![]() ![]() This could stem from someone having experiences in life where money was really tight, causing them to move forward in fear and trepidation.Ĭhapman says this excessive risk aversion can also commonly be seen in relationships in which two people come together who have had different experiences with money growing up. Chapman calls this "excessive risk aversion," which can be correlated to mindsets of fear and scarcity around money. On the other hand, a severe lack of spending, even when the money is available, can also be a sign of financial trauma. In many ways, overspending can also be a form of financial avoidance, since consumption is a temporary way to deal with pain while avoiding the reality of finances. "So we've got a lot of people who are constantly engaging with this narrative and are kind of playing into this dopamine addiction or treadmill of chasing pleasure to basically soothe pain or boredom." "One of the core messages of consumerism is that if you ever feel bored or sad or lonely or inadequate, something's wrong with you and you need to fix it right away and you can do that by buying something or consuming, essentially," Chapman explains. This response can stem from the common narratives around money in dominant culture. "If you're because you've had a stressed-out day, you may be doing that spending because you're trying to soothe pain or you're looking for an increase in dopamine." For anyone struggling with overspending, Chapman says it's important to do some internal reflection and ask yourself why. This could look like anything from spending too much money on eating out or splurging on major purchases with money you don't have. ![]() Overspending or compulsive spending is another common response to financial trauma. These larger-scale forms of financial trauma might look like the scarcity mindset passed down from your parents or the societal pressure to over-consume.įinancial trauma, no matter the source, can have a debilitating or destructive impact on the way we interact with money, so it's important to recognize the signs and work to understand our own behaviors on a deeper level. As Chapman explains, the trauma around money can also be generational, intergenerational, relational, societal, or systemic. We can also explore financial trauma from a wider lens. "A couple of examples of this would be living in poverty for more than a few months, or let's say you invested your entire retirement savings in some stock deal, and you lost it all, or maybe there was a divorce, and you ran into some challenges with your finances with your partner," Chapman explains. When it comes to trauma in general, the most widely understood form is the kind that's caused by a singular traumatic event-a natural disaster, an assault, a car crash-and the same can be applied to individual trauma around money. "When we consider today's reality of stagnant incomes, limited savings and high amounts of credit card and other debt, along with frequent financial traumas such as defaults, evictions, and aggressive debt collection, these findings should trigger alarm bells for our society to address the challenges with debt millions are facing," Scott Saunders, founder and CEO of Happy Money, told Business Wire in response to the study.Ĭhantel Chapman, co-founder of the Trauma of Money Method and founder of What The Finances, takes a trauma-informed approach to financial education and says it's crucial to look at financial trauma on both an individual and collective level. Potential Causes Debt and Financial Insecurity He ended up finding that nearly one in four Americans and one in three millennials suffer from PTSD-like symptoms caused by financially induced stress.Īs the study shows, the people experiencing these symptoms display destructive behaviors around finances (like avoidance and denial) as well as more traditional symptoms of trauma, like agitation, irritability, hypervigilance, self-destructive behavior, and isolation. In 2016, he led a study on the links between personality and financial behaviors. Galen Buckwalter, a psychological research scientist and chief science officer at Happy Money, is one of the leading experts on financial trauma. We talked with experts to learn more about financial trauma, what it can look like, and the steps you can take to resolve it.ĭr. ![]() These negative relationships to money-formed by anything from childhood experiences to long-term debt in adulthood-can be connected to financial trauma, which can, in turn, inform and hinder the ways that people interact with money in daily life. While some people have been privileged to never have to worry about money, many others are used to associating money with stress, a lack of security, and even feelings of unworthiness. In fact, personal finances, as "facts and figures" as they may seem, can come with a lot of emotional baggage. Interacting with money is a fact of life, but that doesn't mean it's easy. ![]()
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