Financial Trauma & Debt

Trauma and debt tend to go hand in hand. When you have experienced trauma, you tend to go into “survival mode,” which leads to short-term thinking. While this helps you get through that difficult moment in your life, the financial habits and debt that you may have incurred must still be dealt with.

What is Financial Trauma?

Financial trauma is any type of trauma that impacts you financial habits, or your relationship with money. This can be directly related to spending money, such as living in poverty, losing a job and going into debt, or even just having to live paycheck to paycheck.

Financial trauma can also be trauma that isn’t directly related to money, but still affects how you view finances and spending money. Things like abusive relationships, controlling parents, and low self-esteem can also be considered financial trauma, since they have a direct impact on your relationship with money.

How Does Trauma Affect Spending?

Trauma typically affects spending in negative ways. You may hoard more money than you need for an emergency fund, for example, feeling as though you may lose everything at any moment. This stops you from creating a profitable investment portfolio, or from spending money on yourself for things you need.

You may also wind up at the other end of the spectrum, and put yourself into debt by not thinking about the future. This is another unhealthy habit that leaves you without savings or a reliable plan for retirement.

How Do You Heal Financial Trauma?

Healing from financial trauma typically requires taking the time to develop a relationship with a professional. Sometimes, people are able to heal from financial trauma with only a therapist, but we usually recommend also seeing a money coach since therapists don’t typically provide you with the knowledge and tools necessary to properly manage your finances.

While both therapists and money coaches will be able to talk you through your past experiences that led you to have an unhealthy relationship with money, a therapist will focus on your relationships with yourself and others, and a money coach will focus on your relationship with yourself and money, and the skills you need to be financially successful.

What Helps People Who Have Suffered From Financial Trauma?

People who have suffered from financial trauma typically benefit from money coaching, therapy, developing good habits by learning to create and stick to a budget, and recognizing what they are doing right and wrong.

If you believe that you may have suffered from financial trauma, you will benefit from gaining a deeper understanding of the unhealthy habits you may have developed. By learning the right ways to manage your wealth, you will be able to enjoy using money as a tool. When you can make smart purchases without the stress that comes from being unsure of your decisions, you will notice that your newfound confidence begins to positively impact other areas of your life.

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