How Trauma Can Affect Your Finances
In the wake of hurricanes, shootings, and political turmoil many people have been touched by traumatic events. It is estimated that as many as 89.7% of people have experienced a trauma in their lifetime. A traumatic event is typically defined as witnessing or directly experiencing an event that is life threatening or a serious threat to ones safety (such as physical or sexual assault).
These events are so powerful that they can turn a person’s world upside down or even change one’s personality. An area often neglected from the conversation about trauma is how these events can impact one’s finances.
The most well known mental health diagnosis associated with trauma is Post-Traumatic Stress Disorder (PTSD). There is an assumption due to pop culture that anyone who experiences a trauma will develop PTSD, however, this disorder is fairly rare. In fact, only 8.3% of people will develop PTSD following a trauma.
Other disorders may develop in response to a traumatic event instead such as Major Depressive Disorder, Other Stressor-Related Disorder, or Borderline Personality Disorder. However, many people will recover naturally over time and never develop a mental health disorder.
It is common to have several symptoms following exposure to a traumatic event.
Common reactions following a trauma include:
Mood changes: increased anger or irritability, depression, anxiety, hopelessness
Cognitive impairments: problems with concentration, attention, memory
Physical health problems: fatigue, upset stomach, headaches, muscle tension
Trouble sleeping or nightmares
Rapid heart rate and breathing
Hypervigilance (constantly on guard, overly intense awareness of environment)
Flashbacks, intrusive thoughts or images of the event
Unhelpful and unrealistic thoughts about the event, yourself, or the world
Typically, most of these symptoms will subside 4 to 6 weeks following the event.
However, the effects of a traumatic event can have farther-reaching financial consequences including:
Self-medicating: As a way to cope with the symptoms, people may try to self-medicate in ways that are expensive and unhealthy. Common behaviors include excessive shopping, drinking, or drug use.
Over-working: Another response to the distress is to avoid the thoughts and feelings through excessive work. This can lead to burnout and worsening of symptoms over time.
Neglecting or avoiding finances: Since trauma can impair memory and attention, finances often fall to a low priority compared to other concerns. People may unintentionally neglect or even willfully ignore attending to their finances following a crisis.
Being too conservative with money: The other side of spending is to become too conservative with money and engage is practices that limit financial growth such as not investing or keeping most of one’s wealth in easily accessible cash. This likely stems from unhelpful beliefs about self, others, and the world. There is often an overestimation of danger and the likelihood of another traumatic event occurring. While this may result in having cash on hand when needed, it can hurt ones long-term financial position.
Self-sabotage: Unhelpful and overly rigid beliefs can also lead to self-sabotage through performing below what one is capable of. Many people believe that they did something to deserve the trauma or feel guilty for behaviors they engage in following the event. This causes a feeling of not being worthy of success and wealth. People may also sabotage professional and personal relationships through anger outbursts or social isolation.
Foreshortened future: An overestimation of danger can also lead to a belief that one will not live long. This belief may be unconscious and is called a foreshortened future. People who think this way avoid planning for the future and may engage in reckless spending.
If you have experienced a trauma, consider the following for coping effectively and keeping your finances, as well as your health, intact.
Psychotherapy can help with understanding your symptoms, learning more effective coping, and monitoring harmful self-medicating behaviors. While supportive talk therapy may be sufficient for most people following a trauma, there are also more intensive treatments for people who develop PTSD. These include Cognitive Processing Therapy (CPT), Prolonged Exposure (PE), and Eye Movement Desensitization and Reprocessing (EMDR) therapy.
Experiencing a life threatening event triggers a stress response. This is a powerful physiological reaction that is useful in a crisis. It creates bodily changes that allow you to run away, fight off the threat, or freeze to increase the chances of survival. However, when the stress response stays on after the threat has passed, it can cause physical and emotional damage. Exercise, especially cardio, is a highly effective way to reset the body and work through the stress reaction. It also releases chemicals in the brain that stimulate positive emotions.
Incorporate adaptive coping skills to process the trauma and enhance the recovery process. Relaxation skills can be used to calm the mind and body. These include deep breathing, progressive muscle relaxation, mindfulness, meditation, and visualization. There are numerous free resources online to learn these simple techniques. Hand writing your thoughts and feelings is a powerful technique for processing painful experiences. It also may help to talk about your experience with supportive people in your life or people who have had similar experiences.
Mental health professionals understand PTSD as a problem in recovery from trauma. Typically this problem is a result of avoidance. People who develop PTSD avoid thoughts, feelings, and external reminders of the traumatic event. This avoidance prevents the processing of the event and feeds the symptoms so that they become worse over time. To prevent this from occurring, garner awareness of your process by asking reflective questions. These may include general reflections about what you are thinking, feeling, and how your behaviors have changed. They may also include specific reflections about how you are dealing with your finances and your spending behaviors.
No one should have to experience a trauma and it is unfair that the distress can continue long after the event itself. Unfortunately, many of us will experience something to this effect. It is important to remember that you are not crazy or broken and you can heal over time. First, take some time to attend to your physical and mental health. Be gentle with yourself and use your support system. This is the best way to get your life and your finances back on track and prevent more serious long-term consequences.