For the last couple of weeks, I’ve been following the story regarding the collapse of FTX – a massive cryptocurrency exchange with roughly $30 billion in assets.
And in a little less than a week, the company filed for bankruptcy.
It was a massive turn of events for a company with over a million investors. But what I’ve been thinking about isn’t the amount of money that the company lost. Instead, I’ve been reflecting on those who invested in the company and how FTX’s bankruptcy will significantly alter the lives of hundreds of thousands of ordinary people who lost significant amounts of their life savings because of a poor investment decision.
And what they’re experiencing is known as financial grief.
Losing One’s Dream
There’s been a lot of financial hardships over these last few years. From bankruptcy filings, to unemployment and record-high inflation, many people struggle to make ends meet.
Many of these financial hardships were due to the pandemic, as COVID impacted the manufacturing and shipping industries. In addition, the shortages of food products are also contributing to higher prices.
But many people are experiencing financial hardships because their investments did poorly due to the pandemic, and it may take years to recover their money.
Others may have invested their entire life savings into a get-rich-fast scheme. Or, they may have put their faith in someone who promised high-yield returns, only to realize later the financial advice was faulty, inaccurate, or downright fraudulent.
The people behind these stories all experienced significant financial losses, and the emotions, thoughts, and behaviours they’re experiencing are similar to anyone who’s endured grieving.
We Can Grieve Many Types of Losses
When a person has experienced a significant financial loss or financial grief, it can be mortifying. Gone are their dreams of retirement and lifestyle. Because of a bad investment(s), a person might have to work well into their 70s or unwittingly move into a smaller home. Or unable to move anywhere at all.
Not exactly the kind of retirement dreams they were hoping for.
They might also be grieving a change in their personal life story. For example, when they were younger, a person might have said to themselves, “One day, I’m going to travel the world and vacation to a tropical destination.” Or, “When I get older, I’m going to volunteer my time in a community centre.”
But due to their financial losses, they’ve had to abandon those dreams altogether.
Practice Self-compassion
When I speak with someone experiencing financial grief due to poor financial decisions, they feel humiliated, embarrassed, and deflated. They’re coming to terms with lost dreams and feeling regretful for not making different choices.
There’s not much you can do over something that you’ve lost. What you can do, though, is to accept that you did your best and that you made the best decisions based on the information you had at that time.
Last week, I wrote about self-compassion. If you feel remorse and regret over financial losses, stop beating yourself up over something you cannot change. Instead, show yourself some compassion, just as you would someone else who’s experienced a significant loss.
Richard
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