Rahkim Sabree owns his own home in Hartford, Connecticut. He invests and has savings. Despite this, he is sometimes anxious. Any unforeseen expense, big or small, worries her.
“When I have to spend, I get nervous,” says Sabree, 33, who is a financial consultant. He sometimes ends up postponing necessities like buying shoes or doing repairs at home.
During her teenage years, Sabree lived with her family in a low-rental housing project and relied on social assistance. “When things got really bad, we were cut off from the water and the electricity,” he says. More than once, they were almost expelled. He still remembers the shame of seeing an eviction notice on the door.
This era has shaped the way he spends and saves. Being in control of his finances brings him peace. But the unexpected causes anxiety. “I feel like I’m experiencing events instead of acting on them,” Sabree said.
According to psychologist Alex Melkumian, founder of the Financial Psychology Center in Los Angeles, experiences like Mr. Sabree’s can lead to what’s called “financial trauma”: an intense and long-lasting emotional reaction to past or present financial distress. .
Daily stress comes and goes, but a trauma lasts and eventually alters the relationship with money, explains Thomas Faupl, a financial therapist from San Francisco.
PTSD is not a mental health diagnosis. It often eludes financial advisors and mental health professionals. Many people are unaware that their psychological and financial health can be affected by traumatic experiences involving money, Faupl says.
Yet a 2016 poll showed that 25% of Americans (36% of millennials) report symptoms of PTSD caused by financial distress.
Conversely, it can also lead to the postponement of necessary expenses. Thus, Sabree believed himself to be frugal; he told himself that he was saving to ward off bad weather. But he found that all his choices were dictated by an excessive fear of finding himself in trouble.
Any painful experience related to money can lead to feelings of insecurity, says Aja Evans, a financial therapist in New York. This often results in negative thoughts, such as “I’ll never have enough money” or “I’ll never be good with money.”
Overspending can also reveal financial trauma: today we compensate for the feeling of deprivation felt during childhood, by blazing all our savings on vacation, at the restaurant or by buying online.
Chantel Chapman, a 40-year-old entrepreneur from British Columbia, says she was a real high roller. For 10 years, she spent lavishly on gifts, clothes, and dinners beyond her means. Result: $10,000 on his credit card and a tax debt of the same amount, which ate into his savings.
Like Sabree, Chapman comes from a poor family. Sabree’s financial trauma made her frugal, Chapman’s made her spendthrift.
She feared debt, but her need to fit in with her surroundings of well-to-do people made her spend too much. She wanted to please: “I thought I had to look a certain way to be accepted. »
Any memory, thought or feeling related to the trauma can trigger distress. If you lost money during the 2008 financial crisis, seeing the stock market go down can be anxiety-provoking.
“It’s like watching a horror movie over and over again,” says Michelle Griffith, wealth manager at Citi Personal Wealth Management.
When prices drop and emotion runs high, she recommends sticking to the facts. “Even very bearish markets bounce back,” she says. Over the past 70 years, the stock market has fallen 5% several times a year. You can manage stress by reminding yourself that past lows have faded, says Griffith.
No one knows the future, but knowing how to spot what triggers your anxiety helps you take better care of yourself, says Evans. Breathing deeply, going for a walk or talking with a friend has a calming effect, which reduces the risk of impulsive actions, she added.
As in our personal relationships, setting boundaries can help us control our financial behaviors, says Griffith.
Automation helps to bypass temptations: so scheduling automatic transfers from checking account to savings account each month takes the guesswork out of it. Same goes for monthly bills and retirement savings, she says.
Evans suggests spendthrifts remove their credit cards from their smartphones and online stores. Buying provides a dopamine rush that can hurt self-control, he says. If the credit card is not at hand, it is easier to resist.
Excessively frugal people can do the opposite: force themselves to spend $10 or $20 on a treat. It’s a way to get out of your comfort zone; do the opposite of what the negative emotion commands you to do, he says.
To recover from financial trauma, Faupl, San Francisco’s financial therapist, recommends a two-pronged approach: address the financial aspect and the trauma that caused it.
There are therapists trained in psychology and with expertise in financial trauma. They can help understand the connection between a painful experience and financial problems. So, if money was a point of contention in your childhood, perhaps you avoid difficult financial conversations in adulthood. If you grew up fearing lack, perhaps you are even avoiding necessary expenses today.
Besides therapy, attending a financial education class or talking to a financial advisor can put you on the path to success.
