The Impact of Psychological Trauma on Finance: Narrative Financial Therapy Considerations in Exploring Complex Trauma and Impaired Financial Decision Making

Abstract

The current paper aims to foster new discussion on the complex, deleterious, and conflated relationship between psychological trauma and financial management processes. Trauma and financial distress are interconnected, affecting the cognitive, behavioral, emotional, and relational aspects of our lives. A case vignette is presented for financial therapists which utilizes an integrated, trauma-informed approach addressing the lasting impact of childhood trauma on financial management behaviors and the client's life story. Treatment modalities consider narrative financial therapy, four categories of sexual and financial shame, and four phases of trauma restoration. Ethical and practice implications are discussed.

Fathers' psychological responses to pediatric cancer–induced financial distress

“…Overall, parents of children with pediatric cancer may be at higher risk for PTSS due to severe financial stressors than the general population because the financial stressors represent a second type of severe stressor, the first being their child's diagnosis; prior exposure to extreme stressors heighten risk for PTSS with subsequent exposures 28 . The shock of the diagnosis, ongoing reminders of the threat to the child's life and parents’ moral obligation to their child can impair cognition and intensify emotions, thus promoting behaviors that might quell distress in the short‐term but ultimately lead to poorer outcomes 2,29 . Prior studies found mothers of pediatric cancer survivors to have higher risk for severe PTSS than fathers, possibly due to repeated caregiving‐related secondary traumatization 30 .…”

“…28 The shock of the diagnosis, ongoing reminders of the threat to the child's life and parents' moral obligation to their child can impair cognition and intensify emotions, thus promoting behaviors that might quell distress in the short-term but ultimately lead to poorer outcomes. 2,29 Prior studies found mothers of pediatric cancer survivors to have higher risk for severe PTSS than fathers, possibly due to repeated caregiving-related secondary traumatization. 30 Future studies should investigate financial trauma among mothers.…”

Utilizing family systems theory in financial therapy

“…Marriage and family therapists utilize a variety of modalities that are informed by family systems theory lens and can be used to intervene in order to change behaviors, attitudes, biases, and perceptions to improve client decision‐making and well‐being. Modalities such as family systems therapy (Archuleta & Burr, 2015; Archuleta & Britt‐Lutter, 2018; Archuleta & Ross, 2015; Gale, Ross, Thomas, & Boe, 2020; Gale & Ross, 2017; Karam, Blow, Sprenkle, & Davis, 2015; Kim, Gale, Goetz, & Bermúdez, 2011; Seay, Gale & Goetz, 2015), cognitive‐behavioral therapy (Ford, 2015; Ford, Baptist, & Archuleta, 2011; Nabeshima & Klontz, 2015), narrative therapy (Ford, 2015; Ford et al, 2011; McCoy, Ross, & Goetz, 2013, 2015; Ross III & Coambs, 2018), and solution‐focused therapy (Archuleta et al, 2015; Archuleta, Grable, & Burr, 2015; Archuleta, Mielitz, Jayne, & Le, 2020; Palmer, Pichot, & Kunovskaya, 2016) are among a few that have been applied in financial therapy. With theoretical underpinnings in family systems theory, these modalities take into consideration that “individual clients cannot be understood without understanding the client's environment and their relationship with family members” (Archuleta & Ross III, 2015, p. 765) and others who are a part of their system.…”