financial trauma

What Is Financial Trauma?

Have you experience financial trauma? Have you ever been in shock over something that happened in your life? Or upset at some type of upheaval? Have you experienced ongoing stress that just didn’t let up? Or chronic pain—emotional or physical? Have you ever felt deep sorrow, grief, heartbreak, or heartache? Been in agony or misery? Felt anxiety? Been disturbed or deeply worried? Chances are you have, that all of us have.

Here’s the interesting thing: all those words that I just used are synonyms of trauma. They mean the same.

When I first started on my own journey of self-knowledge, I learned that using the word “trauma” is very normal in the mental health field. Until that time, I had assumed “trauma” meant physical injury, most likely severe—something like a serious accident that was a really big event. Based on that definition, I assumed I had not experienced any trauma in my life.

As I started doing my own therapy and participating in 12-Step groups, I learned about emotional trauma. I now understand that it is probably more common than physical trauma. Emotional trauma is the impact of disturbing life experiences—perhaps one significant event such as a divorce or death in the family. It can also take the form of a series of recurring smaller events, often called complex trauma. While emotional trauma is often less visible than physical trauma, it can be just as damaging.

Nobody really escapes trauma, whether it’s physical or emotional. All of us have experienced it in some form. One of those forms is financial trauma.

To define financial trauma, let’s use some of the synonyms from the first paragraph. Have you ever had a sudden economic shock or financial upheaval? Been in financial distress? Been fired from a job? Lived with the chronic stress of having expenses exceed income month after month? Felt sorrow, grief, or heartache around a financial decision or circumstance? Or experienced a traumatic life event like the death of a parent or a spouse that had financial as well as emotional consequences? If so, you have been affected by financial trauma.

And the opposite of trauma is healing. One way to think about financial therapy is as healing from financial traumas—healing that has both financial and emotional components.

What are some signs of financial trauma? Let’s start with signs of emotional trauma, because the two are closely related. Those include:

  • Repeated intrusive thoughts about the traumatic event or events
  • Triggered memories
  • Mood swings from happiness to anger or depression
  • Changes in eating habits (either overeating or not eating)
  • Changes in sleeping habits (insomnia or sleeping more than usual)
  • Changes in spending habits
  • Difficulty focusing
  • Negative self-talk
  • Nervous energy
  • A sense of dread or fear
  • A lack of joy
  • Feeling isolated and alone

Let’s look at a few examples of these related to financial trauma specifically. You might be afraid, every time the phone rings, that it’s a creditor demanding payment or someone announcing some dire financial event. I went through a period of time when every time I got an email or call from a client, my first assumption was that they were going to fire me. You might lie awake at night fearing you’ll never make enough money. You might have recurring worry that you won’t be able to support your family in the way you would like to. You might feel angry that you have no one to talk to around your financial struggles. You might be afraid of wasting money or making financial mistakes. You might feel like a financial failure compared to other people.

And underlying all these fears and thoughts is often a great deal of shame. The shame that surrounds financial trauma is huge. I often say that money touches everything we do. I also think that shame touches everything that money touches. There is so much shame projected onto money. It is woven into our emotions and our money scripts. The goal of financial therapy is to help us heal from these traumas and move toward financial and emotional wellness. We want to heal from past financial shame, to understand that financial mistakes and traumas are something everyone experiences, and to build a strong and functional relationship with money.

Check out The Financial Therapy Podcast by Rick Kahler concerning this topic.

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