When you hear the word “trauma,” what comes to mind? The death of a loved one, severe injury or illness, a natural disaster, physical or sexual abuse, wartime combat? These are the things that I once thought of as trauma.

What I’ve since learned is that events like these are descriptions of extreme trauma, not necessarily trauma. The word “trauma” is simply the Greek term for “wound.” According to Mirriam-Webster, originally the Greeks used the word for physical injuries. Now it is commonly used to describe emotional injuries as well.

A traumatic event can be both physical and emotional. A physical injury can result in lingering psychological symptoms even after someone recovers bodily. Most of us have become familiar with the term post-traumatic stress disorder, or PTSD. Its symptoms, such as anxiety, depression, flashbacks, and recurring nightmares, can stem from an original trauma that is either physical or emotional.

However, not all trauma is inherently extreme or considered a traumatic event. Less extreme trauma can include shock, upheaval, distress, chronic stress, physical or emotional pain, grief, or heartache from a variety of sources and life experiences. By this standard, there isn’t a human past the age of two that hasn’t experienced trauma.

Any trauma, extreme or not, can be emotionally debilitating if it overwhelms a person. A chronic series of less extreme traumas can lead to experiencing the same symptoms as acute one-time traumatic events. The impact of being exposed to multiple or prolonged stresses is called complex trauma. Examples can include repeated incidences of stress, emotional abuse or neglect, criticism, chaotic family dynamics, or relatively minor chronic illness such as asthma or significant allergies.

So, what does trauma have to do with money? Because money is so integral to all aspects of our lives, distressing or disturbing financial experiences can overwhelm someone and become traumatic events. They can be the cause of PTSD or complex trauma.

Dr. Galen Buckwalter, a research psychologist, defines Financial PTSD as “the physical, emotional, and cognitive deficits people experience when they cannot cope with either abrupt financial loss or the chronic stress of having inadequate financial resources.” – Resource: https://goop.com/wellness/career-money/are-you-struggling-with-financial-ptsd/

While both of these circumstances certainly qualify as financial trauma, this definition is quite narrow. A wide variety of financial events and circumstances, even ones that could appear insignificant to others, might be traumatic for the person involved.

Examples of financial trauma could include:

  • Chronic worry or fear around money, regardless of your income level
  • A sudden significant change in financial circumstances—either a loss or a gain
  • Having a parent or partner use money to control and manipulate you
  • Regret or shame over a past financial decision or circumstance
  • Any perceived financial wounding, especially in childhood

Based on my experience, most financial trauma is experienced as children, not adults. Most problematic financial behaviors and disorders affecting a person’s life today have their roots in childhood. Also, a trauma does not need to be specifically around money to symptomatically show up in a person’s financial life. Many sources of trauma—such as addiction, mental illness, chronic physical illness, or the death of a parent—include financial components or may have long-term effects on someone’s financial behavior.

Behavioral signs of financial trauma include gambling, hoarding, compulsive buying, overspending, underspending, financial denial, financial enabling, financial enmeshment, squandering sudden windfalls, and repeated poor financial decisions.

Emotional signs of financial trauma include depression, ambivalence, regularly reliving the original event, anger, mood swings, overeating, trouble concentrating, chronic fear, shame, and anger.

The good news is that recovering from financial trauma is possible. The emerging field of financial therapy specifically helps people negotiate, resolve, and heal financial traumas.



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