- Cost of living crisis and money challenges
- Healing from constant money worries
- Identifying impact of trauma
- Creation of new behavioural patterns
- Understanding fight/flight/freeze/fawn responses
Financial trauma is characterised as a dysfunctional reaction to chronic financial worries and stress. When we think of trauma we tend to understand it as something that is caused by a singular traumatic event, such as a natural disaster, a personal assault, or a road accident. The same can also be applied to individual trauma surrounding money. This could involve suffering a significant loss, perhaps a large percentage of your retirement pot, or inheritance, whilst speculating in business, the stock market or in crypto currency trading and you ended up losing your total investment. However, we can also view financial trauma from a wider lens. Trauma around money might also have multi dimensional impacts such as how previous family generations viewed scarcity. There might be some legacy from our previous generations who suffered from famines, for instance, or where there were natural disasters. There might also be societal pressures to over-consume and this can increase money worries.
There is not a great deal of research in this area. But one study in 2016 ( Dr. Galen Buckwalter, at Happy Money) found that people experiencing PTSD-like symptoms around financial stress can display destructive behaviours around their finances (such as avoidance and denial) in addition to more common symptoms of trauma, like agitation, irritability, hypervigilance, self-destructive behaviour, and isolation. The study found that millennials are disproportionately affected by financial trauma.
What are some signs of financial trauma?
When we refer to trauma in general, we think of fight/flight/freeze/fawn response from our sympathetic nervous system. These can be termed trauma responses. This ancient stress response mechanism works well when we are faced with imminent danger. It was designed for the time on the savannah when predators were everywhere and we needed to be extremely vigilant. Our bodies will perceive threats and work to keep us alive when real threats are present. Our bodies will get pumped with adrenaline, and increased oxygen, so that our muscles expand and we get geared up to defend ourselves or to escape danger. However, this ancient stress response mechanism has not evolved with advances in civilisations. We are no longer living on the savannah but our survival system has not really caught up with the new surroundings. The same evolutionary responses from the savannah are still deeply embedded within our bodies. We can perceive threat and experience feelings of fear as if we are about to be targeted, when in danger and if we fear we are about to be eaten.
Trauma becomes debilitating when the body goes through this survival activated cycle when the threats are not immediate. This is when anxiety attacks can be present, along with vivid flashbacks of a traumatic event or extreme bouts of sadness. Trauma may be the invisible factor causing these overwhelmingly intense feelings to be stimulated which in turn causes an over-reliance on our bodies survival instincts, which may be referred to as a trauma response.
Here’s how financial worries can manifest in everyday life:
- Financial avoidance
This can mean not opening mail or or not attending to bookkeeping duties. It might also be when the gambler/investor refuses to acknowledge their profit and loss account. This kind of avoidance could mirror the freeze response or even a form of dissociation at its most intense level. Signs of the freeze response are a sense of dread, having a pounding heart and feeling stiff, heavy, cold or numb. What is being avoided is extreme feelings of fear, pain or insecurity but what can actually happen is increasing levels of debt as well as declining credit scores.
- Overspending
Overspending and compulsive shopping can feel like a form of self medication in pursuit of the alleviation of pain. Such activity can be an attempt to avoid the reality of finances. It can be a form of financial avoidance, since the so-called ‘retail therapy’ is merely a short term attempt at easing emotional pain whilst avoiding the payment card statements. This kind of behaviour could potentially mirror the fight response and signs could be a tight jaw or a burning sensation in your stomach. You may not be gearing up for a physical fight but might be fighting the internal discomfort by overspending.
- Underspending
A significant lack of spending, even when the money is available, can also be a sign of financial trauma. This could be seen as a form of “excessive risk aversion”. This kind of reluctance to spend could mirror the flight response. Signs of a flight response are feeling fidgety, tense or trapped and having a restless body. This could result from someone growing up in an environment where money was very tight. Even though they might go on to earn a big salary their early life might have caused them to move forward in life in fear and trepidation. Their social life and career choices might be impacted by this fearful approach.
Gamblers will also typically underspend in order to protect their betting bank or out of guilt for experiencing past loses whilst gambling.
- Lack of boundaries
This could stem from not having a perceived worth in yourself and might entail undercharging for your services. It can also involve an absence of contracts in business relationships, where expectations are blurry and there is an absence of written down job descriptions and duties. An example would be entering into a business relationship with a friend and not agreeing a formal contract of roles and responsibilities in advance. Lack of boundaries tend to also mirror the fawn response. This response can be used after an unsuccessful fight, flight, or freeze attempt. It can commonly occur in people who grew up in abusive families. Signs of a fawn response include over-agreement, trying to be overly helpful and when your primary concern is to make someone else happy.
How does financial trauma impact a person’s relationship with money?
There will be increased salience around money matters. This means a person seems to always talk about the cost of things. Their world appears to revolve around money, whether spending it or saving it. When out enjoying a meal or a shopping experience when on holiday the occasion can be ruined by an over emphasis on the cost of things.
How does financial trauma impact a person’s well-being?
Experiencing stress over the long-term can take a real physical and mental toll on your health. Research has shown a connection between stress and chronic problems like high blood pressure, obesity, depression, as well as damaging your body’s immune system.
Financial trauma can severely impact physical health. In men, chronic stress can potentially have severe adverse affects on how the body functions. There could be negative consequences for sperm and testosterone production. It may even cause erectile dysfunction and infections in the testes, prostate, or urethra. In women, the affects of chronic stress can worsen PMS, potentially cause changes in the menstrual cycle, as well as missed periods. Financial trauma can also aggravate the symptoms of menopause and decrease sexual desire.
The quality of your sleep patterns can also be impacted as constant money worries can keep you from switching off. Poor sleep patterns can have a detrimental effect on your immune system and your body’s ability to emotionally regulate and to fight disease. The stress of financial trauma can also lead to poor diet as you might be more likely to seek the short term boosts offered by a sugar rush to escape emotional pain.
When stress becomes chronic there might be more greater instances of addictive behaviour such as more usage of alcohol and drugs, gambling, or porn, in an increasingly desperate attempt to escape the emotional pain of facing reality.
How should financial trauma be addressed in these challenging times?
Even in a cost of living crisis there are some people who have been privileged to never need to worry about money. But for many a cost of living crisis might rekindle past associations of money and stress, a lack of security, and even feelings of unworthiness.
Financial trauma doesn’t have to be a life sentence. Recovery from the negative impacts of financial trauma means forming a more healthy relationship with money. Practically, it is important to first acknowledge that there is a problem around money. Like any form of problem behaviour there can be a form of denial amongst those who most suffer with financial matters. Money, perhaps in the same way as sex, can so often be a taboo subject. Money is linked to perceived value systems on a societal level and money worries can be a way of people embedding their sense of personal shame. It is important, therefore, to talk about money with the people in your life, perhaps in the same open way that other subjects are talked about. Being more open about money can boost the quality of all your relationships as well as empower you to be paid what you are worth.
Recovery from financial trauma involves the creation of new habits which can take time and energy whilst you tackle the stress in your life. This is especially relevant for new year resolutions. Breaking bad habits can be very challenging and realistically requires patience and perseverance. Studies have shown that it takes on average 66 days to break behavioural cycles or to create new ones. Change can occur from introducing a new environment, but ultimately sheer determination can often be needed until new behaviour becomes part of a positive newly established routine.
The ability to successfully manage your stress levels is an integral part of improving your overall health. Successful outcomes will involve identifying your physical, emotional, and behavioural signs of stress that can help you to analyze them and work to overcome them. Better understanding your fight/flight/freeze/fawn response can improve health outcomes as you learn to return to a calmer state more quickly.
Noel Bell is a UKCP accredited psychotherapist based in London and can be contacted on 07852407140 or noel@noelbell.net
