People exposed in early childhood to negative experiences with money, such as experiences of poverty and financial insecurity, can develop debt trauma.
The trauma of debt can affect many aspects of a person’s life, but personal finance columnist Rubina Ahmed-Haq has some tips on how to handle it.
“Debt trauma can have a dramatic effect on people’s ability to manage their money. It relates to how money or maybe the lack of it can make a person feel very insecure and unworthy,” Ahmed said. -Haq. saskatchewan weekend.
Ahmed-Haq said that years of financial insecurity or personal events like a financially devastating divorce or bad investment can also result in debt trauma.
“If as a child you were in a situation where you saw your parents could never pay the bills on time or were always behind on payments or a big event that happens in your adult life, like your business going bankrupt, you can trigger that,” he said.
“Those childhood experiences of being food insecure or being evicted from your home as a child, can have lasting effects, whether you’re in debt as an adult or not.”
according to a recent survey conducted by Maru/Matchbox and commissioner Per Meridian Credit Union, 55 per cent of Canadians said their childhood experience with money had a lasting impact, and 42 per cent said their early experiences with money have left them anxious and worried about their money as adults.
The online survey was conducted with 1,509 respondents across Canada among adults 18 and older between July 27 and August 11. CBC cannot accurately calculate a margin of error for online polls. For comparison purposes only, a probability sample of the same size would yield a margin of error of +/- 2.5 percentage points.
Ahmed-Haq said life events can also trigger debt trauma, even if people are financially stable.
He referred to the recent Canada Food Price Report – which projects the largest annual increase in food bills on record by 2022 – triggering “a traumatic debt response” in anyone who was food insecure or had a food insecure childhood.
“It doesn’t necessarily always have to do with the fact that someone is too heavily in debt to be in a state of debt trauma. The effect is really psychological. We come across something like the Canadian food price report, and it gives us that family experience that can put us in that state caused by trauma,” he said.
Ahmed-Haq said the trauma-triggered state makes it difficult for people to make healthy financial decisions. That state can cause one to end up ignoring bills and debt and further exacerbate debt trauma.
“When your brain is in a trauma-triggered state, we lose connection with our cognitive ability and go into survival mode,” he said.
In survival mode, Ahmed-Haq said people don’t seek help because they feel there is no real solution to their problems, further intensifying their debt trauma.
Debt trauma has far-reaching effects
Ahmed-Haq said that trauma can affect all aspects of a person’s life.
She said that couples can fight over money and their individual expenses. They may also feel more anxious about their ability to pay household expenses.
The trauma of debt can distract people from work and also prevent them from pursuing their goals and being happy.
While it can be difficult to recognize if someone is experiencing debt trauma, Ahmed-Haq said avoidance, distractions and denial are some of the obvious signs.
Avoidance can manifest as not wanting to look at one’s debt. Stopping looking at bills or ignoring calls from collectors is a telltale sign, as people take the “if I can’t see it, it’s not there” approach, Ahmed-Haq said.
She said that people experiencing debt trauma use distraction to find ways to take their minds off their debts and escape anxiety.
“Watching too much TV, spending too much time away from home and not really dealing with debt, or worse, using drugs and alcohol to escape this feeling of always worrying about your money,” she said.
Denial means ignoring the signs that one is experiencing debt trauma and instead linking it to other stressors or life events.
How to heal?
Ahmed-Haq said that the first step in recovering from debt trauma is recognizing that one is experiencing debt trauma and accepting it.
Talking with a therapist can help you understand the life events that contribute to the trauma.
“Take active steps to better manage your money, which may include a plan to pay off debt, take steps to ask for a raise at work or improve your skills to achieve a better financial situation,” he said.
She said this is hard to do, as it can also mean distancing yourself from the people and things that trigger a debt trauma response.
Ahmed-Haq said it takes strength to say no to occasions, like wedding invitations or visits from out-of-town friends, that can cost hundreds of dollars.
“It’s really about reconfiguring your experience with money when it’s traumatic and negative. It’s about making it positive and understanding,” he said.
“That can come with having a budget in place, paying down debt, feeling good financially, and once you have that whole plan in place, you’ll feel much more in control of your debt trauma.”