How to emotionally recover from a financial loss


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Most people know that when we experience the death of a loved one, we grieve. It's our brain's way of processing the significant change and loss.

What most people don't realise is that we grieve any change, including financial loss or a sudden career change, not just the loss of a loved one or thing. Research shows that these experiences have a significantly greater impact on women's emotional and financial wellbeing, particularly for those facing gender-based financial challenges and discrimination in the workplace.

A 2021 US study found that women are more likely to experience financial insecurity than men. This was supported by an American Psychological Association study that found women were more likely to experience stress, anxiety and depression as a result of financial strain.

how to grieve a financial loss

It's not only psychologically detrimental; it also has significant impacts on physical health. The Journal of Behavioral Medicine reported a study that showed the link between financial stress and higher levels of inflammation, a known risk factor for chronic illnesses such as heart disease and diabetes.

This was further backed up by a study published in the journal of Applied Psychology: Health and Well-Being, which found financial stress was associated with health issues such as headaches, digestive problems and sleep difficulties, particularly among women.

Put simply, the trauma and grief experienced from financial stress has a huge impact on mental and physical health and the ability to recover from financial loss, with this impact particularly pronounced in women. It is so odd then that we don't talk about financial stress and loss with the same reverence and gravity we use when talking about death. But we should.

The good news is that we can significantly reduce the impact of financial stress simply by understanding what is going on inside our heads. The first step is to understand the grief cycle and how it relates to financial loss.

Developed by psychiatrist Elisabeth Kübler-Ross when comforting families who have lost loved ones to cancer, the grief cycle is a model that describes the stages of emotional reactions to loss.

The five stages are denial, anger, bargaining, depression and acceptance. The grief cycle provides a framework for understanding the emotional journey of loss, a pathway through anger and depression to peace and hope.

The stages of the financial grief cycle can play out as follows:

• Denial

In this stage, you may be in disbelief or may try to ignore the financial loss, rationalising the situation or hoping against all hope that it will simply resolve itself.

• Anger

As reality sets in you become angry, resentful and frustrated. You may even feel betrayed or violated by the loss and lash out irrationally.

• Bargaining

You try to mitigate the pain of the loss by making deals with yourself or others, deals that may not be beneficial in the long term but serve to regain a sense of immediate control.

• Depression

This is where you give in to the sadness and self-loathing. You feel overwhelmed by emotions, withdraw from others and generally lack motivation. Hopelessness creeps in where it can be hard to imagine a brighter future.

• Acceptance

In this stage you feel your eyes lift, the veil of hopelessness dissipates as you gradually come to terms with your new reality and begin the rebuilding process.

Financial loss, career change or any significant loss of resource can be extremely difficult and emotional, even traumatic.

Understanding the grief cycle and developing practical strategies for financial recovery will help you regain control of your finances, mitigate against poor decision-making and speed your financial reconstruction.

Tips for coping with financial grief

• Study the grief cycle

Remember the stages and recognise your emotions for what they are. See them so you can control them, otherwise they will control you.

• Talk

Talk with friends, family or trusted mentors, or join a financial trauma support group to help navigate your emotions in safe environments and discover better coping strategies.

• Get organised

Create a budget, track expenses and review credit reports to help regain a sense of control and clarity in a time of confusion and panic.

• Set goals

Write down your goals and create a plan for financial recovery. This helps shift your focus toward a future, better state.

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Phil Slade is a behavioural economist and psychologist and the author of Going Ape S#!t! and founder of Decida. He works across digital innovation, strategy and cognitive bias. Phil holds a Bachelor of Psychology from The University of Queensland and a Master of Organisational Psychology from Griffith University.
Glen Wehrmann
March 27, 2023 1.24am

Thank you for your article. The experience of grief from the sudden death of a loved one or the shock of loss of a job and security of income occurs often without forewarning. Older workers losing partners and losing work face age-discrimination. There must be more openness to supporting people through these challenges and the positive future and living that can result from dealing with the emotional loss of loved ones and financial loss of jobs and careers.