In March 2023, The Bank of England made its 11th interest rate rise since December 2021, taking the base rate to 4.25%. With ongoing concerns about the cost of living crisis in the UK, ABC Finance collaborated with consultant clinical psychologist Dr Nick Johl to explore Britain’s biggest money worries and the impact on mental health. They also shared psychological money “tricks” that retailers use to encourage consumers to spend more.

According to Nick Johl, “Money makes the world go round. We currently live in a society with a cost-of-living crisis, where costs are rising in all aspects of our lives, and there is an economic downturn. The main concern for most adults is affordability – being able to afford the house we live in, the fuel for the cars we drive, feeding our families, and sometimes treating ourselves.

“Having money can also bring worries about the consequences of not being able to afford the cost of living and the impact it could have on our lives. This includes the risk of losing our homes, going into debt, and not being able to provide for our families. These worries can cause us to become very anxious and stressed, which may lead us to turn to unhelpful coping mechanisms.”

He also highlighted that our upbringing and early experiences shape our attitudes towards spending and saving. Negative experiences such as debt growing up can teach us to worry more about money and fear that history can repeat itself.

Money worries can have a significant impact on our mental health, leading to increased experiences of anxiety, depression, stress, and burnout. They can also increase the risk of adopting unhealthy coping mechanisms such as deliberate self-harm, thoughts of wanting to end life, increased use of alcohol, drug taking and smoking.

Gary Hemming, a money expert at ABC Finance, shared some actionable tips on how to deal with money-related stress, such as carrying out a financial review of all outgoings, realigning some goals, and differentiating between “needs” and “wants”.

Retailers use a range of psychological techniques and ‘tricks’ to encourage spending, such as creating a mindset of ‘bagging a bargain’ and displaying huge price reductions without the ability to compare prices elsewhere. Multibuy offers can also be misleading, and children are often targeted to pester parents into buying items for them. Retailers also use checkout points to encourage impulse buying.

Hospitality businesses use sensory overload, such as temperature, colours, music, and smells, to create a memorable experience for customers. They also want customers to feel at home, consume more, and return again.

“Johl warned consumers to be mindful of their emotional responses to purchases, especially when it comes to fear of missing out (FOMO) marketing tactics. He stated, ‘If you notice a rush of emotions, excitement, or physical changes in your body, you are most likely making an impulsive purchase. Impulse buying can affect our logical thinking in two ways – first, ‘Can I afford this?’ and secondly, ‘Do I even need this?'”

Money worries continue to impact the mental health of many people in the UK, particularly in the current cost-of-living crisis. Consumers need to be mindful of the psychological money “tricks” used by retailers and hospitality businesses to avoid unnecessary spending. By addressing financial situations head-on and taking control of finances, individuals can reduce their worries and improve their mental health.