This creates a scarcity mindset, where everything feels like it’s slipping away — leading to unhealthy decision-making and emotional strain.
Fight or Flight: The Decision Trap of Financial Anxiety
When anxiety strikes, our brain reacts in extremes — either taking no risk at all or taking massive, impulsive risks. Here are some common signs of financial anxiety:
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Hoarding: Over-saving money or stockpiling items out of fear they’ll become unaffordable
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Overspending: Shopping as a distraction or emotional escape
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Avoiding financial decisions: Postponing budget discussions or ignoring money-related problems
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Over-lending money: Helping others financially even when your own finances are unstable
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Worrying irrationally: Feeling overwhelmed by the thought of managing your savings
If you're checking any of these boxes, you're not alone. Many of us do. The good news is: there are ways to address it, and you can start small.
Living with Inflation: How to Manage Financial Anxiety
You don’t need to become a financial wizard overnight. But taking small, consistent steps toward better financial and emotional wellbeing can make a huge difference. Here are a few tips:
1. Prioritize Financial Goals
Don’t overwhelm yourself by trying to tackle everything at once. Start by listing your top financial priorities — whether it’s paying off debt, saving for a medical emergency, or investing in education.
2. Focus on What You Can Control
You can’t change the national inflation rate. But you can control how you spend, save, invest, and collaborate. Look at opportunities to cut unnecessary costs or improve income sources. Small adjustments can offer big relief.
3. Train Your Mind to Expect Uncertainty
This doesn’t mean becoming negative — it means becoming prepared. Mindfulness practices and therapy can help you navigate uncertainty without spiraling into panic. Being mentally ready for tough scenarios can reduce the power they hold over you.
4. Educate Yourself
Financial literacy reduces fear. Learn about budgeting, inflation, and investments — and don’t hesitate to seek guidance from subject matter experts. The more clarity you gain, the less intimidating finances feel.
5. Practice Self-Compassion
You’re not responsible for carrying the weight of the world. Take breaks, rest, and reward yourself. You are your most valuable asset — and no amount of money is worth sacrificing your mental and physical health.
In This Together
Inflation affects us all — emotionally, mentally, and financially. You're not alone in this. Pause. Breathe. Reach out. This phase, like all others, will pass.
If you or somebody you know wants help dealing with financial anxiety, consider reaching our ‘Support’ and ‘Engage’ verticals for affordable and inclusive help!
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