How To Heal Financial Trauma
Worried about paying your rent? Does paying your bills freak you out?
Struggling with money doesn’t mean there’s something wrong with you. Your money issues might just be rooted in financial trauma.
Financial trauma goes far beyond everyday money stress. It’s a set of emotional and physical responses triggered by financial worries.
These worries can stem from a single event, like a big investment loss, or from ongoing struggles, like growing up in poverty.
Having a chronically poor relationship to money will have a negative effect on your financial security. It’s basically impossible to create a lot more money if you’re living in constant fear around it and avoid it at all costs.
But it’s time to get control back!
Let’s dig in and understand the mechanics of money trauma so you can start to heal yours!
What Is Trauma?
Have you ever wondered what trauma is and how it impacts you? When you think of trauma, you probably think of events like accidents or natural disasters. But trauma is not just physical! It can also be emotional (or both).
Your brain is constantly scanning your environment to feel safe. It does this through a process called neuroception. When you experience a traumatic event, your brain remembers the sights, sounds, and feelings associated with that event.
Then, when you encounter similar situations later on in life, your brain might trigger a fight, flight, freeze, or fawn response, even if you’re not in actual danger.
What Is Financial Trauma or Money Trauma?
Financial trauma is emotional and psychological distress caused by negative financial experiences. These experiences are either so painful or so long-lasting that they significantly impact a person’s emotional well-being and feeling of safety. These are much deeper than a temporary worry or stress about money.
The feeling of not having enough resources (money, time, energy) can be perceived as a threat to your very survival by your primitive brain. After all, how do you survive without it? So understand that money issues can feel just as traumatic as issues that actually threaten your physical safety.
That’s why it’s important to consider your relationship with money through a trauma-informed lens. In short, your past experiences might be affecting your present financial behavior! It will be hard to fix the behavior until you address the root of the problem (the money trauma).
Financial trauma can be caused by events like:
- Poverty
- Debt
- Financial loss
- Job loss
- Foreclosure
- Financial abuse
- Discrimination
These experiences can lead to lasting emotional wounds that affect a person’s relationship with money, their mental health, and even their physical health.
Why Financial Trauma Keeps You Stuck
If you’re struggling with money or finances, it’s important to address the underlying trauma first. Taking action without feeling safe can actually create more problems! At the very least, you might feel even worse about trying to change your situation and failing–even though you don’t understand why that keeps happening.
However, there are strategies to deal with this! You can work with a trauma-informed coach or therapist or follow our healing protocol below.
Money Trauma & The Fight-or-Flight Response
One sure-fire sign of money trauma is getting activated into fight, flight, freeze or fawn during financial situations. This signals that we are away from our normal rest-and-digest state of calm and into a state of stress within our body.
However, a stressed out mind is not a logical one! Again, this is how your trauma and physiology might be blocking your very attempts at changing your internal money story.
Here are some common ways this plays out:
The Fight Response With Money
Feeling: The fight trauma response feels very active. Your body feels like it’s gearing up for a physical fight, and might include symptoms like a tight jaw, sweaty palms, or a burning sensation in your stomach.
Behavior: This might look like overworking, taking on extra projects or staying late regularly, even when it’s not needed. If you’re an entrepreneur, it can mean working through the evenings or weekends. However, it can also look like overspending or basically temporarily distracting yourself from your financial woes, by spending even more.
The Flight Response with Money
Feeling: The flight response is also very physical in nature. You’ll likely feel restless, tense or fidgety. While the fight response focuses outwards, flight tends to be more inner focused.
Behavior: Saving everything and never being able to spend on yourself, always thinking about a rainy day or emergency situations, even though your emergency savings are topped up. This could also result in hoarding, both of money or other items.
The Freeze Response With Money
Feeling: The freeze response is the shut-down response. You might feel like taking a nap or hiding on the sofa. You also might experience a sense of dread, having a pounding heart and feeling stiff, heavy, cold or numb
Behavior: Avoids opening/paying bills, won’t look at bank balance, bed rotting when you feel financial pressure
The Fawn Trauma Response
Feeling: The fawn trauma response can have symptoms of both fight or flight and freeze. It’s about looking towards someone else (or getting approval) so that you can feel safe.
Behaviors: Lack of boundaries with money, feeling like you want to “keep up”, buying things for other people even though you can’t afford it. In business, that might mean giving away freebies or discounts, even though you’re struggling to make money or accepting work that is below what you want to be paid.
Which one of those responses do you notice in yourself with money?
Signs Of Financial Trauma
People who have experienced financial trauma may exhibit signs like:
- Anxiety around money
- Avoiding checking bank statements or ignoring bills
- Shame or guilt about money
- Overspending or compulsive spending
- Hoarding money or underspending
- Inability to charge their worth/negotiate raises, etc.
Over time this can lead to:
- Lowered earning potential from underearning or staying in low-paying jobs/careers
- Large amounts of debt
- Bankruptcy
- Mental health issues, including anxiety and depression
- Chronic health issues related to stress, like high blood pressure, obesity, and weakened immunity.
- Buffering behaviors, including addictions and substance abuse issues
How To Heal Financial Trauma
The good news is that you can heal from trauma. Trauma always creates a learned response in your brain. But anything you learned, you can also unlearn and reprogram.
By understanding how your nervous system reacts to perceived threats, you can learn to regulate your emotions and start to feel safe and confident around money. This will help you release you old financial patterns of scarcity and poverty and move into financial success.
1. Acknowledge Your Trauma
Our modern world is sooooo not good with emotional pain. Even though you’ve probably been hiding away your money shame and trauma for many years, it’s time to acknowledge it. Acknowledge what happened to you. Validate your pain and stop trying to minimize it or hide it!
Seeing your own trauma is like suddenly noticing that you’ve been trying to run a marathon race with a broken leg! Of course, things will have been more difficult for you.
Remember, financial trauma is not your fault! What happened to you was likely painful and unfair. But turning away won’t make it any easier. We don’t have to live in victim mode but it’s also unhealthy to ignore this part of you.
2. Strengthen Your Nervous System
Anytime we address trauma, we must also address the nervous system. Right now, your body has a pattern of freaking out when it thinks about money. Our goal is to notice when that happens so we can calm ourselves back down again.
When these reactions take hold, your body’s primal instincts are in charge, not your logical thinking. This can make it tough to stick to financial plans because your brain prioritizes immediate safety over long-term goals.
Here’s why understanding your money stress response matters:
Awareness is key. Recognizing your go-to reaction can help you catch yourself before it takes over.
Calm the system. Specific exercises can help soothe your nervous system when money worries arise.
Build resilience By regularly calming your nervous system, you’ll be better equipped to handle stress in general, including financial pressure.
This approach empowers you to address the root of the issue and build a healthier relationship with money.
Find out more about how to regulate your nervous system here!
3. Share Your Story With Someone Supportive
Trauma and shame work together hand-in-hand. Many times our money trauma has created a deep sense of shame: like there’s something fundamentally wrong with us.
Shame is an interesting emotion, because we always feel it in relation to other people.
However, other people can also offer us the antidote. Simply opening up and sharing your struggles with someone you trust will go a long way to taming your shame.
Shame grows in silence. But sharing your story will take much of the pain away from this intense emotion. Furthermore, you might just be surprised at how many people can relate to your story! In my opinion, financial trauma is a natural by-product of living under capitalism. That means there are many people in the world who understand your pain!
4. Heal Specific Traumas
Now that we’ve done a little healing work, let’s dig into your specific trauma. This work isn’t about going back and reliving that event. It’s about seeing what kind of impact that experience had on your life.
Trauma (whether big or small) goes far beyond the initial event.
The Event
The original mistake or ongoing circumstance that caused the trauma.
What caused your financial trauma?
If you have multiple causes, do this exercise separately for each one.
The Limiting Belief
We all automatically create meaning in the world around us, especially when we experience something emotionally painful.
What did you make your event mean? What story did you create? (ie. “People like me can’t make money”, “There’s no point in trying”, “I’m not just good with money” etc.)
The Protective Pattern
Finally, we have the behavior or protective pattern caused by the trauma. For example, maybe you grew up in poverty. You developed the belief that you had to work really hard to survive. And now, even though you have savings and a good job, you still find yourself stressing over money and refusing to spend it.
The protective pattern is the behavior caused by your limiting belief. Since you work hard for money but still feel insecure with it, you’re still trying to create a “wall” of money around you to protect you.
In turn, this coping mechanism or pattern also causes its own set of problems. Perhaps you have disagreements with your partner over spending because you won’t let yourself spend on anything “frivolous”. That’s causes strife in your partnership.
What pattern do you have around money (when you think about this core issue and limiting belief)?
Now you can see how one original trauma event can still be impacting your life today! You might not think your marital issues have anything to do with your past. But many times, our past is not nearly as far away as you think.
Noticing your particular pattern is a huge first step forward! But now it’s up to you. We can’t go back and change the original event. But we can change the pattern in our mind and behavior.
- Ask yourself: what would be a new supportive belief I could replace this with?
- What can I do to change my old pattern of behavior?
Outside help with this can always be of immense help. But if your trauma is particularly deep or painful, please consider working through this with the help of a professional!
5. Find & Reprogram Your Limiting Beliefs
Your mindset about money is a powerful force. Limiting beliefs, like “girls can’t make big money,” can hold you back from taking action towards financial goals. These beliefs fuel negative feelings and lead to behaviors that sabotage your success.
Here’s the key: your thoughts shape your reality. By challenging limiting beliefs, you can unlock new possibilities and take steps towards financial security.
Want to learn more? Check out this post on how to change beliefs with CBT!
7. Create Healthy New Money Behaviors
Okay, now for the fun part! (Said no one ever!) Like it or not, part of getting over your financial trauma involves taking control of your finances.
That means: understanding your current financial outlook, creating a budget, and setting financial goals (whether that’s getting out of debt or saving for the future).
My best advice for this is to set yourself a financial date, every week. Maybe you sit down with a nice glass of wine or some chai. You put on some music that makes you feel good. And you do the damn thing! Look at what’s there. Look at what you’re spending. Make any adjustments you need to. Start planning for the future, whether that’s buying a house, a car, retiring, etc.
Even if you’ve always shied away, you can do this! And if you find yourself going into fight -or-flight mode, go back and calm your body down before proceeding.
8. Learn About Money
One of the reasons why money trauma is so common is because–collectively–we don’t understand it. Personally, I believe that’s intentional! You’re taught so much in school, but very little about money. Yet you’ve probably learned just how stressful it is to live in our modern world without that knowledge.
This isn’t the time to shrug your shoulders. It’s time to stop believing you’re not smart enough to understand it or that there’s no point in learning. It’s also time to stop leaving your financial future in the hands of your partner (or Dream Future Husband!).
No one is coming to save you! And that’s okay because you can learn how to save yourself.
There are any number of books and podcasts to help you get started. And thank gouda, these days, there are plenty of women and POC people out there teaching about money! It’s not the domain of old conservative white men anymore. (Translation: these ones won’t make you fall asleep!)
I Will Teach You To Be Rich – Ramit Sethy
IMO avoid anything Dave Ramsey like the plague unless you want to reinforce those “I’m a garbage human with money” messages!
9. Seek Extra Help
When it comes to trauma, working with a professional is often the best choice. Whether that’s a trauma-informed coach (like me!) or a therapist is up to you. There are therapists who specialize in financial trauma but there are many others who can still offer help. Both coaching and therapy can help you understand your trauma and develop healthier coping mechanisms. Do some research to figure out the right one for you!
Additionally, you might also want to seek out the help of a financial professional to help create a financial plan, debt repayment program, or savings.
Looking for affordable therapy you can do at home? Try Betterhelp!
So tell me: do you struggle with financial trauma? Did you learn some useful new coping strategies here today?
Your Financial Future Is In Your Hands
Again, financial trauma is not you fault! In so many ways, the current economic system is designed to put people at a disadvantage. The problem is the system, not you. You don’t need to hold onto to the shame, pain and trauma from that. With some self-love and simple strategy, you can reprogram your brain and nervous system to feel safe and secure with your finances–and in turn, change your financial outlook forever!
PS Looking for more? You might also want to check out this post about how to regulate your nervous system, or feel better about anything with CBT.
