While financial PTSD might not be officially recognised by health professionals, it is a reality for many people.

Money is an emotional topic for most people, regardless of age, income or profession. Having money in abundance can unlock a world of opportunities, yet it can also be overwhelming. Losing money, or constantly being in a state of need, can be devastating and leave mental scars.

Although money or financial post-traumatic stress disorder (PTSD) is not recognised in the Diagnostic and Statistical Manual of Mental Disorders (the tool mental health professionals the world over use to make diagnoses), it is a real lived experience for many.

Psychologist Dr Galen Buckwalter defines financial PTSD 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.”

While your childhood experiences can strongly influence how you view and feel about money, childhood is not the only time that financial trauma or financial PTSD can take root.

Cathy Lammas, a Business Development Manager at Glacier by Sanlam, points out some scenarios that some of us might have experienced even just within the past few years that would not only affect our emotional and mental health, but be financially traumatic too.

“Your business might have had to close down, or you may have suffered a job loss. Perhaps you had to retrench employees at your company. So there would’ve been not only a loss of income, but also the burden of knowing you’ve had to let some people go, which leads to great emotional stress.”

Trauma isn’t only caused by loss, either. You could receive a windfall, or win the lottery, and be left with a sense of guilt about the resources made available to you, or experience regret about how you handled them.

How do you know if you have financial PTSD?

Your stress response to financial or money trauma can take different forms, depending on your own coping mechanisms, how recent your experience was, and what the actual experience involved.

“Within a family or friendship unit, red flags could be if you’re constantly talking about money, or about get-rich-quick schemes,” says Lammas.

Another symptom can be over- or under-spending. For example, if your financial resources were limited when you were growing up, you might take thriftiness to an extreme as a trauma response to avoid being in that situation again.

Alternatively, you may have a poor credit score or be in a debt spiral and overspend. “Shopping gives you a dopamine rush. So, when you are extremely stressed-out, anxious and tense, you do whatever feels good to make yourself feel better, and for many, that means shopping.”

Do you avoid opening bills, or even hide them in a drawer out of sight? This can also be a sign of financial PTSD.

“This is a classic example of denial or avoidance – just ignoring reality,” says Lammas.

Begin the healing process

Lammas has some good news: there is hope. “Financial PTSD, like any trauma, is not a life sentence,” she says. You can take steps towards healing and securing a steady, fruitful financial future ‒ a future in which you rule your finances, not the other way round.”

Here are some steps to try.

Own and normalise it

“One aspect involved in healing is to admit what you’re dealing with,” says Lammas.

“It’s important to speak about your situation, and reach out to your immediate circle and get support.”

For example, if you’ve suffered a loss of income, or you’re drowning in debt, the extravagant expenses need to be paused, even if just temporarily. Letting your friends and family know about your situation can empower them to support you in a meaningful way.

Speak to your financial adviser

You might have developed an unhealthy financial habit, and need to put a strategy in place to curb it so that it doesn’t jeopardise your financial goals. Or you might have recently gone through a financially traumatic event that could affect, say, your retirement planning.

In these cases, your adviser needs to know about it. “Let your adviser know that you’ve lost your job, or that you can no longer make your monthly premiums, and find out whether there are any penalties you might suffer,” says Lammas.

“Good financial houses often offer solutions that allow you to freeze your premiums and incur zero penalties,” she continues. This is particularly useful and necessary in a situation where you’ve been retrenched and can’t afford to maintain risk cover premiums or retirement fund contributions.

Take control

Lammas also stresses the importance of taking your finances by the reins by broadening your financial education and finding out about the range and flexibility of the products that are available to you on your financial journey.

Particularly important in guarding yourself against a financially traumatising emergency is building an emergency pot of savings.

“You should have enough money saved up for the number of months you are likely to be unemployed if you are retrenched, for example,” she says.

“Having a nest egg to fall back on until you get back on your feet in the event of a job loss, or a divorce, can help you get through the trauma.”

Ask your financial adviser about savings options you can add to your portfolio that cater both for emergencies, medium-term goals and longer-term goals such as retirement.

This article first appeared in City Press.