Why Financial Planning Is Part of Healing From Childhood Trauma

Every year, when April comes around, I love the change from winter to spring, hearing the birds chirping, and seeing the flowers blooming. At the same time, I am reminded of the painful experiences children go through as April is National Child Abuse Prevention Month. 

Why is a financial planner writing about childhood abuse? 

Because I am also a Licensed Marriage and Family Therapist and I have experienced childhood abuse, which I wrote about in The Healthy Love and Money Way: How The Four Attachment Styles Impact Your Financial-Wellbeing.

For some people, these two professional trainings together make immediate sense. For others, it leaves them scratching their heads. 

Let’s go beneath the surface and see why understanding childhood abuse and prevention is imperative for financial planning and financial planners. 

Many clients in Therapy-Informed Financial Planning™ are stuck, embarrassed, angry, and scared about a wide range of financial topics. This makes it hard for them to experience a sense of financial well-being. 

Here are common sticking points I see:

• Unpaid Taxes
• Financial miscommunication between partners
• Fear of investing
• Anxiety about spending money
• Earning or having more money than expected and feeling overwhelmed

No matter what the combination of financial sticking points happens to be for a client, the point is they feel stuck and unable to move toward their important goals. As a financial planner and therapist, I know that it takes a combination of therapeutic and financial planning skills to help the client move forward. 

Let’s See A Bigger View

Humans commonly compartmentalize and categorize information. However, when we combine both mental/relational health therapy and financial planning—cooking with the ingredients of both, so to speak—we come up with something far more effective than either could be alone. 

What the World of Therapy Brings to the Kitchen

The world of therapy brings a deep understanding of how humans work and navigate their thoughts, feelings, behaviors, sense of self, and sense of others. It brings an understanding of how a wide range of life experiences shape, impair, and influence humans. While there are many approaches to therapy to help humans live healthier and fuller lives, there is a common theme that humans can heal from psychological suffering and foster healthier relationships with themselves and others. 

What the World of Financial Planning Brings to the Kitchen

The world of financial planning brings with it a deep understanding of how elements of a person's financial life are interconnected, including how they earn and spend money, invest for the future, experience taxes, protect themselves from financial losses through insurance, and properly plan to transfer family assets from one generation to the next through estate planning. 

One of the underlying and often unstated assumptions of financial planning is that people have a sufficient level of mental and relational health that allows them to take the recommendations given and implement them without any psychological or relational distress. 

What the World Looks Like When Therapy and Financial Planning are Cooked Together

Humans are involved in every step of financial planning. It is not just getting money to do what needs to be done; it’s getting the humans connected to the money. When financial planning is paired with therapy, those involved understand and appreciate that if a person's mental and relational health is compromised, evaluating and maintaining the given financial planning recommendations will be much more difficult. 

Childhood Trauma: Mental and Relational Health

The research behind mental and relational health continues to find that long-standing impacts of childhood trauma are a pervasive predictor of negative mental and relational health outcomes. 

Childhood trauma often comes from the experiences of childhood abuse and neglect. 

Why is childhood trauma such a significant predictor of later mental and relational health outcomes? 

I like to think about it this way: the mind, brain, and body are growing and developing through infancy and into childhood. New layers of growth and development build on what was previously developed. We cannot see most of the internal growth and connection ]happening inside the human body and brain; we can only see the external changes. 

When we don’t understand the complex internal processes involved, it is easy to minimize the impact of external events on the internal development of infants and children. But when we understand that the ability of the brain’s neuron connections is impacted by childhood trauma, we start to get a different understanding of the significance of childhood trauma. 

Our brains and nervous systems grow while marinating in relationships with the humans we are raised around. This affects the languages we speak, the cultural customs we adopt, and so much more. So why wouldn’t our experiences of childhood trauma also shape us all the way down to the neural pathways in our brains and our autonomic nervous systems? These developmental experiences give rise to our patterns of thoughts, feelings, behaviors, and sense of self. These patterns interact with our brains and autonomic nervous system to shape them in an ongoing loop. 

Developing Your Financial Plan In Light of Your Experiences With Childhood Trauma

Healing, learning, and growing from childhood trauma is an ongoing process. It is layered and nuanced. 

I know from both my own experience and those of working with many clients that healing from trauma unfolds in relatively predictable stages. 

When we embark on a journey of healing from childhood trauma, we may need to suspend active financial decisions about the future until we find a basis for our stability and direction in life. If we are working, we may need to set as many parts of our financial life on autopilot as possible, including regular retirement savings and investment contributions. Healing from trauma can lead to major changes in the priorities of our lives and the way we want to live. These shifts mean we need to recalibrate our financial norms of what we earn, spend, save, and invest. 

The process of financial planning can be very helpful in identifying the numbers and ratios that make the most sense for your life and where you want to go. Financial planning can also help you evaluate the plausibility of your financial goals and what it will take to achieve those goals. 

The ability to quantify what it will take to achieve particular goals can be very illuminating and reassuring. A common pattern for those with childhood trauma is that they will either hold on to money tightly and not allow themselves important pleasures and health services they need, or they will spend open-handedly without much consideration for what it will take to care for themselves in the future. 

Working with a financial planner who understands the impacts of childhood trauma on your life and can use therapeutic practices to help you engage in your financial plan increases your odds of success. I have developed Therapy-Informed Financial Planning™ to help clients affected by trauma both to heal from childhood wounds and build a new financial life for themselves.

Let’s schedule 30 minutes to discuss how Therapy-Informed Financial Planning™ can help you. 

Wishing You Healthy Love and Money,

Ed Coambs

MBA, MA, MS, CFP®, CFT-I™, LMFT