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Everybody goes through a stressful and traumatic event at least once in life. Job loss, divorce or a toxic relationship can leave one depleted of positive and warm feelings. As a result, many engage in unhealthy financial behaviors that may lead to debt or under-earning.

In a 2012 study on veterans called ‘Do Psychological Shocks Affect Financial Risk Taking Behavior‘, psychologists found that subjects who went through combat were more afraid of investing money. This lead to them avoiding certain monetary gains that would benefit their retirement. The study explains that traumatic shocks force people to become more risk-averse, which is why the subjects in the study refrained from investing.

If you’ve been through a traumatic experience and you think that it affected your finances, there are ways to help yourself go through it. Here are some steps to take to get control of your emotions, so that you’ll make better money decisions.

Understand the impact of trauma on the brain

Psychotherapist Paul Hokemeyer says that trauma throws us in a survival mode. When we’re in a survival mode, we’ll take measures to protect ourselves-and those measures might not be beneficial to us.

Some ways we might soothe ourselves after trauma is through compulsive spending.

One of Hokemeyer’s patients, a woman who used to live in an abusive home said that, each time she heard her parents scream, she’d go online and look for clothes. Then she’d notice that the act of actually purchasing a clothing item would make her feel instantly good. She then made a habit of buying something new each time she was triggered by her parents’ violent behavior.

The connection between spending and feeling good makes sense to Hokemeyer’s patient. That way she was able to avoid dealing with the stress at home even if temporarily.

Michelle Black, credit expert at also believes that people’s bank accounts suffer as a result of a traumatic experience. There are dozens of cases of stress-related debt that she’s dealing with on a weekly basis.

One of her customers, a man who lost his wife in a car accident used shopping and overspending to cover up his grief. After working through the grief with him, the man was able to recover financially and be more careful with his money.

Know what you’re doing

Often people lack awareness when it comes to their financial behavior. They might spend too much money on going out or pay with credit for gym memberships or new gadgets. It’s important to know how trauma makes you behave so that you can take steps to improve your finances.

Over spending

Just like Hokemeyer’s patient, you might spend too much money on clothes or shoes to avoid a stressful event at home or in your personal life.


The opposite of spending too much money is not spending enough money on things you need. Under-spending is linked to deprivation. When you’re in a state of deprivation, you don’t think you deserve to have certain things and that might be an effect of trauma.


Even though you have high qualifications and academic achievements, you refuse to get jobs that will pay you a great income. Instead, you limit yourself to low-quality gigs that don’t showcase your talents and abilities.


Trauma can lead you to believe the world is a scary place. As a result, you’ll accumulate a lot of stuff to put a shield between you and the ‘unsafe’ world.


Owning expensive things you bought with credit might be a way to prove your own value. Therefore, going into debt to have the things you want feels good to you.

Seek out professional help

After realizing you’re struggling emotionally, you can seek out the help of a cognitive therapist who can help you reframe those negative beliefs that trauma left you with.

Another way to improve your psychological state is by trying EMDR therapy. This type of therapy is designed to help you accept the traumatic event you went through and find ways to cope with it that don’t involve the abuse of money.

‘You must train your brain to believe in you. If you sense you have a problem, there is a 99 percent chance is true. Trust that feeling and seek proper care to address the issues’, says psychotherapist Hokemeyer.

Regain your inner power

Overcoming emotional stress can also be achieved by engaging in activities that empower you. For example, if you were always good at playing chess, why not joining a meet up group on chess and get your head in the game? Do you like painting or writing? You can pursue those interests that will certainly give you a confidence boost. And you don’t even have to spend money.

Stephen Lesavich, co-author of ‘The Plastic Effect: How Urban Legends Influence The Use And Misuse Of Credit Cards‘ says that awareness is important if you want to stop making bad money decisions. He empowers his clients by making them ask the following questions:

How do I feel right now?

What is causing me to react this way?

Why do I feel the need to buy this?

Do I really need it?

How do I feel after I buy it?

You can use these questions as well to have more control over your money habits. The more you practice this type of self-generated therapy the more aware you will become of what you’re doing.

Whether you like it or not your money problems might be rooted in traumatic situations you’ve been through. But remember that you do have a choice-and that’s to deal with what happened to you so that you can soothe you anxieties and treat your money with care.


  • Marlena Eva

    Health & Wellness Content Writer

    Marlena Eva is a content writer with a background in psychology. She loves traveling, being in nature, and reading about new technology. Follow her @MarlenaEeva