Still, it is not the one variety of trauma that may impact our money behavior.
Real traumas, even people who don’t have anything to do with funds, can affect the way in which you handle money. Simply put, trauma is an emotional wound that impacts our self-esteem and security.
Any negative experience related to value and security can challenge or influence our behavior and habits around money, along with how secure we feel and the way we feel about ourselves.
In general, money trauma can stem from a wide range of life experiences, including:
- Generational trauma: Stress is inherited genetically and/or through upbringing. (For example, a grandparent who grew up poor or at war might inherit a way of insecurity with their income.)
- Relationship trauma: Situations akin to abuse, abandonment or neglect typically experienced by caregivers or other close relationships.
- Social trauma: Threats and psychological harm targeting a collective social group. (For example, the discomfort of managing personal funds as a lady as a result of patriarchal conditioning or constant comparisons to others driven by consumerism.)
- Systemic trauma: Damage on the institutional level from broader systems akin to racism and capitalism. (This can present itself in various forms, akin to a powerful aversion to debt that stems from societal trauma resulting from redlining, predatory lending tactics that focus on marginalized groups, or other harmful systems that contribute to the racial wealth gap. )
- Scarcity mentality: The brain has a tough time distinguishing between actual scarcity and perceived scarcity, so experiencing each scarcity can impact the brain in the same technique to a trauma response. True scarcity occurs when basic survival resources are lacking. On the opposite hand, perceived scarcity could also be that our needs are being met, but we feel lacking as a result of past experiences or comparison with others, perhaps through platforms akin to social media.
Financial trauma can impact the way in which we handle money by affecting a few of our cognitive functions. In a trauma-activated state, now we have less access to the areas of our brain that help us with long-term goal setting, decision making, rational considering, and impulse control. Responses to money trauma have been shown to temporarily disrupt speech or lower IQ.
Although everyone’s experience of trauma is different, the results are frequently manifested by a group of comparable symptoms:
- Hypervigilance
- hopelessness
- worthlessness
- insomnia
- deafness
- Flashbacks
- Memory loss
- irritability
- Overwhelm
- Little concentration
- Chronic pain
- Loss of self-confidence
If trauma will not be addressed, it might result in unhelpful money habits, akin to: B. compulsive spending, risk aversion, financial avoidance and relationship disorders akin to financial infidelity. Trauma can also be often a trigger for financial shame. Survivors of cash trauma might also feel ashamed of positive things, akin to getting a raise, buying a house, and even helping with debt relief.
A recent study by Coastal capital on financial shame shows what this looks like in practice: 63% of Canadians take steps to avoid coping with their funds and 56% say financial shame affects their relationships with friends and colleagues.
