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Financial Trauma Is Real: Why Black People Should Consider Financial Therapy

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Financial Trauma Is Real: Why Black People Should Consider Financial Therapy

April is monetary literacy month and the month-long celebration typically comes with appeals to low-income and marginalized communities that recommend the silver bullet to their monetary woes is monetary literacy–and it’s not. Whereas it’s vital to notice that monetary literacy is a crucial step towards sound monetary choice making, it doesn’t account for individuals who are financially literate however impacted by behavioral points stemming from institutional distrust, historic exclusion, and monetary traumas. The stigmas round psychological well being embedded inside these communities additionally act as a deterrent, stopping its members from searching for the assistance they might want.

What Is Monetary Trauma

Whereas there isn’t any set normal definition for monetary trauma, monetary trauma could be described as any occasion noticed or skilled that has a damaging impression on the best way somebody views, interacts with, or believes about cash. Most frequently related to

  • Main losses in earnings or employment
  • Homelessness
  • Sustained monetary stress as a result of poverty
  • And many others.

Monetary trauma can be triggered by inaccurate monetary steerage or recommendation resulting in the lack of financial savings, or the overleveraging of debt. This speaks particularly to the weaponizing of phrases like “generational wealth” to push complicated monetary services to these with out the data or earnings to determine or keep them. This performs on the ambitions of some to flee or put as a lot distance between themselves and poverty as doable.

Monetary trauma and variations of the time period like “cash trauma” are growing in recognition because the connection between how individuals assume and really feel about cash, and what they really do with cash turns into extra mainstream. Whereas this is a crucial step in portray the whole image of what total monetary wellness appears to be like like, it typically falls in need of acknowledging the historic and current day impacts of racially motivated exclusion, exploitation, and abuse endured by Black individuals as a part of a larger generational trauma. The response to stated trauma could be sufficient to discourage collaborating in monetary programs which have impacts on the best way Black individuals take into consideration

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  • Retirement and property planning
  • Investing
  • Dwelling possession
  • Accountable use of credit score
  • Banking relationships
  • And extra

The refusal to take part in these programs would possibly seem to be an absence of economic literacy on paper, however might very effectively be tied into the response to generational distrust and observations handed down by way of household items. That’s to say that the financially traumatic expertise might need occurred with a grandparent, however the ensuing trauma response then grew to become the norm and was handed all the way down to the mum or dad who then handed it all the way down to the kid.

Monetary Remedy As A Resolution

Discovering psychological well being professionals with relatable experiences and schooling that acknowledge the lived experiences of Black individuals could also be troublesome as solely 4% of therapists are Black, based on analysis carried out by Zippia on demographics and statistics for therapists in america. Including in specialised coaching in navigating monetary choice making, monetary anxiousness, or monetary stress, shrinks that pool even additional–leaving these points unresolved or placed on the again burner for a certified skilled to handle later.

Acknowledging once more nevertheless the historic lack of entry and institutional distrust Black individuals could have when pursuing monetary recommendation or acknowledging a monetary set off to a larger psychological well being want, this leaves a really small alternative to handle these points permitting them to proceed festering and exhibiting up in relationships, behaviors, and even in bodily well being.

Luckily, work being carried out by organizations such because the Monetary Remedy Affiliation mix therapeutic and monetary competencies to assist individuals enhance total monetary well-being whereas additionally curating a listing of certified monetary therapists. Monetary remedy or monetary counseling can assist discover internalized beliefs and behaviors about cash addressing

  • Shortage
  • Resolution making
  • Objective setting
  • Life occasions such because the delivery of a kid, marriage, divorce, and so on
  • Hardship
  • And extra

Examing these beliefs by way of the lens of a larger generational trauma permits Black individuals to examine how systemic exclusion, abuse, and monetary trauma seemingly impression monetary choice making, even when seen initially as a constructive. For instance, a high-income incomes Black skilled who skilled poverty would possibly aggressively save as a response to monetary trauma manifesting as shortage. In response to conventional views on monetary literacy, this can be a constructive conduct. Nonetheless, seen by way of a trauma knowledgeable lens this particular person could also be hoarding cash regardless of having a excessive earnings and enough financial savings.

Monetary remedy alone doesn’t stand instead of conventional remedy the place certified therapists could diagnose or prescribe medicine, however acts as a complement to cowl gaps in monetary coaching or specialization. It’s vital to notice that some certified psychological well being professionals do have monetary coaching or specialization in monetary remedy, whereas monetary therapists should not required to have the requisite credentials to diagnose or prescribe medicines.

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If you’re having a psychological well being emergency, you need to contact a certified psychological well being skilled.

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US labor market finishes 2024 on high note, adding 256,000 jobs in December as unemployment falls to 4.1%

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US labor market finishes 2024 on high note, adding 256,000 jobs in December as unemployment falls to 4.1%

The US economy added more jobs than forecast in December while the unemployment rate unexpectedly fell.

Data from the Bureau of Labor Statistics released Friday showed 256,000 new jobs were created in December, far more than the 165,000 expected by economists and higher than the 212,000 seen in November. The unemployment rate fell to 4.1% from 4.2% in November. December marked the most monthly job gains seen since March 2023.

Revisions to the unemployment rate in 2024 also showed the labor market was stronger than initially thought. The cycle high for the unemployment rate had initially been 4.3% in July but that figure was revised down to 4.2% in Friday’s release.

“There is no denying that this is a strong report,” Jefferies US economist Thomas Simons wrote in a note to clients on Friday.

Wage growth, an important measure for gauging inflation pressures, rose 0.3% in December, in line with economists’ expectations and below the 0.4% seen in November.

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Compared to the prior year, wages rose 3.9% in December, below the 4% seen in November. Meanwhile, the labor force participation rate was flat at 62.5%.

The strong picture of the US labor market presented in Friday’s report pushed out investor bets on when the Federal Reserve will cut interest rates next. Traders now see a less than 50% chance of the Fed cutting interest rates until June, per the CME Fed Watch Tool. A day prior, investors had favored a cut in May.

Read more: How the Fed rate cut affects your bank accounts, loans, credit cards, and investments

“You’re seeing this steady but slightly cooling labor market trend, which is very encouraging from a Fed perspective,” EY chief economist Gregory Daco told Yahoo Finance. “I think the attention will actually pivot back towards inflation developments over the course of the next three months.”

Stocks sank following the report, with futures tied to all three major averages down nearly 1%. Meanwhile, the 10-year Treasury yield (^TNX), a recent headwind for stocks, added about 8 basis points to reach 4.78%, its highest level since November 2023.

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“The problem here now is if you’re looking for rate cuts based on a weakening labor market..stop looking for those,” Steve Sosnick, chief strategist at Interactive Brokers, told Yahoo Finance. “It’s not going to happen in the immediate term.”

A general view as fans hold up national flags in support of Team United States during the evening Swimming session on day eight of the Olympic Games Paris 2024 at Paris La Defense Arena on Aug. 3, 2024, in Nanterre, France. (Quinn Rooney/Getty Images) · Quinn Rooney via Getty Images

Josh Schafer is a reporter for Yahoo Finance. Follow him on X @_joshschafer.

Click here for the latest stock market news and in-depth analysis, including events that move stocks

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SBA Offers Financial Relief to Los Angeles County Businesses and Residents Impacted by Devastating Wildfires

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SBA Offers Financial Relief to Los Angeles County Businesses and Residents Impacted by Devastating Wildfires

Administrator Guzman to Travel to Southern California to Assess Needs

WASHINGTON, Jan. 09, 2025 (GLOBE NEWSWIRE) — Today, SBA Administrator Isabel Casillas Guzman announced that low-interest federal disaster loans are now available to Southern California businesses, homeowners, renters and private nonprofit (PNP) organizations following President Joe Biden’s major disaster declaration. The declaration covers Los Angeles and the contiguous counties of Kern, Orange, San Bernardino, and Ventura due to wildfires and straight-line winds that began Jan. 7, 2025.

Administrator Guzman also will join FEMA Administrator Deanne Criswell in Southern California this week to assess on-the-ground needs and ensure the SBA is fully prepared to assist businesses, homeowners, and renters impacted by this disaster.

“As heroic firefighters and first responders continue to battle the devastating wildfires sweeping across Southern California, the federal government is surging resources to ensure that Angelenos are prepared to recover and rebuild from this catastrophe,” said SBA Administrator Guzman. “In response to President Biden’s major disaster declaration, the SBA is mobilizing to provide financial relief to impacted businesses and residents. Our continued prayers are with the brave individuals working to put out these fires as well as all those who have lost loved ones, their homes, and their businesses to this disaster. We stand ready to support our fellow Americans for as long as it takes.”

Loans are available to businesses of all sizes and PNP organizations to repair or replace damaged or destroyed real estate, machinery, equipment, inventory, and other business assets. The SBA also offers Economic Injury Disaster Loans (EIDLs) to small businesses, small agricultural cooperatives, small businesses engaged in aquaculture, and most PNP organizations to help meet working capital needs caused by the disaster, even if there is no physical damage. EIDLs may be used to pay fixed debts, payroll, accounts payable, and other expenses that would have been met if not for the disaster. Businesses can apply for loans of up to $2 million.

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Disaster loans of up to $500,000 are available to homeowners to repair or replace damaged or destroyed real estate. Homeowners and renters also are eligible for up to $100,000 to repair or replace damaged or destroyed personal property, including personal vehicles.

Interest rates can be as low as 4% for businesses, 3.625% for PNP organizations, and 2.563% for homeowners and renters, with terms up to 30 years. Loan amounts and terms are set by the SBA and based on each applicant’s financial condition. Interest does not begin to accrue until 12 months from the date of the first disaster loan disbursement and loan repayment can be deferred 12 months from the date of the first disbursement.

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Using The Emotions Wheel To Transform Financial Help

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Using The Emotions Wheel To Transform Financial Help

I recently launched a peer financial coaching center at my university, providing students with a place to receive financial coaching help. While the center primarily relies on trained peer financial coaches to assist fellow students, I occasionally step in as a financial coach. During one of my sessions, a young college student arrived with a big smile, radiating confidence and maturity. She seemed poised and self-assured, and I assumed our session would likely cover advanced financial topics, like stocks or Roth IRAs.

Still, I decided to start by asking her how she was feeling.

She gave me a sideways glance and replied, “OK.”

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Seeing her hesitation, I decided to ask a follow-up question: “Would you mind looking at this emotion wheel and letting me know which emotion best matches how you’re feeling?”

She studied the colorful wheel for a moment, then handed it back and said, “‘Powerless’ and ‘bleak.’”

Her serious tone caught me off guard—I hadn’t expected that response.

“Let’s start there,” I said. “Tell me more about why you’re feeling that way.”

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Financial Facilitator, Not Advice Giver

In my article, The Path to Financial Health Goes Deeper Than Advice, I argued that most people are not ready to change, which is why traditional financial advice often falls short. Instead, the key to improving financial health is having someone come alongside as a financial facilitator—not simply an advice giver. Rather than looking down from the metaphorical mountain-top of financial expertise, a financial facilitator walks alongside the individual, helping them move toward a place where they are ready to make meaningful changes.

The book, Facilitating Financial Health, emphasizes that the most important characteristic of a financial facilitator is empathy. Empathy involves warmth, genuineness, and positive regard. It involves feeling another person’s emotions alongside them. However, empathy is only possible once you truly understand how someone is feeling.

Reflecting on my encounter with the student who described feeling “powerless” and “bleak,” imagine how the meeting might have unfolded if, after she initially replied that she was “OK,” I had simply launched into a discussion about stocks and Roth IRAs.

Given her kind nature, I suspect she would have smiled politely and even thanked me for my efforts. However, beneath the surface, she would have left the session feeling just as unsupported—if not worse—than before. While I might have walked away feeling accomplished, she would have gained nothing meaningful from our conversation, and the opportunity to truly help her would have been lost.

Magnify Your Empathy Powers With Emotional Wheels

One way to improve your ability to express empathy is by helping someone discover and articulate their emotions. Simply asking, “How are you feeling?” may not yield a clear response, as the person might not be ready to answer or may struggle to put their emotions into words. An emotion wheel is a powerful tool that assists individuals in identifying their feelings. The most effective emotion wheels provide enough granularity to ensure that everyone, regardless of their emotional state, can find the precise word(s) to describe how they are feeling.

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Over the past 50 years, psychologists and researchers have significantly advanced the development of emotion wheels to better understand and categorize human emotions. Robert Plutchik’s influential “Wheel of Emotions” (1980) was one of the earliest models, highlighting eight core emotions—joy, trust, fear, surprise, sadness, disgust, anger, and anticipation—arranged in a circular structure to illustrate their intensities, combinations, and opposites.

More recent emotion wheels distinguish between comfortable and uncomfortable emotions, reflecting findings that these types of emotions are processed in different parts of the body (Enete et al., 2020). This distinction helps explain why individuals can simultaneously experience seemingly contradictory emotions, such as being “thrilled” and “scared.”

Using Emotion Wheels

The emotion wheel I use comes from Human Systems, which provides two emotion wheels: one for comfortable emotions and another for uncomfortable emotions. Each wheel identifies five or six broad emotions and breaks them down into up to nine sub-emotions.” Each sub-emotion is further refined into two sub-sub emotions for greater specificity.

For instance, the uncomfortable emotion wheel by Human Systems includes six broad emotions: Angry, Embarrassed, Afraid, Sad, Dislike, and Alone. Under “Angry,” there are nine sub-emotions such as Offended, Indignant, Dismayed, Bitter, Frustrated, Aggressive, Harassed, Bored, and Rushed. Each sub-emotion is further detailed, like “Insulted” or “Mocked” under “Offended,” and “Pushed” or “Pressured” under “Rushed.”

I often use these emotion wheels with my two children as part of teaching them to identify their emotions. My wife and I believe this helps them develop better coping and communication skills. When our kids are overwhelmed by their emotions, asking them to pinpoint how they’re feeling can be incredibly effective. (Although, one time my son humorously thwarted this approach by circling the entire uncomfortable emotions wheel and walking away!)

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Conclusion

When providing financial help to others, it’s essential to first help them identify their emotions. Emotion wheels are powerful tools for assisting individuals in recognizing and naming their feelings. The understanding that you gain from an emotion wheel enables you to express genuine empathy with others, which is crucial for effectively “walking with them” on their journey toward greater financial health.

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