Financial trauma is real: why black people should consider financial healing
April is Financial Literacy Month and the month-long celebration often comes with appeals from low-income and marginalized communities who suggest that the silver bullet for their financial woes is financial literacy – and it isn’t. While it is important to note that financial literacy is an important step toward making sound financial decisions, it does not account for those who are financially literate but for behavioral issues arising from institutional mistrust, historical exclusion, and financial trauma. affected by the issues. The stigma surrounding mental health within these communities also acts as a deterrent, preventing its members from getting the help they need.
what is financial shock
While there is no set standard definition for financial trauma, financial trauma can be described or experienced as any event that has a negative impact on the way someone thinks, talks, or believes about money. Does matter. most frequently linked
- major loss of income or employment
- constant financial stress due to poverty
Wrong financial guidance or advice can also trigger a financial shock which can lead to loss of savings, or over leverage of loans. This speaks specifically to the weaponization of terms such as “generational wealth” to push those without the knowledge or income to set up or maintain complex financial products and services. It plays on the ambitions of some to avoid or put as much distance as possible between themselves and poverty.
Financial trauma and variations of the term such as “money trauma” are growing in popularity as the connection between how people think and feel about money, and what they actually do with money, becomes more mainstream. While this is an important step in painting the full picture of what overall financial well-being looks like, it often falls short of acknowledging the historical and present-day effects of racially motivated exclusion, exploitation, and mistreatment by Black people. . trauma. The response to said trauma may be enough to discourage participation in financial systems, which has an impact on the way black people think.
- retirement and estate planning
- home ownership
- responsible use of credit
- banking relationship
- even more
Refusal to participate in these systems may sound like a lack of financial literacy on paper, but may very well be tied in response to generational mistrust and comments passed down through family units. That is to say, a financially traumatic experience may have happened to a grandparent, but the resulting trauma response then became the norm and passed on to the parent, who passed it on to the child.
Financial Therapy as a Solution
Finding mental health professionals with relevant experiences and education can be difficult, according to research by Zippia on demographics and statistics for physicians in the United States who acknowledge the lived experiences of black people, with only 4% of therapists are black Adding in specialized training in financial decision-making, financial anxiety, or navigating financial stress narrows that pool even further – leaving those issues unresolved or on the back burner for a qualified professional to address later. is kept on.
Re-acknowledging the historical lack of access and institutional mistrust of Black people when following financial advice or acknowledging the financial triggers for needing more mental health, this leaves little opportunity to address these issues. gives them permission to continue the celebration and show. In relationships, behavior and even physical health.
Fortunately, the work being done by organizations such as the Financial Therapy Association blends medical and financial competencies to help people improve overall financial well-being, as well as create a directory of qualified financial therapists. Financial therapy or financial counseling can help address internal beliefs and behaviors about how money is addressed.
- decision making
- goal setting
- Life events like birth of a child, marriage, divorce etc.
- even more
Examining these beliefs through the lens of more generational trauma allows Black people to observe how systemic exclusion, abuse, and financial trauma affect their likelihood of making financial decisions, even if initially positively. Have been seen For example, a high-income earning Black professional who has experienced poverty may save aggressively as a response to the financial trauma that manifests as a shortage. According to traditional views on financial literacy, this can be a positive behavior. However, viewed through a trauma-informed lens, this person may be hoarding money despite having a high income and substantial savings.
Financial medicine alone is not in place of traditional medicine, where qualified practitioners can diagnose or prescribe medicine, but serves as a supplement to cover gaps in financial training or expertise. It is important to note that while some qualified mental health professionals have financial training or expertise in financial treatment, financial therapists do not have the requisite credentials to diagnose or prescribe medications.
If you are having a mental health emergency, you should contact a qualified mental health professional.