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Unraveling Financial Trauma: How Our Past Experiences with Money Affect Our Attitudes & Behaviors

Updated: Nov 14, 2023

Talking about money is taboo, but we need to have difficult conversations if we want to improve our relationships with our wallets.

A young person holding a piggy bank, financial trauma blog

Refresher: What is Trauma?

Trauma happens when the stress we endure is greater than our ability to cope with that stress. Trauma settles into our bodies and minds when we fail to adequately process and resolve the overwhelming stress that caused it.

Some scholars like to differentiate between big T Trauma and little T trauma, but it’s all trauma.

In the context of financial trauma, there’s little benefit to distinguishing a large traumatic event (like a natural disaster that led to bankruptcy) from a series of “smaller” traumatic events (like growing up in poverty). In fact, I’d argue that this differentiation is actively harmful, as it pulls us into the trap of the trauma competition.

Whether you’re new to trauma-informed concepts or just need a refresher, here’s what you need to know:

  • Trauma happens when we struggle to cope with stress, whether that comes in the form of one big stressor or a series of smaller stressors over time.

  • Trauma rewires our brains for survival. Past adverse experiences can dictate how we think and behave today.

  • While our trauma responses served us in the past, these behaviors and attitudes are often harmful to us now.

  • It’s possible to rewire our brains for healing through supportive relationships, connection to the world around us, and self-awareness.

Quote from Bessel van der Kolk, the Body Keeps the Score, "Being traumatized means continuing to organize your life as if the trauma were still going on-unchanged and immutable-as every new encounter or event is contaminated by the past.”

Examples of Financial Trauma

In this article, we’re going to look at a specific type of trauma: financial trauma. Financial trauma is any trauma associated with money and finances. Most often, money trauma occurs when our financial safety is at risk.

Examples of financial trauma include:

  • growing up in poverty/not having enough money

  • witnessing caregivers worry about money

  • losing a job/unwanted unemployment

  • experiencing a family member lose a job or being unable to acquire a job

  • being in debt/not being able to pay off debt

  • an unexpected and costly event, such as an illness, accident, or natural disaster

  • experiencing financial abuse or someone else controlling your finances

Please note that this is not a complete list of financial trauma. Your own financial trauma might look similar or different to the examples on this list.

Financial Trauma Informs Our Relationships with Money

We spoke with Andrea Ferrero, who is the co-founder and executive director of Pockets Change, a financial literacy nonprofit that provides curriculum, workshops, and professional development to build financial resilience through hip-hop pedagogy. She has dedicated her life to helping people overcome their financial trauma and has seen firsthand how much our experiences with money shape our current attitudes.

She explained, “We form our relationships with money between the ages of 3-7 years old. I’ve spent the last two decades as an educator and nonprofit leader having vulnerable intergenerational conversations about our relationships with money and how it shows up in our decision-making at any age.”

Like any trauma, there are very real physical, psychological, and emotional impacts of financial trauma.

We also asked Andrea about her personal experience of financial trauma. She said, “They say money talks, and in my household growing up it spoke volumes. It filled silences and it paused plans; the generational trauma of getting by filled my ears even when adults around me never directly discussed finances.”

Although money wasn’t something that Andrea’s family explicitly spoke about, the stress and trauma still showed up. Not talking about something doesn’t make it go away—which is why talking about our financial trauma is so important.

She went on to say, “By five years old I had an incredible desire to make money as a way to solve problems. Our tendencies are shaped by our trauma.”

Whatever the cause of financial trauma, our adverse experiences leave lasting impacts on our attitudes and behaviors around money in both our personal and professional lives.

"Behavior is the language of trauma" quote from Micere Keels, the Trauma Responsive Educational Practices Project

Financial Trauma in our Personal Lives

Whether you’re lending money to a friend, financing a new car, or creating a budget, financial trauma is likely going to pop in and say hi. Money trauma appears in many forms, and you might recognize it through:

  • a scarcity mindset that tells you your “wants” aren’t worth spending money on or that you shouldn’t take financial risks

  • a compulsion to be extremely frugal, save as much as possible, or “hoard” money

  • shame or guilt around how, when, and why you spend or save

  • fear or avoidance when you think about the future of your finances

  • anger or resentment around how those around you spend their money

  • grief or loss regarding your past spending habits or financial experiences

Money trauma can have a significant impact on our personal lives. Our attitudes towards our finances can spill over into our sense of safety, our willingness to change careers, our ability to trust others, and our closest relationships. So, even though we’re talking about money trauma, the impact on our lives is a lot deeper than just our finances.

One of the most pervasive and harmful impacts of trauma is the inability to plan for the future. When we struggle to set financial goals, we often stumble into financial instability or fail to make intentional choices that would benefit us.

Financial trauma quote from Pockets Change alumni, co-founder and executive director of Pockets Change, "If you don't make a plan for your money, your money will make a plan for you."

Financial trauma also maintains deep connections to our careers since most of us ultimately show up to work to earn an income.

Financial Trauma in our Professional Lives

The professional world possesses many harmful characteristics, especially around money.

Companies pressure employees to say (and believe) that a profession should be a person’s number one priority over a family or personal interests. Talking about how much money you make at work is often frowned upon (because it would support pay equity and transparency, forcing companies to pay their workers equitably).

When we work in environments that lack open communication about pay and finances, we tend to feel anxious or uncertain about our job security, including our ability to negotiate a fair salary.

When we are overworked and underpaid, we tend to feel under-appreciated, devalued, or disrespected, creating a rift in our relationship to work and in our relationships at work.

Furthermore, a fear of losing financial stability can lead to greater stress when we choose to tolerate unfair working conditions over making the leap to a new job.

Rather than keeping quiet about money, we need to talk about it—at home and at work. Pamela Capalad, co-founder of Pockets Change alongside Andrea Ferrero, eloquently said “When we are kept in the dark about our finances, we lose our autonomy and power. When we are taught that money is a taboo, we hide from ourselves and whisper about our mistakes instead of questioning why.”

Financial Trauma in Organizations

Because money trauma is so pervasive in our lives, it’s important for organizations to address financial trauma. Are your students living out of their cars because housing costs are unaffordable? Are employees struggling to meet their basic needs because their wages are too low? Do employees feel on edge at the end of the fiscal year because they never know if there will be funding to pay them next year?

Organizational leaders have a responsibility to address their role in causing financial trauma and failing to support their employees, students, and clients. Our institutions are positioned to create positive change—but they have to address the problem first.

Addressing trauma and moving forward with sustained change can and does have lasting positive impacts on personal and organizational levels.

Healing from Financial Trauma

As is the case with any trauma healing, healing from financial trauma is a lifelong process with no quick-fix solution. To start the healing journey, you’ll need to acknowledge the impact that your past experiences have had on your current attitudes and behaviors around money.

Financial trauma blog quote from Andrea Ferrero, co-founder and executive director of Pockets Change, "When we acknowledge financial trauma in our lives, we can meet ourselves with compassion, cultivate kind curiosity into our habits, and engage in community to dispel the shame that holds us back from healing financial trauma.”

Facing the truth of your financial trauma is a difficult process, but it's an important step toward creating a healthier relationship with money.

Here are some concrete steps you can take to improve your relationship with money and heal from your money trauma:

  • Practice self-awareness. Pay attention to your attitudes and hidden beliefs about money. You can start by taking this 2-question money personality quiz to gain some insight.

  • Validate your feelings. Guilt and shame are common feelings for trauma survivors. It’s okay to feel guilt. It’s okay to feel ashamed. It’s okay to feel angry. However you feel about your money (and however you feel about your feelings), you’re allowed to feel that way. It makes sense that you feel that way. Whenever you notice yourself saying, “I shouldn’t feel like this,” self-correct by validating your feelings.

  • Build self-compassion. We are often our harshest critics. When you notice yourself ruminating, consider how your inner voice would change if you were giving advice to a loved one. Instead of criticizing or chastising, focus on validating and supporting.

  • Plan for the future. Planning for the future is scary and difficult! Start with small, achievable financial goals instead of lofty long-term goals. Here are some ideas to inspire you (keep in mind, you want these goals to feel easy, almost too easy): save $50 this month, open an emergency savings account, set up an automatic weekly savings transfer of $10/week, or start reading a financial literacy book. To start, pick just one goal.

  • Celebrate small wins. A win is a win! Celebrate your successes, no matter how big or how small they are. Every step in your journey matters.

Final Thoughts: Financial Trauma

Financial trauma can have a significant impact on our lives, both personally and professionally. By acknowledging the impact of our past experiences and working to heal from them, we can create healthier relationships with money and ultimately live more fulfilling lives.

So, let’s start talking about money trauma.

Financial trauma quote from Dyalekt Director of Pedagogy, Pockets Change,“Together we can break down barriers and let each other know that money is a tool and a process—you’re not wrong, you’re not bad at money, and you’re not alone.”


Becca Choi
Becca Choi
Oct 18, 2023

Nora, this is a big reason why making sure we can get out of our trauma and access our executive functioning is crucial. Our executive functioning is responsible for all these skills. And discomfort asking for help is so common - so common that we address it in every group we train. Asking for help and seeking support is key in healing trauma. I hope that helps! Keep doing the good work of creating change in your life. Progress is slow, but it's possible!!!


Nora Watts
Nora Watts
Oct 18, 2023

I forgot to mention dates. I have been 1 month early for an appointment and one month late. It falls into the ridiculous category .


Nora Watts
Nora Watts
Oct 15, 2023

There doesn't seem to be a quiz link. How does dyscalculia fit into this? I always had trouble knowing what my bank balance was prior to online banking.

Nora Watts
Nora Watts
Oct 18, 2023
Replying to

Hello Becca, Walk up to someone and ask them to check your math. For you, there is no reason to feel ashamed but still, you may feel awkward. My discomfort with asking for this sort of help is large, I can write budgets but I forget major things. Then when I add it up, I'm wrong even with a calculator. How many times can you re-add the same numbers before you scream? And the money is always spent with no room for an occasional coffee with friends. If I get sick the situation worsens. I can't hurry this. Few people will voluntarily help another with numbers. There are no numbers checks on documents. I can't put numbers into tables o…


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