money health weekly


Financial Flashpoints: Money and Trauma

Put yourself in these peoples' shoes. 

Your parents saved diligently their whole life, but then the great recession came and your parents decided to sell their investments after they went down because they were sick of it falling week after week. Once out of the market, the market rebounded and your parents missed out on all the gains. 

You and your family scraped by to put food on the table and keep the lights on. Then a bill collector caught up with your parents and your family fell behind on rent, eventually evicted with no place to go. 

Your mother was never involved with the family finances and never noticed your father moving money out of their joint accounts into accounts that he owned by himself. After moving all the money, he divorced your mother to start a new life and you and your money were left with nothing.

financial flashpoints and behavior

Financial Flashpoints and Trauma

Financial flashpoints are effectively the money version of trauma. They are very intense emotional experiences that we have with respect to money. Because these experience cause a great deal of emotional and cognitive pain our brains do whatever they can to ease that pain and reduce the chance of feeling that pain in the future. They write and update our money scripts and therefore have the ability to change the course of our money behaviors. 

Big, Small, Bad, & Good

It's very easy to think about financial flashpoints as being very big, negative events. Certainly these quality. If you have ever experienced bankruptcy, a costly divorce, foreclosure, homelessness, or even financial losses, those events have mostly definitely had an impact on you and shaped your financial beliefs. 

But financial flashpoints don't have to be very large dramatic events. It could be something as small as an embarrassing moment; for example if you were made fun of at school for wearing hand-me-down clothing. It could be a hurtful comment that someone made to you once that really stuck with you, like someone calling you cheap or rich. 

Guess what - financial flashpoints don't even even need to be negative events. An example could be a situation where you were in dire straights and a family member stepped in to save the day. That is a positive event, but it has the ability to shape your financial views in a way that you never worry about money because you think things will work themselves out in the end.