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Money and mental health: Overcoming financial trauma

by Tania Griffin

Whether it manifests itself as a strained relationship with money, or as past trauma experiences unrelated to finances but exhibited through unhealthy financial behaviours, financial trauma affects South Africans from all walks of life.

October is Mental Health Awareness Month, and CEO of National Debt Advisors Charnel Collins says the often-overlooked psychological aspects of money that lead many consumers to adopt unhealthy financial habits end up entrapping them in the debt cycle.

She says after over a decade in assisting consumers struggling with their finances, she has noted that one of the main contributors to financial trauma in South Africa is poverty and/or general financial strain, which happens to be the daily lived experiences of many people in this country. From historical poverty to present-day economic pressures, scarcity of money affects many South Africans.

“Financial trauma normalises poor financial habits like living pay cheque to pay cheque, high debt levels, lack of financial planning, and no emergency fund. Furthermore, the effects of financial trauma can have significant emotional repercussions, potentially leading to feelings of inferiority and anxiety. People experiencing financial hardships undergo huge emotional distress, especially when they struggle to find suitable employment or meet their income aspirations,” she says, adding that embarrassment and avoidance are also common outcomes of financial trauma.

Collins offers two self-reflection questions consumers can use to gauge their financial trauma and better understand their relationship with money: Do you ever find yourself feeling strongly compelled to make a purchase, only to feel a sense of emptiness after buying it? And do you often feel extremely anxious when buying something that could greatly enhance your life, even when you have more than sufficient funds available?

“If your answers to both questions are yes, you are likely experiencing financial trauma,” she says, and offers the following strategies for effectively addressing the financial trauma:

  • Educate yourself and learn from your mistakes: Seek resources and products to assist you.
  • Be proactive: Taking proactive steps toward improving your finances, including:
    • creating a budget to gain a realistic understanding of your finances.
    • listing your debts from smallest to largest and pay off the smallest debts first.
  • Increase your work value and cash flow: Upgrade your skill set or explore side hustling.
  • Manage your stress: Prioritise self-care including physical exercise, and strive for positivity.
  • Seek professional help: A counsellor or therapist can help you work through your financial trauma by providing coping strategies and emotional support.
  • Consult a financial adviser: Collaborating with a financial adviser can offer professional planning and guidance in creating a roadmap to financial recovery.

“As South Africans grapple with financial trauma, the conversation around money and mental health becomes increasingly important in dealing with monetary struggles. By acknowledging the psychological impact of money and implementing strategies for healing, people can take a significant step toward a better financial future,” Collins concludes.

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