The lasting effect trauma can have on your finances

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A plethora of things effect our personal finances and the development of our financial habits.

From family, to culture, to media, to unprecedented global pandemics, our money lives are constantly being molded and shaped by things both within and beyond our control.

While the majority of things that help shape our financial lives are relatively easy to see (but not necessarily to change or resist), there is a silent epidemic running throughout the world. One that affects as many as 70% of people in the U.S.

This silent epidemic is trauma.

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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.

This article will discuss some of the main effects of trauma on personal finance.

First, we’ll define trauma and its prevalence. Next, we’ll discuss how trauma effects brain development and one of the most eye-opening studies ever done regarding trauma and its effects.

Finally, we’ll conclude by making the connection between trauma and personal finance crystal clear and offer ways to combat its effects.

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.

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.

While not all who experience traumatic events are severely affected by trauma long-term, it is safe to say that the majority are.

As previously mentioned, 70% of U.S. adults (or 223.4 million people) have experienced a traumatic event at least once. Furthermore, 90% of clients in public behavioral health have experienced trauma.

Post-traumatic stress disorder (PTSD) is a common manifestation of trauma, and is characterized by flashbacks, nightmares, and acute anxiety.

While most commonly associated with soldiers returning from war, PTSD is far more prevalent in our everyday society.

And one of the most startling population of victims is children.

Almost all children who witness parental homicide or sexual assault develop PTSD. Furthermore, 90% of those who’ve experienced sexual abuse, 77% of those who’ve experienced a school shooting, and 35% of those exposed to community violence will also develop PTSD.

Aside from the high likelihood of developing PTSD, experiencing trauma is linked to a host of other negative outcomes, especially when experienced in childhood.

Adverse Childhood Experiences (ACEs)

There have been a host of studies linking childhood trauma to negative outcomes later in life, but the largest of these was conducted by Kaiser Permanente in the mid-90’s.

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.

ACEs are traumatic events that occur during childhood (between the ages of 0-17 years). Examples of ACEs include:

  • Experiencing abuse and/or neglect
  • Witnessing violence
  • Death of a parent
  • Substance abuse in the home
  • Parent/guardian mental health struggles
  • Parent imprisonment
  • Poverty (shown to be a strong factor in accumulating ACEs)

Experiencing ACEs in childhood was linked to many lasting negative outcomes effecting health, opportunities, and general well-being. Some of these negative outcomes include:

  • Chronic health problems such as cancer, diabetes, and heart disease
  • Depression and suicide
  • Mental illness
  • Obesity
  • Substance abuse in adulthood
  • Difficult forming healthy and stable relationships
  • Unstable work history
  • Struggles with finances
  • Shortened lifespan

While it makes sense that traumas would be linked to a higher risk of negative outcomes, the most eye-opening aspect of the study was the direct correlation between the number of ACEs one experiences and the increase in the risk for negative outcomes.

People can be given an ACEs score from 0 to 10, with each type of trauma counting as one regardless of how many times it happens.

ACEs really begin to take a toll once a person reaches a score of 4. Those with an ACEs score of 4 are twice as likely to smoke and seven times more likely to suffer from alcoholism. Your risk of emphysema or chronic bronchitis raises by 400%, and your risk of suicide by 1200%.

Those with an ACEs score of 6 or higher may have their lifespan shortened by up to 20 years.

Furthermore, those with high ACEs scores are more likely to have more marriages, broken bones, drug prescriptions, depression, autoimmune diseases, and to be violent as adults.

The implications for experiencing trauma in childhood are clear, now let us talk about why.

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.

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.

In the brain, the more basic systems meant to keep you alive are developed, while higher-order thinking and problem-solving are neglected. The under-development of higher-order areas of the brain leads to issues with attention, decision-making, learning, and responses to stress.

The changes in brain development, along with lack of treatment, often result in risk-taking behaviors and maladaptive means of coping with the trauma such as drug and alcohol abuse.

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.

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. Long-term health issues further impede the ability to bring in income and increase the amount spent on healthcare.

Compounding the issue, people who have experienced trauma typically exhibit a plethora of behaviors that negatively impact their finances. A big one is spending on maladaptive coping mechanisms like cigarettes, drugs, alcohol, food, and other wants. The same changes to the brain that impact decision-making may lead to impulse spending and trouble managing finances. Debt and disorganized finances is common for people who’ve experienced trauma.

On top of all that, many who experience childhood trauma were witness to poor money management in their families and are likely to emulate those strategies as adults.

And the effects aren’t just felt on a personal level, but a societal one. The effect of ACEs is to blame for a significant portion of healthcare costs, emergency responses, mental health, criminal justice, and workspace absenteeism. Taken together, the economic costs of trauma to our society is in the hundreds of billions of dollars every year.

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

Luckily, the impact of trauma on your life and personal finances isn’t a forgone conclusion.

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.

This applies to your mental health, physical health, and financial health.

The optimal course of action would be to first seek out support for coping with the trauma from a mental health professional. 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. Your therapist will likely have local resources they can point you to, but you can also reach out to community programs for help.

Most communities offer some sort of financial coaching or classes where you can learn basic financial literacy and personal finance skills such as building and maintaining a budget. These financial education resources will also be able to point you toward resources to help you access higher education opportunities that will increase your job skills. These adult education programs can help you earn your diploma, GED, or learn specialized skills.

Catholic Charities is one such organization found throughout the U.S. that offers mental health services, financial support and coaching, and can also point you toward other community resources in your area. You can visit the Catholic Charities USA Find Help page to find a location near you.

Another resource is Mental Health America, which offers peer support for those struggling with addiction and other mental health challenges. You can find an affiliate program near you by visiting this page.

No matter what has happened, know that there is hope and things can improve.

Our brains have this amazing ability to adapt and change throughout our life and can reorganize themselves through the formation of new neural connections.

This means that with access to the right resources and hard work, you can change your habits and behaviors and improve the outcome of your life.

If you’ve experienced trauma and you’re struggling, with personal finances or otherwise, seek out help as soon as you can and put yourself on the path to healing and success.

Moral of the Story

Trauma is the silent epidemic running throughout our country and the world. It is insidious and impacts everything you do. The effects of trauma on personal finance is similarly poignant.

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.

But despite all this doom and gloom there is hope

Just as the brain adapts to deal with a traumatic environment, it can adapt to support a safe and healthy lifestyle.

But this change must start with you. If you’ve been the victim of trauma and are struggling in any capacity now is the time to get help. Find a mental health professional you trust that can help you work through what you’ve experienced and develop healthy ways to cope.

At the same time, look for financial education and coaching so you can combine the progress you’re making in therapy with your financial life.

As a child, you had no control over what happened to you, but as an adult, you have all the control to change it.

Remember, you are not responsible for what happened, but you are responsible for ensuring it doesn’t continue to dictate your life.

Talk about Life Saved.

This article originally appeared on MoneySavedIsMoneyEarned.com and was syndicated by MediaFeed.org.

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14 ways to stop losing sleep over money stress

14 ways to stop losing sleep over money stress

With so much stress in the world these days — worrying about money, making ends meet and keeping your family safe — you may literally be losing sleep. That’s a big problem; when you don’t get enough sleep, you put your health and safety at risk, and you can’t perform at your best. Sleep deprivation increases your risk for anxiety, makes you more forgetful, and even suppresses your immune system, which increases your likelihood of getting sick.

If you aren’t sleeping over worries about money, here are steps you can take now to start taking control of your finances.

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First, you have to know where you are financially. The point of this exercise isn’t to shame yourself for your spending habits; you simply want to get an accurate and objective measure of your situation.

Look at your bank and credit card statements and review how much you’re spending each month compared to how much income you’re earning. Ideally, you’re making more than you spend and have some breathing room. If that’s not the case, we’ll talk about fixing that in the next steps.

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Next, commit to tracking your spending. No single method works for everyone, so think about what’s easiest for you. Some people prefer writing everything in a journal while others like using a spreadsheet. You might want to use an app like Mint, which syncs with your bank and credit card accounts and automatically tracks your spending for you. Find a convenient method for you that you’ll stick with for the long term for the best results.

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After reviewing your spending habits, look for areas where you can cut corners. With so many people growing bored of sheltering-in-place, you may not realize you’re ordering things online you don’t really need. You can use that extra time to work on easy ways to lower your bills.

If you’re looking for some ideas on where to cut back, here are a few common areas:

  • Restaurant food: Many people are relying on takeout and delivery right now. Although it’s convenient, delivery fees and tips can be costly. Instead, save those services for special treats, and take a little extra time preparing your own meals and spending less on groceries.
  • Streaming services: Because you’re spending more time at home, you may have signed up for multiple streaming services, such as Netflix, Hulu, Disney+, and HBOMax. Having numerous services can add up. Try to pick one or two favorites, and cancel the other ones to save some money. You can also use one of the best credit cards for streaming services and earn cash back or travel rewards for money you’re spending anyway.
  • Pause impulse buys: If you are tempted by impulse purchases, use Unroll.me to stop getting marketing emails from your favorite stores.
  • Negotiate bills: Use TrueBill or Trim to automatically scan your credit card. statements and cancel unused services. They’ll also negotiate your bills for you, such as your cell phone and cable bills.
  • Cut your most expensive monthly bills.
  • Let Truebill negotiate with your cable, phone, and internet providers. If they can’t negotiate any savings, you pay nothing.

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If you lost your job and can’t pay your bills or your employer cut your hours at work, financial stress can cause you to lose sleep. If that’s the case, reach out to your creditors right away. Student loan lenders, credit card companies and auto lenders may have financial hardship programs that could reduce your payments. Or they may allow you to postpone your payments for a few months, which gives you time to get back on your feet. By reaching out, you may even avoid costly late fees.

Reducing your monthly payments, even temporarily, can give you some extra breathing room so you can afford the essentials — and get some much-needed rest at night.

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Having debt hanging over you can be a major stressor. Coming up with a repayment plan and putting it into action can help you feel more in control again.

Sit down and organize all your billing statements, including your credit card statements, student loan statements, car loan statements and medical bills. List all of your loan amounts, their interest rates and your monthly payments. Think about what repayment strategy would make the most sense for you.

Two popular approaches to debt reduction are the debt snowball and debt avalanche strategies:

  • Debt snowball: With the debt snowball method, you focus on paying off the loan with the lowest balance first.
  • Debt avalanche: If you use the debt avalanche method, you focus on paying off the loan with the highest interest rate first.

Whichever method you choose, stick with it and stay focused. Over time, you’ll see results.

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If you don’t have an emergency fund, every little hiccup or unexpected expense can be a big problem. You can help give yourself some relief by building an emergency fund. Although saving three to six months’ worth of living expenses is ideal, don’t let yourself get overwhelmed by big numbers. Start small. Aim to set aside just $100 to $500 at first, and build from there.

A simple way to save it to put aside a portion of every paycheck. If you get any unexpected windfalls, such as a birthday gift or tax refund, deposit that directly into your savings account to bulk up your emergency fund. Consider opening a separate high-yield savings account for your emergency fund. This will help you resist raiding your savings and also earn you more interest.

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Late fees are a costly fee you should never have to pay. Whenever possible, automate your bills. See whether your bank offers automatic bill pay. If not, many companies, including utility companies, allow you to use your credit card for recurring payments. However, only sync your credit card if you know you can pay off your balance in full each month to avoid costly credit card interest charges.

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You likely have hundreds of dollars worth of unused electronics, books and clothes in your home. If you sell those items, you can turn your old stuff into cash — then use that money to pay down debt or bolster your emergency fund.

  • Electronics: You can sell used electronics on Decluttr, Gazelle, or at Best Buy.
  • Books: Sell your old textbooks on BookScouter or Chegg.
  • Clothes: You can sell individual items directly to consumers with Poshmark, or send bundles of items to ThredUp.

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If you’re barely making ends meet, bringing in additional income can make you feel more comfortable and build up your emergency savings faster. From delivering groceries to tutoring online, there are lots of different ways to earn extra money in your spare time.

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Don’t leave your emergency fund or other savings accounts to chance; it’s too easy to spend what’s in your checking account. Take advantage of automation to move your money into designated savings accounts so it’s harder to access that money. Set up recurring deposits so that money is automatically deposited regularly.

Consider opening more than one savings account for your various goals, such as three different accounts: one for your emergency fund, your dream vacation, and your house fund. By having designated savings accounts, you can stay focused on your goals.

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If uncertainty about the future causes you anxiety, planning and investing for the long-term can help you rest more peacefully. You don’t need to have thousands of dollars to start investing. With apps like Acorns and Stash, you can invest in fractional shares and start investing with as little as $1.

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Although keeping up with the news can help you be well-informed, it can also be overwhelming and stressful. If you find yourself experiencing feelings of depression or anxiety because of the latest updates on the stock market or coronavirus, take a break from the news and focus on a long-term mindset.

We have survived pandemics before. And historically, the market has delivered positive returns. By staying consistent and riding out the ebbs and flows, you can continue to see growth with your investments, so turn off the TV and your sleep will probably improve.

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Many people worry about money simply because they don’t have a plan in place and don’t know where to start. If that’s the case for you, consider setting up a session with an accredited financial advisor. A financial advisor can help you manage your investment portfolio and develop a plan to achieve your financial goals, such as retiring at a specific age.

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If you’re continually struggling with insomnia because of money issues and stress, it’s important to talk to a therapist or healthcare professional. Losing sleep can cause significant health issues and affect your mental health over the long term. If you’re not sure where to start or need a referral, talk to your general physician about your sleep issues.

If you don’t have insurance or otherwise are worried about the cost of therapy, there are affordable options available:

  • Federally-funded health centers: At these centers, you pay only what you can afford and fees are based on your income. Use the Health Resources and Services Administration website to find a health center near you.
  • Open Path Psychotherapy Collective: Open Path is a nationwide network of mental health professionals who provide care to low- and middle-income families at reduced rates.
  • Sliding scale therapists: Some private therapists charge fees on a sliding scale, which means they charge different fees based on patients’ income. The less you make, the less you’ll pay. You can use sites like Good Therapy to search for local therapists accepting sliding-scale clients.
  • Online therapy: Online or virtual therapy through apps like TalkSpace or BetterHelp are up to 80% cheaper than traditional therapy. And you can talk with licensed therapists on your own schedule.

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If you’re dealing with a substantial amount of stress around money because of the coronavirus pandemic, you’re not alone. But all that anxiety and worry can affect your ability to get a good night’s sleep, which can impact multiple aspects of your life, including your overall health.

By coming up with a plan to pay down your debt, boost your savings, and increase your income, you can get a handle on your finances and relieve some of that stress so you can get the rest you need.

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This article originally appeared on FinanceBuzz.com and was syndicated by MediaFeed.org.

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Featured Image Credit: DepositPhotos.com.

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