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“The tens of thousands of federal workers who have been cut from their jobs are not the only ones dealing with financial uncertainty. With people afraid to look at their retirement accounts and others fretting about a possible recession and layoffs — fear around our individual and collective financial future can feel overwhelming.
There’s no denying having financial reserves helps people get through financial instability, but some research suggests there are other factors that matter as much — or in some cases more — when it comes to people’s physical and mental health.
The way people think about their financial circumstances makes a significant difference in how well they weather the situation, says Jeffrey Anvari-Clark, a professor of social work at the University of North Dakota. He studies the way financial instability impacts people.
A study he published in 2023 showed that how a person felt about a decline in income mattered to their emotional well-being 20 times more than the actual financial change itself.
“ It was the perception that — was it a catastrophe or was it a minor thing?” says Anvari-Clark, describing the way that people in his research approached the problem of financial insecurity. He says the narratives people told themselves about money “played a much bigger role in determining how a person was feeling about their financial health,” than their actual financial reserves.
People who can experiance a financial setback as temporary, he says, may be able to remain relatively calm and move through it, while some might experience the same setback as a disaster — one that triggers intense stress that can spiral into serious health problems, like depression, substance abuse, high-blood pressure and heart problems.
This is not to suggest that money doesn’t matter, Anvari-Clark says.If people can’t pay the mortgage or get food on the table, that’s a crisis. But he says his research shows that how people deal with that crisis can make things better — or worse.
“ Money often is an emotional problem presenting itself as a thinking problem,” says Amanda Clayman, a therapist who specializes in helping people manage financial distress.
Her clients frequently enough come to her feeling fatigued or paralyzed — not just from job loss, but from dealing with all kinds of financial uncertainty.
Reigning in these feelings, says clayman, requires that people take steps to channel their energy in a productive direction after a financial setback.After a job loss, grieve then construct a new identity
One of the factors that keeps people from moving on after a job loss is the grief they can feel for the identity they built around the job, says Anvari-Clark.
Recognizing and processing this grief is critically important, he says.
“ People who didn’t know how to handle that loss of identity,” struggled to move on after job loss, he says. “That’s what made it perhaps an even bigger catastrophe than just simply having a reduction in income.”
that said, it’s not necessarily an easy process.
“The work and the mission is something that I’m really mourning,” says one federal worker, Michelle, who was fired from her job working to prevent child sex trafficking at the Centers for Disease Control and Prevention. Michelle asked to use only her middle name for fear of jeopardizing the severance pay she is still receiving from CDC.Given that her whole team was cut, she worried no one would continue the work they where doing.
“I’m heartbroken for what this means for our country and, and the safety of the people in it,” she says.
Still, she’s beginning to think about work she could do in other countries, at a child advocacy center, or in the field of sex education.
“ I’ve been trying to think of paths that still feel in service of the larger goal of public service,” she says.
Grief can be necesary in situations other than job loss.Financial therapist Amanda Clay takes an example from her own life.
“ I have a kid going to college this fall and we have been growing her 529 for years.” Now that the markets are so volatile,says Clayman,”We’ve just watched a big chunk of her savings disappear.”
Clayman says she’s trying to “grieve the hope of what our financial position was going to be.” Experiencing and processing the resentment and the feeling that “I did everything right,” she says is painful, but she believes it’s the most constructive step she can take in order to move on and embrace the new financial reality in wich she finds herself.”
Navigating Financial Uncertainty: How Your Mindset Can Make All the Difference
Time.news Editor: Welcome, readers. With rising concerns about job security, retirement funds, and the overall economic climate, many are feeling overwhelmed by financial uncertainty.Today, we’re speaking with Dr. Evelyn Reed, a behavioral economist specializing in financial psychology, to explore how we can better manage these anxieties and build financial resilience. Dr. Reed, thank you for joining us.
dr.Reed: Thank you for having me. It’s a crucial topic, especially right now.
Time.news Editor: Dr. Reed, recent reports highlight that even more than the actual financial change itself, how we feel about our financial circumstances significantly impacts our well-being. Can you elaborate on this?
Dr. Reed: Absolutely.It boils down to financial mindset [[1,2,3]].Research, including studies by Professor Jeffrey Anvari-Clark, shows that our perception of a financial setback plays a huge role in our emotional and mental health.Viewing a job loss or a dip in savings as a catastrophe triggers a much more intense and damaging stress response compared to seeing it as a temporary setback. This aligns with the principles of the psychology of money [[2]].
Time.news Editor: So, it’s about reframing our thinking? What practical advice can you offer to someone struggling with this negative mindset?
Dr. Reed: Reframing is definitely key.First, acknowledge your feelings.It’s okay to feel scared or frustrated. Don’t suppress those emotions. The article mentions Amanda clayman,a financial therapist,who rightly points out that money is frequently enough an emotional problem masquerading as a practical one. Allow yourself to grieve.
Time.news Editor: grieve? That sounds intense when we are talking about money.
Dr. Reed: Yes, Amanda Clayman also mentions feeling the need to grieve the loss of potential financial gains regarding saving for her child’s college due to the volatility in the markets. The emotional attachment to our financial goals and expectations can trigger feelings of loss when those plans are disrupted. Acknowledging and processing this grief is crucial for moving forward in a healthy way.
Time.news Editor: The article also touches upon job loss and the grief associated with losing one’s professional identity. How can someone navigate that?
Dr. Reed: your job frequently enough becomes intertwined with your sense of self. Losing it can feel like a personal blow. It’s vital to recognize that the job market does not define you. As the article mentions acknowledging they are grieving the loss of their identity, is critical to move on after job loss.
Allow yourself time to mourn the loss of routine, relationships, and the feeling of purpose. Then, actively start constructing a new narrative. Ask yourself: What skills did I gain? What aspects of my previous role did I enjoy? How can I translate those into new opportunities?
Time.news Editor: That’s excellent advice. Many people are experiencing what feels like constant financial uncertainty.What are some proactive steps people can take to build financial resilience in the face of ongoing economic challenges? [[1]]
Dr. Reed: Building financial resilience [[1]] is about more than just saving money, although that’s important. It’s about cultivating a growth mindset [[1, 3]]. Here are a few actionable steps:
Increase Financial Literacy: Understand basic financial principles like budgeting,investing,and debt management. The more you understand, the more empowered you’ll feel.
Challenge Negative Thoughts: When you catch yourself thinking catastrophically, consciously ask yourself: Is this thought based on facts or fear? What’s the worst-case scenario, and how likely is it?
Focus on What You Can Control: You can’t control the stock market or interest rates, but you can control your spending, your job search efforts, and your efforts to learn new skills.
Seek support: Talk to trusted friends, family members, or a financial advisor. Sometimes just voicing your anxieties can help alleviate them.
* Practice Mindfulness: Techniques like meditation or deep breathing can help you manage stress and make more rational financial decisions, rather than emotionally driven ones.[[2]] Taking the time to center yourself and re-evaluate.
Time.news Editor: That’s very helpful. Frequently enough people are in a state of paralysis, and can’t bring themselves to address their finances.What advice do you have for them??
Dr. Reed: One simple effective solution would be to take baby-steps. Start by listing out your income and expenses, it can be a rough estimate. Then make small adjustments to reduce your expenses that are reasonable to stick with. This would provide a clearer picture,allowing you to formulate simple strategies that can empower you to be more in control of your financial circumstances. Then slowly work on long-term financial goals.
Time.news Editor: Dr. Reed, thank you for sharing your insights and practical advice. It’s reassuring to no that even in the face of economic uncertainty, we have the power to shape our financial well-being by cultivating a resilient mindset.
Dr. Reed: My pleasure. Remember, building financial resilience is a journey, not a destination. Be patient with yourself, celebrate small wins, and keep learning.