As widespread economic instability sweeps the headlines and predictions point to a global recession, we’re all feeling uneasy in some way. But could your lifetime financial experience be making you even more stressed than you need to be?
Rising prices and interest rate hikes are common stressors right now. On top of that, many of us have long term fears around what could happen next.
If this is you, there’s a chance you’re holding onto some emotional financial baggage.
Read more by Emma Edwards:
What are your financial flashpoints?
The way we feel about money is shaped by our beliefs and experiences with it.
So, how money was dealt with during our childhood, the way we’ve interacted with money throughout our lives, the way we’ve seen loved ones handle money, and the good and bad things we’ve experienced around money into adulthood. Every interaction we have with money, either individually or on a more macro level, can contribute to the way we feel about it.
So when it comes to recessions or economic instability, headlines can bring up a lot of those old memories and trigger a fear response based on our previous experiences.
What memories do you have of previous economic downturns?
Millennials and older gen z's would have been 10-20 years old when the 2008 Global Financial Crisis (GFC) hit.
Ask yourself – what memories do you have from that time, or any other significant economic period you’ve lived through? Even the more recent economic impacts of the pandemic could have left a lasting mark on your financial mindset.
I was sixteen when the UK’s Credit Crunch swept the economy. My mum was made redundant, with no severance package to fall back on - she was just told ‘sorry, don’t come in on Monday' and that was that.
Redundancy is stressful for anyone, but especially a single parent amidst an economic crisis. I remember her being scared. Having to take on work she absolutely hated. Panicking as headlines announced that the worst was still to come.
You might have similar memories. Perhaps financial strain during economic uncertainty caused tension in your home; it could’ve even led to marital breakdown. Maybe you saw loved ones struggling. Maybe you or someone you knew lost their home or their livelihood.
All of these experiences can contribute to biases and beliefs that we carry around and apply to future situations.
Experiences that resemble the original memory – like the threat of a recession – can bring up these fears and make you feel uneasy. All of this is on top of the present day stressors you’re experiencing.
Try to separate your money wounds from your present reality
When feelings of unease, panic or fear pop up around economic instability, try to work out whether it is based on present threats or past wounds.
Fears from the past are very valid, and that fear is your brain trying to protect you from danger. But it can also harm you by clouding your judgement and doubling down on worry.
For example, if your family struggled during the GFC and ended up defaulting on their mortgage, you might be fearful that the same will happen to you. By untangling this ingrained fear and distancing it from your reality right now, you can discern whether this is a real danger for you, or whether you’re just carrying that emotional baggage.
Perhaps you experienced your parents struggling because they never had savings. If you do now have emergency savings to fall back on, you could be carrying a latent fear response that doesn’t serve you in your situation.
This added stress can hold you back from tackling your own situation because of the mental load it takes up. When you’re clouded with worry that stems from these flashpoints, you’re less able to see opportunities and solutions that apply to your reality today.