Title: The Hidden Toll of Financial Trauma: How Past Experiences Can Shape Our Relationship with Money
Subtitle: Recognizing the Signs, Overcoming the Challenges, and Seeking Help
Rahkim Sabree, a 33-year-old financial adviser and consultant, has his own home and a significant amount of savings. Despite these achievements, he often feels anxious about spending money. This unease stems from his childhood experiences of living in subsidized housing and relying on food stamps to make purchases. The constant fear of eviction and the embarrassment of eviction notices have left a lasting impact on Sabree’s spending and saving habits.
Sabree’s story is an example of “financial trauma,” a psychological response to past or present financial difficulties. Alex Melkumian, a psychologist and founder of the Center for Financial Psychology in Los Angeles, explains that financial trauma can lead to anxiety, negative thoughts, and even reliving traumatic events. Distinct from everyday stress, financial trauma affects a person’s relationship with money, often stemming from causes such as medical debt, financial insecurity, economic crises, and even structural issues like racism and discrimination.
Unfortunately, financial trauma is not widely recognized or addressed as a mental health issue. Many individuals are unaware that overwhelming financial experiences can have adverse effects on their psychological and financial well-being. A survey conducted in 2016 revealed that 25 percent of Americans, including 36 percent of millennials, reported experiencing symptoms of PTSD due to financial distress.
Recognizing the signs of financial trauma is crucial in addressing its effects. One red flag is an avoidance of anything related to money, such as budgeting, opening bills, or discussing finances. This behavior can also manifest as a refusal to spend money, driven by a fear of returning to poverty. On the other hand, some individuals may seek comfort in excessive spending, attempting to compensate for childhood deprivation. The tendency to sabotage one’s financial future by rejecting higher-paying job opportunities is another warning sign.
Once the signs of financial trauma are identified, individuals can work towards finding solutions. Financial therapists and counselors can play a valuable role in guiding individuals through their traumatic experiences and their financial implications. Exploring one’s financial situation through this lens can be the first step towards addressing and overcoming the trauma.
Learning to identify triggers associated with financial trauma, such as economic downturns or debt milestones like the end of forbearance periods, can provide individuals with self-care tools. Taking deep breaths, going for a walk, or seeking support from friends can help alleviate anxiety and prevent impulsive actions. Moreover, setting financial limits, such as removing credit card data from online platforms or allowing oneself small spending risks, can help establish boundaries and reduce impulsive spending or avoidance behaviors.
Recovering from financial trauma requires a multi-faceted approach that addresses both the financial aspects and the underlying trauma. Seeking help from a financial therapist who specializes in financial trauma can be instrumental. These professionals possess expertise in psychology and financial matters, enabling them to identify the link between traumatic experiences and current financial challenges. By working through these connections, individuals can gain insight and develop healthier perspectives and behaviors towards money.
In conclusion, financial trauma can have a profound impact on an individual’s mental and financial well-being. Acknowledging the signs, understanding triggers, setting boundaries, and seeking professional help are critical steps towards overcoming the negative effects of financial trauma. By addressing the root causes and reshaping their relationship with money, individuals can regain control over their finances and find peace of mind.