The Long-Term Financial Effects of PTSD

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October is Domestic Violence Awareness Month. In recognition, Femme Frugality will be running a series on the topic every Monday this month. This series will include a mixture of factual pieces and personal stories. Today we focus on the topic of PTSD, and what it can do to the long-term finances of survivors.

Please use the hashtag #DVAM2017 when sharing this article on social media.

Note: This post may contain triggers for those suffering from PTSD.

I never knew abuse could stay with you so long after the fact--or that PTSD could have an effect on your money.

PTSD is often thought of as a soldiers’ disorder. It is true that somewhere around 20% of combat veterans suffer from PTSD. These brave souls have been through truly traumatic and devastating events.

War is not the only place one can experience trauma, though. About 1 in 4 American women and 1 in 9 American men have experienced some type of domestic violence—whether that be physical abuse, sexual abuse or stalking—resulting in physical or psychological injury, according to the CDC.

In fact, there is a particularly strong correlation between PTSD and sexual trauma. This may explain in part why women are more than twice as likely to develop PTSD after a traumatic event.

How does having PTSD affect your long-term money situation? Today we’re delving in to find out.

The Effects of Macroeconomic Financial Shocks

Depression Babiesa study which focused on data from 1960 up until 2007—revealed that how the stock market has performed over your lifetime influences how much risk you’re willing to take on in your investments. For example, those who lived through the Great Depression are decidedly more conservative in their investments than those who entered the workforce in 1990.

PTSD’s Effect on Investing Behaviors

After reading Depression Babies, there was a lingering question in the air: if big, financial shocks impacted investing habits over the course of a lifetime, what effect would other types of trauma have on investment choices?

Vicki Bogan, associate professor of economics at Cornell University, worked together with colleagues David Just and Brian Wansink to find the answer to this question. Their findings were illuminating.

The study–Do Psychological Shocks Affect Financial Risk Taking Behavior?focused on the investment choices of WWII veterans who had experienced combat or war, and compared them to soldiers of the same age and era who had not lived through the same traumatic experiences.

It revealed that combat veterans were 14.10%-17.64% less likely to invest in risky assets such as stocks or mutual funds when compared to their combat-inexperienced peers. This is a problem because while these investments are riskier, they also hold more potential for growth.

Because this study focused on veterans, it notes that this data signals a need for heightened investment education for those who have seen combat.

Domestic Violence, PTSD and Investing

Research on the long-term effects of domestic violence on money habits is virtually nonexistent. Besides that, there isn’t a guarantee that living through abuse will result in PTSD.

However, because the rate of PTSD is comparatively high in women who have lived in abusive households, we can reasonably expect to see similar effects on their investment habits—until proven otherwise.

That means if you have PTSD resulting from abuse, you may want to check yourself to make sure you’re not investing more conservatively than you need to. Women with or without PTSD tend to set lower investing goals than men. We also tend to live longer.

Because we live longer, we need more money, yet we don’t shoot as high with our goals. If you’re avoiding risky assets unnecessarily, your behavior has real potential to delay how long it takes you to reach that already lowered bar.

What to Do if You Have PTSD

If you have experienced a traumatic event, like domestic violence or war, the first step to recovery is awareness. You have to recognize something is wrong before you can fix it.

If you’re concerned that PTSD may be affecting your investment habits or other parts of your life, talk to professionals. A therapist may help you work through the hypervigilance and fear—both of which may be keeping you away from stocks and riskier investments–while a financial professional can help you work out a sound investment strategy that matches your unique risk profile.

Riskier Investments Aren’t for Everyone

Bogan notes that taking on more stocks is not the right reaction for everyone.

“It [how much risk you should take] depends on a lot of factors,” she says. “One of the most important is your time horizon.”

For example, Bogan says that if you are saving money which you will need to access in the next couple of years, investing in stocks isn’t your best bet.

The stock market—over long periods of time—has reliably trended upwards. But in between the starting and ending points of that upward trend, there are a lot of ups and downs. If you invest in a stock and need the money in a year or two, there’s a reasonable chance that you will lose money on your investment.

However, she notes that if you have a longer time horizon—say, 10 or 20 years—you’re better able to ride out the ups and downs, taking advantage of that upwards trend. In these situations, you’re able to take on riskier investments.

Another major factor Bogan illuminates is risk aversion—or your level of comfort with investing in a greater percentage of stocks and mutual funds.

Because this is the area where PTSD could affect your judgement, it’s wise to work with a financial professional. Your own risk aversion may be heightened because of your experiences, even if all the other factors in your life, including time horizon, indicate that investing in more stocks and mutual funds is a wise move.

A professional can help evaluate your situation objectively without the cloud of bias that PTSD casts over riskier investments.

Get PTSD Treatment

Your retirement savings is extremely important. But if you have PTSD, you most likely have even more immediate needs right in front of you. What you’re going through is real, and other people have been there.

You might have PTSD if you’re exemplifying some—though not necessarily all–of these symptoms.

  • Nightmares, intrusive thoughts or flashbacks.
  • Emotional distress or physical pain/illness after exposure to triggers.
  • You try to avoid thinking about the trauma.
  • You can’t remember the details of the traumatic incident.
  • Loss of interest in activities you used to enjoy.
  • Isolation from friends and family.
  • Irritability or aggression.
  • Hypervigilance.
  • Trouble sleeping or concentrating.

The good news is that other people haven’t just been where you are right now—they’ve come out the other side.

The VA has stepped up their PTSD efforts in recent years. While not geared towards domestic violence survivors, the VA’s resources are still worth a look from all affected parties.

If you’re nervous about getting treatment for PTSD, visit About Face. The VA has put this resource together to encourage those suffering from the disorder to learn more, and to seek treatment.

Those people who have made it out the other side?

You’ll find them there, sharing their stories and the experiences they had while they walked the path of recovery.

Where to Find PTSD Treatment

Once you’ve decided you want to work towards recovery, seek out a mental health professional in your area. Preferentially, you’ll get someone with experience with domestic violence and/or PTSD. You can search local psychologists and licensed clinical social workers (LCSWs) by their specialties on Psychology Today.

If you’re in an area where health insurance is scant, call the National Domestic Violence Hotline. They will be able to connect you with any local resources that may exist.

While you’re waiting to be connected, you can also take a look at the VA’s PTSD Coach Online. It’s not a substitute for personalized therapy, but it is a place to start.

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13 thoughts on “The Long-Term Financial Effects of PTSD

    1. Femme Frugality

      It is rough to think about, but I think the way we help people get healthier is by talking about the hard things. For example, the effects of domestic violence on personal finances long-term appears to have very little research. If more people talk about it, they’ll start asking questions, and then doing research to find answers. Hopefully in that way we’ll find ways to alleviate the pain people are going through. A lot of people who go through it don’t even know they could have PTSD–so I’m with you! Awareness is key!

  1. Done by Forty

    That’s really interesting to see how investing behavior is impacted by PTSD. Just another example of how inequality can be increased over time: how being unlucky early on in life can set you up to have lower wealth and income later in life.

    And I really appreciate the attempt to move PTSD outside the realm of the military. That’s just one slice of the pie.

    Moving post. Great stuff from you, as always.

    1. Femme Frugality

      Exactly. This is a whole other topic, but the incarceration rate of domestic violence survivors–many of whom I’m assuming are greatly affected by PTSD because statistics–is astounding. We’re not helping people in the right ways.

      Yes. I’m really glad soldiers are getting attention on this FINALLY. And that military culture is slowly changing to encourage affected parties to seek treatment.

      But there’s a large population with the same affliction that is vastly under served. And that needs to be rectified.

  2. Prudence Debtfree

    My grand-father fought in WWI, and we believe he had PTSD – though it was never diagnosed. He went through the hell of trench warfare – including being buried alive for 3 days after mud from a burst shell filled up his trench. But he never spoke of it. I remember him as an angry man, and I felt a bit scared of him. It’s so, so good that our society today encourages people with PTSD to identify their condition, seek help, and open up. Thanks for being part of that encouragement and part of that opening.

    1. Femme

      I hear you, Ruth. I feel like the entire WWII generation, at least here, made PTSD symptoms a part of the male culture for the generation. So sad that it was stigmatized for so long. That and an unsupportive populace contributed in large part to Vietnam veterans homeless rates, too, I worry. And even post 9/11 vets, with help available, were not going to seek treatment even with resources available–especially if they were from military families–in my personal experience as short as 9 years ago.

      I’m glad the stigma is eroding, and hope that by talking about it, we’re able to make things easier so today’s survivors of trauma don’t have to endure what your great-grandfather did.

  3. Laurie Blank

    Wow – a lot of stuff here I didn’t know, FF. I’ve always been staunchly fearful of investing in the stock market, and now I’m starting to understand why. I never considered a connection between my history of being in an abusive relationship and my fear of investing with any risk. Thank you, FF. I thought I knew a lot but I am still learning!!

    1. femmefrugality Post author

      No problem, Laurie! This isn’t something that gets talked about a lot when we hear about domestic abuse, but it should be. Also good to keep an eye on if you end up going through a rough time mentally at any point in the future—something survivors may want to bring up to therapists if the therapist themselves don’t bring it up. They likely will, but being aware it’s a possibility should encourage everyone to get into the office in the first place if they notice any of these other signs cropping up!

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