The Effects of Trauma on Personal Finance

This silent epidemic is trauma.

Trauma is a pervasive aspect of our society that effects every aspect of the lives of those who have experienced it. Although the link between trauma and personal finance may not be clear, rest assured that it is there. Here we will discuss some of the main effects of trauma on personal finance.

What is Trauma?

According to the American Psychological Association, trauma is “an emotional response to a terrible event.” It occurs when the extreme stress of the event(s) overwhelms the person’s ability to cope.  People impacted by trauma often have feelings of fear and helplessness, and their inability to cope or escape the trauma often leads to the development of maladaptive means of coping.

Adverse Childhood Experiences (ACEs)

Called the Adverse Childhood Experiences (ACE) Study, researchers surveyed over 17,000 individuals about their childhood experiences and correlated them with later life outcomes. The main study, and extensive follow-ups, found that adverse childhood experiences, or ACEs, were significantly correlated to numerous negative outcomes later in life.

Trauma and the Brain

Prolonged stress, called toxic stress, changes the way the brain develops. Without getting too technical, toxic stress means that the brain, and the body, are constantly in a state of fight, flight, or freeze. This constant stress state means that stress hormones are higher throughout the body, resulting in increased inflammation and decreased immunity, leading to chronic disease.

The Effects of Trauma on Personal Finance

By now the effects of trauma on personal finance should be becoming clear. Not only might experiencing trauma inhibit a person’s ability to make money, it often leads to a plethora of habits and behaviors that negatively impact spending and money management.

How You Can Combat the Effects of Trauma on Your Personal Finances

Obviously, the best way to prevent the impact of trauma is to prevent the trauma from happening in the first place, but absent major societal change, the onus is placed on the individual to enact their own change. With that being said, the single biggest thing you can do to combat the effects of trauma on your personal finances is to get help as soon as you can.

Moral of the Story

Research on the impact of trauma has shown that adverse childhood experiences, especially when you’ve experienced multiple ACEs, leads to a host of negative outcomes later in life for your mental, physical, and financial health.  These outcomes are due to changes in the brain caused by trauma and chronic high levels of stress.

Swipe Up to Learn The Effects of Trauma on Personal Finance

For More Posts Like This Visit

Money Saved Is Money Earned!