Finance Trauma

Recognizing Financial Trauma

A sudden or prolonged lack of money can lead to sudden and detrimental changes to your lifestyle causing profound financial trauma.

In a 2019 Forbes article, Galen Buckwaler, an expert on financial trauma, defined financial trauma as a dysfunctional reaction to chronic financial stress. He stated that the impacts can present similarly to those who experience post-traumatic stress disorder (PTSD).

Buckwaler developed assessments and profiling methods to minimize risk associated with financial loans. He found that 23% of adults and 36% of millennials experience Financial Stress at levels that qualify them for a PTSD diagnosis.

What are the Different Types of Financial Trauma

  • Job Loss or income reduction can lead to feelings of insecurity, stress, and a loss of identity. This can have a long-lasting impact on a person’s sense of financial stability.
  • Bankruptcy Going through bankruptcy can be emotionally devastating and create a sense of shame and guilt.
  • Evictionor Foreclosure can be emotionally devastating and create a sense of shame and guilt.
  • Debt, especially when it leads to harassing calls from creditors or constant financial pressure, can cause intense anxiety and stress.
  • Divorce or a relationship breakup can lead to financial upheaval, including property division, alimony, child support, and legal fees.
  • Scam or fraud can result in feelings of violation, mistrust, and vulnerability.
  • Medical Expenses, especially unexpected ones, can be financially overwhelming and lead to anxiety about future healthcare needs.
  • Crisis or natural disasters can have financial repercussions, causing stress and uncertainty about how to rebuild.
  • Student loan debt, coupled with the fear of not being able to repay it, can lead to a constant sense of burden and financial pressure.
  • Inadequate retirement savings or investment losses can create anxiety about financial security in later life.
  • Growing up in poverty or experiencing extreme financial hardship like homelessness can lead to long-term psychological effects.

It’s important to note that the impact of financial trauma can vary widely from person to person. Some individuals may experience a combination of these traumas. Seeking professional help from experienced mental health experts, financial advisors, or counselors. They can provide the support needed to address these challenges and work toward healing and recovery.

Overcoming Trauma and Regaining Control

Understand that if you are suffering from the effects of financial trauma, help is available. You can take control and develop a game plan to help you regain your confidence and re-establish control over your financial life. Remember, there is no shame in asking for help.

  • Acknowledge Your Feelings: Recognize and validate your emotions related to the financial trauma. It’s okay to feel anxious, stressed, or even overwhelmed. Acknowledging your emotions is the first step toward addressing them.
  • Seek Professional Help: Consider working with a therapist or counselor who specializes in trauma and/or financial stress. They can help you process your emotions, develop coping strategies, and provide guidance tailored to your situation.
  • Create a Support System: Reach out to friends, family, or support groups who can provide empathy, understanding, and a listening ear. Sometimes, sharing your experiences with others can help alleviate feelings of isolation.
  • Educate Yourself: Gaining knowledge about personal finance and understanding how financial systems work can help you regain a sense of control. Learning about budgeting, saving, investing, and debt management can empower you to make informed decisions.
  • Build a Financial Plan: Develop a clear plan to address your financial situation. This could involve creating a budget, setting financial goals, and taking steps to improve your financial stability over time.
  • Take Small Steps: Break down your financial goals into smaller, manageable tasks. Achieving these smaller steps can provide a sense of accomplishment and help reduce feelings of being overwhelmed.
  • Practice Self-Care: Engage in activities that promote your overall well-being, such as exercise, meditation, spending time with loved ones, or pursuing hobbies. These activities can help reduce stress and improve your mental state.
  • Mindfulness and Relaxation Techniques: Practices like mindfulness meditation, deep breathing, and progressive muscle relaxation can help you manage anxiety and stress related to your financial trauma.
  • Challenge Negative Thoughts: Be aware of negative thought patterns related to your financial situation. Practice reframing these thoughts to be more realistic and positive.
  • Consider Professional Financial Help: If you’re struggling with managing your finances, consider seeking help from a financial advisor or counselor who can provide guidance on managing debt, creating a budget, and making informed financial decisions.
  • Set Realistic Goals: Set achievable financial goals that you can work toward over time. Celebrate your progress, no matter how small.
  • Patience and Persistence: Healing from financial trauma takes time. Be patient with yourself and recognize that it’s a process of growth and recovery.

Remember that everyone’s experience is unique, and what works for one person might not work for another. If your trauma is severe, impacting your daily life, or causing emotional distress, it’s crucial to consult with a mental health professional who can offer guidance tailored to your specific needs.

🚨 If you or someone you know is in emotional ore mental distress, please get help. If it’s an emergency, call 911. You can also go to your nearest emergency room.