There is a lot of talk on mental health, stress, depression, anxiety, among others. But have you thought about it from a financial point of view?
Financial trauma is an unnormal reaction to money due to past experiences. It could crop from long-term unemployment, job loss, loss of investment or savings, high debt levels, or failure to afford necessities like health care, rent, and food. Maybe it is from childhood experiences, like seeing your parents struggle with money and living from hand to mouth.
You might be making money, but your expenses could be outweighing your income. And, it is not a one-month or a one-time occurrence. It may start as a one-month issue, and it spills over to several months or years, threatening every aspect of your life.
Maybe you are hyper-vigilant with your spending at the grocery store or supermarket. Or you probably don’t want to venture into investing opportunities ever again due to past losses.
Unfortunately, financial trauma is more rampant than we would care to admit. If you are experiencing intense emotions, like stress, anxiety, fear, paranoia, or some expectations around money, you are probably experiencing financial PTSD or trauma.
When you think about money, it is more than banknotes and coins. Money is tied to human needs (remember Maslow’s Hierarchy)? Money equates to security, safety, power, and status. And lack of funds will affect each of these. Now imagine what long-term lack of money can lead to.
While you can not change the past, you can try getting to the root cause of your financial trauma. Addressing this is the only way to get past all the emotions around money that are holding you back from achieving your financial freedom.
The Road To Recovery
There is no shortcut to this because recovering from financial trauma involves dealing with the key pillars of financial wellness, earning, debt, saving, and investing.
Read more about: Financial Checkup: Take Stock of Your Financial Health
What Are Your Income Sources
List down your source/s of income. Is it one, two, or more? One of the keys to financial freedom is having more than one source of income.
If you are employed, maybe get a side hustle and use your skills to make some money on the side. You can even start a business where possible so that you have something else to lean back to.
When worried about lack of income, look at your list of income sources and narrow it down to the ones that are worrying. What can you do to rectify the situation? For example, you could learn a new skill, get more stock for your business or find a better-paying or stable job.
If you are drowning in debt, anything to do with money could lead to stress, anxiety, or depression. For example, when the phone rings or you receive an email, you are fearful because creditors could be looking for you.
Recovering requires knowing what you owe and to whom. Make a list of all your debts and come up with a repayment plan. Paying all the debt in lump sum might not be an ideal situation for you, but a repayment plan allows you to reduce your debt gradually. You could consolidate your debts or pay using the debt snowball or avalanche methods.
Most importantly, reducing your debt gives you some sense of control over your finances.
Plan For The Unforeseen
No one knows what the future holds, but you can always do something to prepare for it when it comes to money issues. When you are experiencing trauma for whatever reason, you always go into survival mode. Thinking beyond your current needs becomes hard, and the feeling is what leads to your financial trauma.
Having a savings account can help you with financial trauma. If your worry is not affording upkeep in case of job loss, put some emergency funds aside for such occasions. If you are worried about healthcare, buy a health insurance cover to care for your medical needs rather than paying for expensive costs from the pocket. Are you concerned about your retirement? It is high time you start saving towards retirement with an individual pension account.
If you have some extra funds left after meeting your expenses and saving, set something aside for investments. Buy shares, bonds, or even some real estate. All these can provide you with passive income and help you build wealth for a better financial life.
Related post: Saving vs Investing: Understanding The Differences
Recognize Your Feelings
What feelings are you experiencing when money comes up? Are you anxious, angry, stressed, fearful, or depressed? And, what could be causing this feeling? Is it because you lack enough savings, lack enough income, or you are drowning in debts and high expenses?
With this, you can come up with a positive response that gets you out of the situation. If it’s the lack of enough income, maybe you can start a side hustle or find another source of income. If you have high expenses, you can create a budget to help you track, manage, and reduce your expenses where possible.
Whatever you do, if you are on the recovery journey, do not ignore your feelings and emotions around money. Face your triggers head-on.
Work With a Professional
Unfortunately, the stress, depression, and anxiety around money can take a toll on more than just your financial life. Sometimes, it can affect your work and general life, leading to insomnia, weight loss, and avoiding your loved ones. If it gets to such a point, it is best to work with a mental health professional.
I know some professional and expensive, but there are affordable and sometimes free options. There are even online professionals in this digital era who can help you through such hard times.
Talk to Someone
While a friend or a relative might have a solution to your financial problems, talking about it can go a long way. For instance, it could show you that most people experience financial difficulties.
They might have experienced the same issues as you, and they could offer tips on surviving or overcoming the situations. I am sure you’ve seen people share their stories, and they are offered jobs or some money to start businesses.
The Bottom Line
Most of us experience financial difficulties, from job losses to insufficient income to meet our needs. The key is learning how to cope healthily. And, when your past experiences with money trigger a feeling of fear, flee or freeze and is holding you back from attaining your financial freedom, take time to identify the cause of the emotion and how you can manage it.