What Is Financial Trauma & How Can You Move Past It?

We all have a narrative that weaves the strings of our different stories into a system of beliefs, desires and fears. Though our personal storyline might be peppered with positive moments, there is no escaping the trauma that the human experience brings with it. 

We typically reserve the term 'trauma' for a very specific set of circumstances, often the most drastic and painful that we can conjure. As the vernacular of — and the attitude towards — mental health and the human struggle becomes more open and more accepting, certain types of trauma have come to the fore. The likes of 'childhood trauma' or 'relationship trauma' are, thankfully, much more a part of our modern vocabulary than they ever were. But what about lesser-known traumas? Those that receive a smaller share of the limelight or are a little less described but can impact our lives just as much? 

It's hard to process our trauma if we are unable to identify it and the more we try to define our experience, the more alone we feel. Financial trauma (FT) is one that is often left off the list. 

It’s important to make the distinction between financial trauma and financial stress. For many of us, financial stress or worry is part of life. It’s a universally acknowledged truth that the cost of living is expensive and our salaries don’t always reflect our desired lifestyles, resulting in angst over our money. Yes, for many people this can cause very real emotional and physical symptoms, but financial trauma has deeper roots. 

Characterised as a dysfunctional reaction to chronic financial stress, the indicators of FT are often similar to those experienced by people with post-traumatic stress disorder (PTSD). They manifest in multiple areas of the person's being, often preventing them from ever feeling successful, safe or at ease where money is concerned. It doesn’t take a long period of stress around money to ingrain financial trauma and it is easily passed down from generation to generation as unconscious belief systems. 

"We know through epigenetics (the study of how your behaviours and environment can cause changes that affect the way your genes work) that trauma can be passed down generationally and so can certain habits and beliefs around money. If you had a grandparent who experienced extreme financial scarcity, it is likely that your parents developed some coping mechanisms along the way that could have impacted your worldview around money," explains Chantel Chapman, a financial trauma researcher, educator and co-founder of The Trauma Of Money Method.

For Chantel, the crucial difference between trauma and stress is that "stress can be used to motivate us if we have strategies for coping whereas trauma can shut down our ability to take helpful action."

Uncovering my own FT was the result of grappling with feelings of worth — or lack of it — during a therapy session. My therapist prompted me to think about boundaries, about which of my insecurities were mine and which I had absorbed from those around me – namely my parents. The realisation that I was living out the trauma felt by one of my ancestors spurred a breath-stealing concoction of relief, resentment and unease. 

Money can seem like a frivolous thing and how we feel about it can all too easily be put down to how much we have of it, as well as the society we live in. It took me a while to really take ownership of my emotions and triggers around the topic. I began to realise that so many of my interactions, so many of my judgements about people, and who I did or didn’t feel worthy around, were linked to my FT. My urge to jump in and pay for others even when it wasn’t expected of me wasn’t straightforward generosity — it was trauma. 

If I was around someone I perceived as having more money than me, I felt uneasy and unworthy. If I was around someone I perceived as having less, I felt my ego sprinting to earn some quick points to stash away for a future interaction where I felt less than. 

It stands to reason that our narrative around finances can often cause us trauma. Money can equate to security, safety, status, power. Money can be interpreted as worthiness and lack of it as worthlessness. There are so many unconscious ideas embedded in our relationship to money that it makes perfect sense, when you think about it, that financial trauma is widespread yet goes largely unaddressed.

If this is all starting to create a familiar knot in your stomach, it’s unsurprising. A survey conducted by Payoff in 2019 found that one in three millennials suffer from acute financial stress (AFS). But examining your own — or your inherited — journey with money and healing your financial trauma can help to alleviate the day-to-day angst. 

For business strategist Lisa Johnson, efforts to remedy her FT enabled her to create a life of financial stability for her family — a life she had never thought possible. She now runs a seven-figure business helping other entrepreneurs find success.

"When I started reflecting on my money story, it became obvious that I didn’t believe people from where I was born could make a lot of money," Lisa tells me. "I also believed I’d have to work so hard to make any money at all that I’d never see my twin sons. And even if I made some, why would I want something so negative, something that might turn me into a bad person?”

Lisa's epiphany encouraged her to really dig into research around these beliefs and she began to read about FT, also working with finance coaches to free herself from her mental restraints around money. 

"I started using positive affirmations to change how I thought about money and sought out evidence that I was wrong," she continues. "For example, finding people from poverty who had gone on to make money and researching those who had money and went on to do amazing things with it. I now make millions a year. It changed my life but it hasn’t changed who I really am."

You don’t need to have come from nothing to inherit or create financial trauma. I certainly have a sense of a privileged upbringing but this is mixed with a feeling that there were relational issues linked to money — there was people-pleasing, anxiety around money and an inherited sense that how you managed your money, or how others managed it for you, was the acceptance of control. 

"Our nervous systems can easily become dysregulated where we can experience [stress]. This can show up physically in the body in many ways such as tightness, fatigue, anxiety, loss of memory, headaches, etc. It can also alter behaviours around money," Chantel tells me. "For example, it could lead to financial avoidance, denial, overspending, under-earning etc."

"If your trauma response is to fawn or people-please, this could show up by you undercharging, paying for things for friends and family when you can’t afford it, or not being able to create boundaries in contract negotiations."

Perhaps by this point, you’re thinking, Okay, I get it but what can I do? Well, financial trauma is like all other forms of trauma — it needs to be brought into the light and given time and space. It needs to be unpicked, challenged and soothed, and it takes work. A lot of work. 

"Notice what is happening in the body and then use the body to help regulate your nervous system," Chantel advises. "You can do this by slowing down the breath, orienting yourself in your space and becoming aware of your five senses: what do you see, what do you hear, what do you feel, what do you smell, what do you taste? Once you are feeling more regulated, explore the narrative that is arising around money for you and then ask what the source of the narrative is. For example, maybe something is coming up around worthiness and asking yourself where you first learned this can help separate you from the narrative."

So I began to journal. I wrote pages and pages — I had much more to say than I realised. I’d set myself time challenges and try to write for 10 minutes, letting my subconscious tumble out of my pen. I was always surprised by what came up. 

Over time, with a stack of journals covered in ink, my narrative began to shift a bit. I can’t profess to have no feelings around money at all but I do know that my beliefs around it — and how it created a lens for the world — felt a smaller and smaller part of me. I’m aware of it — it comes up and it goes down but I no longer hold onto it or let it govern my feelings of worth so strongly.

You see, it isn’t about making more money; it isn’t even about feeling comfortable in your finances (though both have their merits). It’s about wrestling to untangle the beliefs that prevent you from ever feeling stable in either of the above two statements. 

As Bob Dylan said: "All the money you made will never buy back your soul." Only healing the darkest parts of you will.