In a recent column, I discussed financial trauma—money-related occurrences that, either as single extreme events or chronic patterns, can overwhelm a person and become traumatic. Some emotional signs of financial trauma are depression, ambivalence, regularly reliving the original event, anger, mood swings, overeating, trouble concentrating, chronic fear, shame, and anger.

Emotional trauma can develop around eight general types of money events: giving, receiving, spending, saving, loaning, borrowing, earning, and taking. Typically, if you feel a sense of shame around any of these, there may be some past financial trauma.

  1. While research has found that we may get longer-lasting happiness by giving to others rather than receiving for ourselves, giving out of chronic manipulation, guilt, shame, and obligation can become a source of financial trauma.
  2. A gift is an act of generosity that can express care or appreciation. Receiving money can be a source of happiness, gratefulness, fulfillment, and excitement. However, when a gift comes wrapped with strings attached it ceases to be a gift. Strings that turn a gift into a traumatic event might include guilt, manipulation, or expectations of reciprocity or future favors.
  3. Spending money is the way we use it to create and support physical, emotional, and financial wellbeing. When we spend money in ways that support our best interest and values, the congruency and alignment of the spending produces a general sense of wellbeing. Generally, money that is never spent is relatively useless in supporting our needs, goals, dreams, and desires that make life worth living. However, money spent in ways that don’t align with our values or our best interest can cause internal dissonance, stress, depression, and unhappiness, resulting in trauma. The same is true of money spent as a result of guilt, shame, manipulation, coercion, or obligation.
  4. Saving and investing money is a critical component of supporting future spending, which helps create overall wellbeing. However, accumulating money out of fear, obligation, anger, coercion, guilt, shame, or manipulation can be traumatic.
  5. A popular method to create cash flow from one’s savings or investments is loaning money to banks, corporations, governments, or other individuals. The loans most likely to result in financial trauma are those to family or friends. Such loans often have emotional strings attached, and the parties involved may overlook the importance of appropriate paperwork, security, creditworthiness, and clear agreement on terms and consequences for failing to make timely payments.
  6. A lot of financial trauma comes from being unable to pay indebtedness. Whether the cause is poor financial choices or adverse life events like a job loss, there is shame around consequences such as property being repossessed or bankruptcy. Even in less extreme circumstances, borrowing from family or friends may feel shaming.
  7. Earning money can be a source of sustenance, self-esteem, and freedom. It can also carry trauma when a person is under-employed, over-employed, or receiving earnings with strings attached in the form of unwritten expectations, coercion, exploitation, or manipulation.
  8. I am not sure there is an upside to taking money. Embezzling, shoplifting, cheating on taxes, or robbery are all stealing money that rightfully belongs to another. Whether it stems from financial need, anger, fear, or a deep sense of entitlement, taking almost always leads to financial trauma.

The topic of financial trauma is, of course, much more complex than this brief overview. What is overwhelming for one person may not have the same effect on someone else. Whether an event or a pattern of behavior results in financial trauma has more to do with its emotional impact than its financial consequences.

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