Caught in the Crunch

The credit crunch will have a psychological impact for many. Leilani Mitchell explains how we might understand this and what can be done about it.

Over the last few months, most of us will - at some point - have considered our financial situation with at least a little concern for the future. For some, the effects of the credit crunch and the resulting economic downturn will already be a stark reality. They may already be struggling to make ends meet, servicing spiralling debt, or in the process of having belongings or property repossessed.

The Hierarchy of Needs, developed by Abraham Maslow in 1944, provides a useful model that can provide an understanding of the psychological impact of the credit crunch. Maslow identified five categories of human needs, ranging from the most basic physiological needs through to our psychological need for growth.

The five categories are: physiological, safety, social, esteem, and self-actualisation.
Physiological needs are concerned with our basic survival, including the need for food, water, air, warmth, sex, and sleep.

Safety needs are concerned with security, including security of the body, employment, family, resources, health, and property. Social needs focus on our sense of belonging, including needs for love, friendship, acceptance and intimacy.

Esteem needs are concerned with our sense of being valued, including our self esteem, recognition, respect of others, respect by others and achievement. Self-actualisation is concerned with realising the full extent of one's capabilities, including capacities for creativity, spontaneity, self-acceptance and problem solving.

Maslow's hierarchy is generally displayed as a pyramid indicating the importance of meeting the lower needs in order to address those at the higher levels. This is a model for health. Ideally, as we grow and develop we meet the lower level needs moving up the hierarchy to self-actualisation. The problem comes when an external event influences the extent to which we can meet our needs at each level.

This can be further complicated by us triggering back into past experiences, where meeting these needs may really have been under threat. Furthermore, the ways we may use to handle the resulting stress from struggling to meet our needs, may impact on the meeting of other more basic needs.

So, how do times of economic hardship impact at each of these levels of need? At a physiological level, those of us living within the UK generally will be able to meet these needs - with the exception of the very poorest and disadvantaged. On the other hand, what can affect people at this level are the maladaptive means they use to cope with stress. This may include poor diet, drinking, smoking and/or obsessive thinking, leading to lack of sleep.

In order to manage the impact of any negative influences, it is important to ensure that the levels have been attended to. For instance, when looking for a new job or place to live, it will be easier if you are feeling healthy, having eaten well and had enough sleep. Of course, it is much easier to feel good about ourselves when we have a good support network of friends, family and colleagues behind us.

Furthermore, it is important to be able to separate fears carried over from past events from what is happening here and now. Anyone struggling to do this might find the services of a counsellor or psychotherapist helpful.

Overall, in times of economic hardship, it is important that we attend to the basics in life. Our physical health, diet, and good relationships can mean that we are best placed to deal with what life throws at us!!