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Daylight News

Financial Trauma Is Real — and Worse for LGBTQ+ Folks. How to Cope w/Its Effects.

Team Daylight
For decades, conversations around the impact of trauma were focused on military veterans. As the field of psychology has grown, so has our understanding of trauma.

So many factors contribute to the way our brains process stress and trauma. While it’s still a relatively new field of research, studies show a large portion of people living in the U.S. exhibit finance-related PTSD symptoms.

A study conducted by Dr. Galen Buckwalker, Chief Science Officer at Payoff a debt-payoff product of the financial services company Happy Money, showed that 23% of U.S. adults overall and 36% of millennials experience what he’s dubbed “acute financial stress” (AFS).

Buckwalker defines AFS as “the physical, emotional, and cognitive deficits people experience when they cannot cope with either abrupt financial loss or the chronic stress of having inadequate financial resources,” symptoms associated with PTSD.

As disheartening as these statistics are, they aren’t surprising. With the growing student loan crisis, income inequality, racial and gender wealth gaps, the housing crisis, and the growing population of unhoused individuals, it makes sense that so many of us experience financial trauma.

On an individual level, things that can lead to financial trauma include:

  • Housing insecurity.
  • Job loss.
  • Being underpaid.
  • Divorce.
  • Student debt.
  • Food insecurity.
  • High health care costs.
  • Discrimination.

While these statistics are in reference to the general population, we know the LGBTQ+ community likely faces higher rates of financial trauma due to the financial burdens of being queer and the discrimination we face.

Symptoms of financial trauma

In response to a real or perceived threat, our bodies react with fight, flight, freeze or fawn responses.

In financial trauma, this could include rumination, avoidance and seeking instant gratification through things like overspending, overeating or excessive use of substances.

Trauma also has physical and cognitive symptoms, including:

  • Neck, shoulder and back pain.
  • Stomach and digestion issues.
  • Insomnia.
  • Exhaustion.
  • Difficulty regulating emotions.
  • Issues with memory and concentration.

Unhealthy coping mechanisms, like seeking instant gratification, can make our financial situation worse. Breaking cycles is hard, but not impossible.

How to deal with financial trauma

Learning that you’re experiencing the effects of trauma can feel overwhelming, especially if you respond to trauma and stress with avoidance.

Start by acknowledging how your relationship with money and the economic injustices you experience have impacted both your wellbeing and your financial situation.

Address the problems that financial stress causes

If you have access to a therapist, reach out to learn how to deal with chronic stress or PTSD.

If a licensed professional isn’t an option, try Cognitive Behavioral Therapy (CBT) exercises to help cope with strong emotions as they arise. Studies show that CBT can literally rewire the way our brains respond to stress.

The American Psychological Association offers an overview of CBT for patients and families.

Develop a new relationship with money

In this country, many of us, especially queer people, are not set up for success.

If you experience feelings of shame as you reflect on your financial situation, remember to put the blame where it belongs and focus only on what you can control.

Our society strongly emphasizes making good choices without acknowledging that not everyone is given good options to choose from. Lack of financial education combined with generations of discrimination put us at a clear disadvantage financially.

You don’t know what you don’t know. Trauma is not your fault, and healing is possible. Be gentle with yourself as you embark on this journey. You deserve a stress-free financial life.

Gain tools to put autonomy back in your hands

Feeling a lack of control can be a major contributor to the trauma you experience.

Think of money management as a way to take back control of this part of your life. Spend time figuring out your financial goals, and find tools to help you work toward them.