Skip to main content
Open this photo in gallery:

Money trauma, which describes the negative behaviours or feelings around money that persist after experiencing financial stress, can be healed if you learn to recognize it, identify its source and do the work to change your thoughts, feelings and behaviours.Ziga Plahutar/iStockPhoto / Getty Images

If, until now, you thought getting your finances in order was purely a mathematical exercise, you’re in for a surprise. It’s time to put the spreadsheet away and start tallying up your feelings instead.

Money trauma is a term that describes the negative behaviours or feelings around money that persist after experiencing financial stress. In addition to lingering feelings of anxiety and depression, trauma can also inform your behaviour – often to the point of self-sabotaging your financial future. But money trauma can be healed if you learn to recognize it, identify its source and do the work to change your thoughts, feelings and behaviours.

This trauma can be caused by experiencing financial scarcity or financial abuse, such as a partner not allowing you to have a bank account or credit cards in your own name. If you’ve ever gone through an extreme financial event, like losing your home or declaring bankruptcy, these scars may last a lifetime. Even short-lived financial traumas, like being laid off, can create anxiety that will rear its head long after the circumstances have resolved.

Even if you haven’t personally experienced a catastrophic financial event, you may still be exhibiting symptoms of money trauma. Culturally, we live in an economic system that plays up wealth and power, fuelling our fear-of-missing-out anxieties. No wonder many of us have a sometimes fraught relationship with money.

Financial educator Chantel Chapman has created a course called The Trauma of Money that digs into the causes and solutions to both personal and cultural money trauma. Here are some of the ways Ms. Chapman says it can show up in your life:

  • Financial avoidance: You avoid and ignore anything to do with money. For example, you may pay bills late or not at all; you might not even open the statements. You don’t know how much debt you have or who you owe money to, and have no idea how much you have saved or if you’re on track for retirement.
  • Hoarding: You accumulate large amounts of cash out of fear of never having enough. You might have an excessively high savings rate and are stingy with your money. You never pick up the tab when out for dinner with friends or family, and complain about the costs of virtually everything. You forgo most experiences worth having because they cost money and mistake yourself for being frugal when you’re really just cheap.
  • Overspending: You spend everything you make and then some, putting yourself in debt. Even though you know you can’t afford something, you find ways to buy it by tapping credit cards, lines of credit and loans. You don’t have a plan to deal with this debt – you just hope someone will send you a new credit card offer in the mail so you can keep the sham rolling.
  • Unreasonable risk-taking: You’re looking to “make it big” on a single financial transaction so you’ll gamble money recklessly or continuously sign up for pyramid schemes. Your ventures never pan out and often leave you in a worse financial position than you were in before, which only makes you even more desperate to find the next big thing.
  • Extreme risk aversion: You have a lot of anxiety about the stock market, so you keep your money in low-risk, low-return investments like savings accounts and guaranteed investment certificates. While you’re not at risk of losing any money, you also won’t generate the returns you need to retire comfortably and ensure financial security for your family.
  • Financial infidelity: If you’re hiding purchases, bills, debts or investments from your partner, that’s a huge red flag. If you’re not being honest about your household finances, it’s either out of shame or deceit, neither of which is a good sign.

It takes a dedicated and concerted effort to recognize which of our financial anxieties are justified and which we’re clinging to out of comfort and familiarity. If you’re genuinely struggling to make ends meet, worrying about money makes sense. But if your bills are paid and you’re able to save, excessive financial anxiety will only lead to more negative thoughts and feelings, along with self-destructive behaviour.

Sometimes, simply recognizing when you’re acting irrationally because of money trauma is enough to curb the behaviour, but more intense and persistent money trauma might require the help of a therapist to work through. Whatever the case, make the effort to resolve it. If you don’t let go of your money traumas, you’ll never be able to use your money for what it’s actually for: enjoying your life.

Bridget Casey, MBA (Finance) is founder of Money After Graduation, a financial e-learning company. You can follow her on Instagram at @bridgiecasey and Twitter at @BridgieCasey.

Go Deeper

Build your knowledge

Follow related authors and topics

Authors and topics you follow will be added to your personal news feed in Following.

Interact with The Globe