The Mental Health Cost of The Cost Of Living Crisis

If only some piggy banks were this pretty. Some may not exist, while others would be smashed open into a difficult puzzle that cannot be put back together again. Sentimentality smashed like a Pinata by a bunch of sugar loaded little munchkins at a kids Birthday party. Beyond things being expensive (more so than ever, not sugarcoating this); the mental health ramifications of this prolonged cost of living crisis where sh!t is ever so real - where relief from such feels far fetched for some souls having to embrace this experience or adventure has to be talked about. Not swept under the rug. Even if your finances are not taking a back seat and you are doing just fine, that is amazing; yet in some way, shape or form it is fair to purport that the prolonged cost of living crisis and inflationary pressures are affecting the psyche and mental spirit of each and every pers0n.

Once again, let's talk about it. The aim is for closure, and if healing comes forth then even better. According to news.com.au, nearly half of all people living in Australia (48%) say that financial pressure is now their biggest daily stressor, which is clearly responsible for widespread anxiety.

No matter your financial situation (even millionaires and billionaires are impacted by this cost of living crisis; not just you and me) - prosperous economic times still call for the occasional money worry from being paid on time to paying bills on time. In a cost of living crisis on the other hand, those money worries are naturally amplified, and that is a heavy cognitive load for all of us to carry. No different to the feeling of trauma, where it feels like (metaphorically speaking) that you are carrying two buckets full to the brim of bricks.

This cognitive load is like an invisible tax on our mental health and individual psyches. Thinking about money every single day, if not all day is emotionally exhausting; no different to mindlessly scrolling on social media. Constant budgeting (having to tighten the belt through no choice of your own) naturally leads to decision fatigue. Your brain, and then your nervous system is exhausted, and that too leads to stress, anxiety, depression and/or burnout. A cause causes a certain effect, and it isn't your fault. When you are experiencing financial stress, of course your mind is not gravtitating towards abundance and prosperity. There is a bit of heavy lifting involved to reprogram your conscious and then unconscious mind to loosen up the grip, and begin to realise that creating your own money tree is possible despite inflation eating more of our earnings and savings up. Of course, a scarcity mindset through this constant cognitive load can also lead to poor concentration and irritability, and therefore you just do not feel like you, until that pattern is recognised.

According to Wikipedia, the costs of basics have surged faster than wages, with food prices up 11.7% (no wonder why many people are skipping meals), and gas prices up 33.9% since 2022, while wages lag behind.

In a previous article, yours truly brought up the 'friendship recession.' The cost of living crisis is clearly playing a strong part in this trend, as people begin to feel shame and remorse for being in consumer debt for the first time ever; and/or they are unable to pay any other debts. Many people feel judged if they have debt, and therefore do their utmost to hide it from others, which impacts a persons psyche, combined with their self esteem and confidence. As the cost of necessities are more expensive since 2020, this can cause sacrifices in people's social lives, as going out itself feels like a luxury for some, due to being more expensive. When you leave the home, you naturally support the economy by spending money. This prolonged cost of living crisis is causing many to couch surf at a mates place, sleep in cars, tents, or on the streets - or resort to shared accommodation, where living alone by choice is feeling more and more luxurious. Many people are also having to live with their parents again. Loneliness and social withdrawal would amplify. Not great, because we are social beings. We clearly need one another.

In relationships, fights around money (especially where there are income gaps between couples and even housemates) are amplified during this cost of living crisis. The mental health implications are huge. Micro conflicts on whether or not whose turn it is to buy toilet/loo/lavatory paper, and whether or not people in shared accommodation can afford takeway this week are triggers for fights, when prior to the cost of living crisis, these simple treats and necessities would not be given a second thought on the affordability factor. Tensions around spending habits due to different money and life values are commonplace. Communication while being vulnerable will help with such financial contributions to the household.

According to CNBC, as of early 2026, essentials (basics) like housing, food and electricity have reported significant price increases since 2019, where 32% of American people feel that their financial situation will worsen real soon.

Furthermore, it is sad to report that people are delaying or completely avoiding opportunities to buy a house, travel, and have kids to name. And that is upsetting. Life is to be enjoyed, and us humans need security, growth and evolution. All of these major life purchases are fu$k!ng expensive, thanks to this cost of living crisis, and the current levels of inflation, greed, and conflicts such as wars exacerbated from these extreme times. Of course anxiety in connection to "falling behind" is ever so real, and the temptation to compare yourself to others who happen to be better off than you is far from healthy for one's mental health. Grief and identity loss are by-products of not being able to reach your goals due to not having enough money to do so, where the costs of all necessities from groceries to housing is at the point of ridiculous, irrespective of your income.

According to Reuters, around 75% of Australian people alone are dissatisfied with housing affordability, one of the highest rates globally.

Inflation and wage/salary stagnation is making us all feel a bit poorer, combined with high competition levels to get any job (even if it isn't a great one) in this current economy, as at the time of writing. It feels like you are doing all of the right things, such as hitting and exceeding your targets at work, combined with precisely tailoring your job application to the advertised job at hand; and it all feels like your best is never good enough. Starting a new business is not for everyone, and it takes time to plant the necessary seeds to sow for a new business to flourish, while the odds of business success and failure must be respected, like any market. Of course, you hear about people taking up multiple jobs and side gigs just to survive. This is why burnout and pointless hustle fatigue is real, as our purchasing power gets lower and lower with higher inflation.

I do not know about you, however comparing grocery prices, where your diet can also come down to what is on special this week, to cancelling feel good subscriptions, and cutting out those small joys in order to survive is not a lot of fun. Even a cup of joe. Cutting out these more affordable luxuries out of necessity to meet those basic needs of food, shelter and clothing has a hidden mental health cost of no longer feeling safe financially.

In concluding, this is all heavy duty stuff, and my wish for you is that your awareness has been amplified, and I wish to offer a few solutions that are appropriate in helping your mental health in this cost of living crisis. There will be a time where this prolonged cost of living crisis will feel like ancient history; yet the world is (unfortunately) not there yet on the latter. Like everything, this too shall pass. Although all of us have lost an element of personal control in this cost of living crisis; the good news is that we can take some of that control back. It is not what happens to you, it is how you respond or react to what happens.

The aim is to reduce that higher decibel noise around money that is all consuming to your inner psyche. Set aside some time for life admin, say 30 minutes a day, and this is time where you are allowed to access your banking apps to move funds around and check balances. And worry a little about money. Once that time is up, that is it for another day. Enforce that healthy boundary, and you will at some point begin to feel a little better about money.

Redefining your values and the definition of what is enough means that you are moving towards a sustainable lifestyle rather than an aspirational one. You will be surprised to know that financial experts like Ramit Sethi rent their primary place of residence. Depending on where you are at, renting can feel like home ownership. At the end of the day, nothing is permanent. Houses and material goods do not come with us six feet under.

Open conversations around money struggles are available through free and confidential financial counselling services, as well as finding other trustworthy and safe mental health supports to talk about money in a safe and supportive way.

Instead of cutting out too many joyful pleasures; have rituals within your budget that are either free or low cost that help ground you for the sake of your mental health and psyche in this cost of living crisis. Many cafes are ok with you ordering coffee. If you are a regular at a local cafe, the staff will begin to know and greet you by your first name, and vice versa. If you love dogs (for example) together with the love and companionship they provide; offer to dog sit or walk dogs on your day off from work. Not only will you get paid some pocket money, however you are connecting to a source that loves you back. And dogs do a brilliant job at connecting us with other dog owners and/or pet sitters while out and about.

When it comes to social interactions, change that perspective from going out is too expensive right now to low cost connections. People are becoming creative in finding ways to catch up without spending a lot of money.

What areas of your finances are within your control? How can you take better charge and control of your finances? Sit and meditate on these questions, and you might be pleasantly surprised. It is ok to acknowledge the fact that you cannot afford something no matter how simple. If you want that thing badly; you can shift that reframe from not being able to afford it to "How can I afford it?" Your brain wants to work with you in finding suitable and practical solutions to your problems.

"We cannot solve our problems with the same thinking we used when we created them." - Albert Einstein

As Kelly Clarkson says, what doesn't kill you only makes you stronger. Remember: tough times do not last, but tough people do.