Growing up in poverty. Losing your home. Being the victim of a scam or financial abuse. Unexpectedly losing your job and not being able to support yourself.
These are all examples of financial trauma, which refers to extremely stressful circumstances or events involving money and the long-lasting impact of these on your mind and body.
Just like other types of trauma, financial trauma can have important long-term effects on how we feel about ourselves and other people and how we live our lives. We may not always be aware that trauma is at the root of our behaviour, which can make it very hard to understand why we do things the way we do.
Financial trauma can show up in several different ways:
- overspending or not saving
- accumulating debt
- fear, stress, or anxiety over money
- worrying about money constantly or avoiding thinking about it
- not sticking to financial goals or self-sabotaging
- guilt over spending money even when you can afford to
- financial dependence on others
- making unwise money decisions (eg. risky investments or lending too much money)
- arguing about money with loved ones
When financial trauma is driving your money decisions, it often isn’t enough just to learn financial literacy skills or commit to following a budget. Without addressing the emotional reasons for your behaviour, you’re likely to keep repeating old patterns.
In order to stop financial trauma from defining your relationship with money, it’s essential to explore how your life experiences have formed your beliefs about money and assess how well these are serving you. You’ll also need to address the emotional states related to your beliefs that contribute to unhelpful behaviours. Then, it’s time to connect with your goals and values and make conscious decisions about how you want to manage your money.
It’s never too late to form new habits and turn your finances around!
Read more about financial trauma:
https://www.cnn.com/2022/05/16/success/money-trauma
https://www.nerdwallet.com/ca/p/article/finance/how-to-cope-financial-stress-trauma
Rachel Ginsberg, MSW, RSW, is a psychotherapist and registered social worker who specializes in helping women in their 20s-30s overcome money anxiety and financial trauma. Find out more here: https://findingchangetherapy.ca/specialized-services/pages/money-anxiety-and-financial-trauma
Photo by Andre Taissin on Unsplash
