The truth is, we are all affected by the subconscious lessons we “learned” about money throughout our lives. Most households did not teach financial literacy. Money was just the elephant in the room. For so many of us, worry, anxiety and stress became regular feelings when bills and money are brought up.
Financial trauma is REAL and affects most people in some way. Three out of four Americans have reported they feel stress about money at least one time per month.
What is Financial Trauma?
Financial trauma is defined as the emotional and psychological distress that occurs when an individual experiences significant financial stress. Financial stress can include poverty, sudden decrease in income, lack of financial literacy, etc. Financial Trauma is so common. Most people do not realize their current roller coaster relationship with money is the direct result of their unfavorable past with money.
Financial trauma is caused by a major negative experience or many negative experiences that revolve around money/personal finances. These past experiences shape our perception and current relationship with money.
What causes Financial Trauma?
Financial Trauma can be caused by major negative experiences with money such as
- Loss of a job
- Significant loss of income
- Bankruptcy
Or continuous negative experiences such as
- Poverty
- Homelessness
- Food Insecurity
- Living above your means
Or past negative experiences such as
- Listening to parents/ elders complain about not having money
- Witnessing fighting due to finances
- Missing out on childhood experiences
- Experiencing temporary loss of lights, heat, hot water, etc due to non payment
How to identify Financial Trauma?
Identifying financial trauma can be difficult because it can manifest in different ways and may not always be recognized as such. However, here are some signs that may indicate that you may be experiencing financial trauma:
- Persistent worry and anxiety about finances: You may worry excessively about money, even when your financial situation is stable. You may constantly check your bank accounts, worry about bills, and feel anxious about your financial future.
- Avoidance of financial discussions: You may avoid discussing money matters all together. You may feel ashamed or embarrassed about past money decisions or your current financial situation. You may have a fear being judged.
- Physical symptoms: Financial trauma can manifest in physical symptoms, such as headaches, stomach problems, and difficulty sleeping. These symptoms may be caused by stress and anxiety related to financial issues.
- Difficulty making financial decisions: You may find it difficult to make financial decisions, even when the decisions are relatively simple. You may feel overwhelmed by financial choices and lack confidence in their ability to make sound financial decisions.
- Persistent feelings of hopelessness or helplessness: Financial trauma can lead to feelings of hopelessness or helplessness, which can be a sign of depression. You may feel like your financial situation is overwhelming and you have no control over it.
How to address your Financial Trauma
Addressing financial trauma can be a difficult and lengthy process, but it’s essential to work through the trauma to move forward and improve your relationship with money and mental health. Here are some ways to help address your financial trauma:
- Go to therapy
One of the first steps to take if you’re struggling with money management is to seek help from a therapist. Money is a significant source of stress and anxiety for many people, and talking to a professional can help you work through the underlying emotional and psychological issues that may be contributing to your financial struggles. A therapist can help you develop healthy coping mechanisms, identify patterns of behavior that may be holding you back, and provide support and guidance as you work through financial challenges.
- Read
Reading books on personal finance can be an excellent way to gain knowledge and insight into how to manage your money more effectively. There are plenty of books available that cover a range of topics, from basic budgeting and saving to investing and building wealth. Look for books that are easy to read, engaging, and provide actionable advice that you can implement in your life.
- Become financially literate
Financial literacy is an essential aspect of money management. It’s important to have a basic understanding of financial concepts, such as budgeting, saving, investing, and debt management. There are many online resources available that can help you improve your financial literacy, including personal finance blogs and podcasts. The more you know about managing your money, the better equipped you’ll be to make informed decisions about your finances.
- Get organized
One of the most significant challenges when it comes to money management is staying organized. It’s essential to have a system in place for tracking your income and expenses, paying bills on time, and keeping track of your financial goals. Consider using the resources in the Members Only Section to help get started on your journey. Also, make sure to keep all your financial documents, such as receipts, bank statements and tax returns, organized and easily accessible.
- Track Expenses
Finally, tracking your expenses is an essential aspect of money management. It’s crucial to know where your money is going each month so you can identify areas where you may be overspending and make adjustments as needed. Consider using a budgeting app that can automatically track your expenses, or use a notebook or spreadsheet to record your expenses manually. Be honest with yourself about where your money is going, and look for ways to reduce your spending and save more.
In conclusion, financial trauma can have a significant impact on an individual’s life. It can cause stress, anxiety, depression, and other mental health issues. However, it’s possible to recover from financial trauma with the right help and support. Seeking help from a therapist or financial advisor, taking practical steps to address the financial issues, and developing healthy coping mechanisms can all be part of the recovery process.