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?

Experiencing trauma can be the result of a one-time event such as an accident, assault, or natural disaster, but it can also be the result of persistent negative experiences such as abuse or neglect. Post-traumatic stress disorder (PTSD) is a common manifestation of trauma.

Adverse Childhood Experiences (ACEs)

ACEs are traumatic events that occur during childhood (between the ages of 0-17 years). Examples of ACEs include: 1. Experiencing abuse and/or neglect 2. Witnessing violence 3. Death of a parent 4. Substance abuse in the home 5. Parent/guardian mental health struggles 6. Parent imprisonment

Trauma and the Brain

The reason for these outcomes can largely be blamed on the impact of trauma on the developing brain, and it all has to do with stress. The under-development of higher-order areas of the brain leads to issues with attention, decision-making, learning, and responses to stress.

The Effects of Trauma on Personal Finance

First, some of the outcomes named in the ACEs study related to personal finance include limited access to opportunities that would help one develop skills and make money, such as college. Additionally, people who’ve experienced trauma may struggle to hold a job, further inhibiting their ability to obtain a stable income.

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

A therapist or other mental health professional will be able to help you work through your trauma, develop adaptive coping strategies, and help you access any needed medication or other treatment. Ideally, you should also seek out financial help to coincide with your mental health work.  

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