Atieno stared at her supermarket receipt in disbelief. Milk, eggs, bread—everything cost so much more than last week. No matter how much she tried to cut back, the rising prices strained her budget to the breaking point. That night, she sat at her kitchen table surrounded by overdue bills and an empty purse. Atieno felt overwhelmed and anxious about how she would make ends meet. She began to feel helpless, worrying she’d have to take on another job or get a loan just to afford essentials.

Many people find themselves in Atieno’s position as inflation rises worldwide and in Kenya. The main concern being how long the situation will last and if they will make it to the other side with their current resources. You need to be emotionally and mentally stable to increase your chances of pulling through the tough economic times. This article will help you get the inner stability required, give you ways to prepare for inflation, and outline strategies to cope with financial stress.

Table of Content

Understanding Inflation and its Psychological Impact

Emotional and Mental Responses to Financial Stress

Preparing for Inflation

Rethink Your Spending Habits

Seek Out Bargains

Choose Your Debt Wisely

Look for a Side Job

Advocate for a Pay Raise

Coping Strategies for Financial Stress

Understanding Inflation and its Psychological Impact

Rising inflation can have a significant impact on your finances and psychological well-being. As inflation increases, your money doesn’t buy as much as it used to.

You may feel anxious seeing the growing price tags on shopping and electricity bills. Filling up your shopping bag and daily bus fare seems to drain your wallet much faster than before. Having less disposable income left over can cause worry about how to make ends meet.

Even with higher salaries from your job, inflation means your increased earnings still purchase fewer goods and services. This leaves you feeling frustrated that you can’t seem to keep up.

Inflation makes regular budgeting more difficult. When you plan out spending and saving goals, prices continue rising, throwing things off balance. Sticking to a defined budget becomes an ongoing struggle.

Seeing your money unable to stretch as far as expected can hurt your motivation over time. You may be tempted to give up entirely on budgeting or seeking out sales and deals. But surrendering will only make your financial problems worse.

Not keeping pace with inflation also puts you at risk of accruing debt. If you can’t afford essential expenses, you may rely increasingly on loans just to get by. But this leaves you with expensive interest payments, leading to more stress.

When you experience all the above psychological challenges, how do you respond? Let’s discuss this in the next section.

Related: How Last Year’s Failures Can Help You Set Realistic Goals

Emotional and Mental Responses to Financial Stress

Financial challenges can cause you to experience difficult emotions and thoughts. When money is tight, you may struggle both practically and psychologically. Here are five common emotional and mental responses to financial stress:

• Anxiety: Money problems often provoke anxiety. You may feel a knot in your stomach when thinking about bills. Worrying over debt, expenses, or job security can keep you up at night. Anxiety arises from feeling like the situation is out of your control.
• Denial: Some people cope by pretending there is no issue. If debt is mounting, they ignore calls from creditors. Rather than budgeting, they avoid looking at bank balances altogether. Denial is a short-term coping mechanism that lets uncomfortable emotions bubble beneath the surface.
• Anger: Financial strain can make emotions boil over. You may snap at loved ones when worried about cash flow. Anger often masks fear and stress. Channeling irritation to people who are not the cause of inflation leads to more conflict and heightened anger.
• Hopelessness: Ongoing money struggles can drain your optimism. You may feel like giving up on budgeting entirely. Negativity worsens as you focus on what’s lacking rather than possible solutions.
• Shame: Some attach self-worth to financial success and see money trouble as a personal failure. Shame prevents asking for help when it’s needed most. In fact, many people face similar challenges. Your value is not defined by net worth.

Getting perspective on normal emotional reactions reduces their power. Share feelings with loved ones to reduce their effects. Look objectively at your situation to find meaningful ways to move towards financial health one step at a time. You can also take an emotional intelligence course to learn effective ways to manage your emotions as you prepare for inflation.

Preparing for Inflation

Managing through periods of high inflation can be challenging. As the costs of goods and services rise faster than incomes, it puts a strain on budgets. Making some proactive changes can strengthen your financial position to better cope with rising prices. The following are some ways to deal with inflation.

1.   Rethink Your Spending Habits

Writing down every single expense may sound boring, but you might want to take a close look at where your money goes each month. This will help you make decisions about the expenses to cut back on. Making cuts to optional spending like dining out, entertainment, and hobbies may provide some relief to your pocket. Distinguish needs from wants. Ensure what you consider as a need is not really a want that you have become attached to, but you can do without. The following table differentiates needs and wants to help you in that process.

Trimming excess spending and focusing on necessities allows you to redirect cash into your emergency fund, building a buffer for rising prices. In addition, it helps you to increase savings as a cushion against inflation.

2.   Seek Out Bargains

With prices rising across the board, bargain hunting becomes more important. Compare prices between stores and generics vs name brands. Buy staple items in bulk when they are on sale. Utilize discount offers in supermarkets, and sign up for reward programs. Delay major purchases until you find a good deal. Saving even a few shillings here and there adds up. Becoming a strategic shopper takes effort but pays off by stretching your shilling further during inflation.

3.   Choose Your Debt Wisely

Avoid taking on new higher-interest debt from loan sharks or accepting instant loan offers. These quick debts are often difficult to pay back if inflation persists. If you have existing debt whose interest rate fluctuates, explore options to get a fixed rate, which protects against rapid payment increases. The key is to minimize new debt, pay off high-interest rate debts first, and combine remaining balances to fixed rates for lower, more stable payments. For example, you can take a Sacco loan to pay off several debts and only remain with the stable Sacco loan to pay.

4.   Look for a Side Job

Bringing in additional income can help cover rising costs. Explore side gigs like Uber driving, tutoring, freelance work, or part-time shifts. Even 10-15 hours per week of extra work can generate some money to cushion your monthly budget. Building multiple income streams makes you less dependent on any one source. Consider learning about passive income and plan to save some money for that purpose.

5.   Advocate for a Pay Raise

If your wages aren’t keeping up with rising prices, ask your employer for a pay raise. Outline your contributions and increasing responsibilities. Point to positive performance reviews and metrics showing your value. Note inflation’s financial strain and the need to align pay with both the market and your skills. Suggest compromises like a one-time adjustment or phased-in increases. Be prepared to make a strong business case, but know your worth. With a constructive approach, you may be able to negotiate a higher salary to maintain your standard of living.

Coping Strategies for Financial Stress

Money struggles can cause a heavy blow to mental well-being. During inflation, financial challenges become pronounced, provoking anxiety, anger, hopelessness, and other difficult emotions we discussed earlier. Practicing positive coping skills is key to maintaining perspective and resilience. Here are some coping strategies for managing financial stress:

• Track anxious thoughts: Notice when you generalize or are overly pessimistic about money issues. Write down these irrational thoughts and intentionally replace them with more realistic perspectives. Address problems without exaggeration.
• Adopt self-care routines: Make time for healthy sleep, nutritious foods, physical activity, and enjoyable hobbies. Don’t neglect basic needs, which provide a foundation for mental calm. Sustain relationships that rejuvenate you.
• Practice mindfulness techniques: Meditation, deep breathing, body scans, and quiet time reading scripture and/or other self help material helps counter the body’s stress response. Quiet anxious thoughts through present-moment awareness. Regular practice builds resilience over time.
• Reframe setbacks objectively: View periodic financial struggles as learning experiences rather than personal failures. Maintain hope in your ability to problem-solve solutions. Draw strength from overcoming past adversity.
• Limit social media use: Comparing yourself to others online often worsens money-related shame and inadequacy. Stop habits that expose you to lifestyles that spark envy or discouragement. Immersion in social media creates an alternate reality which allows one to ignore the discomfort of their normal lives. The pattern of escapism that results from this is very difficult to break.
• Join a support group: Bonding with others experiencing financial hardship helps normalize challenges. Groups provide tips plus comfort in shared experiences. Humor and positive encounters can lift the spirit.
• Seek counseling as needed: If anxiety or depression continues despite best efforts, pursue professional mental health support. Therapy can help you explore your relationship with money, how you deal with crisis, and help you develop a new perspective of the situation, while providing tools tailored to your unique situation.

Clarity Counseling and Training Centre offers holistic counseling services to people going through financial stress. We help you cope with the financial pressures of life and guide you to come up with a workable solution to your challenges. Get in touch with us today and book your first session.