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Money is one of the big taboos of American life, because everyone needs money to live, and everyone usually wants more of it, but many people struggle to talk about it. A recent survey from Wells Fargo and The Female Quotient, called “Our Secret Numbers,” explored the ways that people talk about money (or not), especially how men and women tend to view money differently.
This survey found one big little-known problem that can drive a lot of people’s unhealthy financial choices: financial trauma.
What is financial trauma?
Financial trauma is a kind of intense response to financial distress. “Trauma” is a strong word for it, but it’s accurate: Some people have had so much financial stress in their lives that they exhibit similar symptoms to PTSD. Financial trauma can even be carried between multiple generations.
People tend to have a lot of emotional baggage about money. Think of people in your own life: Do you have some friends who are confident and carefree about money, and others who are too frugal, bordering on being frightened to spend? What money lessons (helpful or harmful) did you learn from your own parents?
Every family has its own hidden language of money: how people invest, how people spend, and how people feel about their personal finances. Some people grow up in poverty or comfortably middle class; some people grow up in a family that can afford to take vacations and own expensive cars, while other families suffer economic misfortune.
All of these life experiences can contribute to a sense of “not having enough money” or worrying that your money might go away. For example, some research has shown that when a parent loses a job, it can cause long-term harm to the unemployed parent’s children. Children whose fathers lose their jobs are more likely to have to repeat a grade in school, get suspended or expelled from school, and become less likely to enroll in college.
How financial trauma affects your personal finances
Financial trauma happens when money seems so uncertain and unstable, when people have no foundation under them, when there is no limit to how scary things can get. When children grow up seeing their parents get laid off (or even lose the roof over their heads) at any time, it can cause many people to develop a mindset of fear and scarcity around money.
Financial trauma can manifest itself in your personal finances in several ways. Some people are afraid to spend, to the point that they have lots of money in the bank but don’t know how to enjoy it. No matter how much they save, they never feel safe. Other people put on an appearance of having lots of money (expensive clothes, luxury cars, lavish vacations), but have nothing saved for retirement. Others end up recklessly “doom-spending” because they don’t see the point in saving for an uncertain future — but this kind of spending isn’t healthy self-care, it’s self-sabotage.
How to overcome financial trauma
According to the survey from Wells Fargo and The Female Quotient, the first step to overcoming financial trauma is recognizing the signs. Are you afraid to check your bank account or talk about money? Do you have bad memories of growing up in a home where your parents were stressed and depressed about money? Did you inherit bad financial habits? Do you have limiting beliefs about whether you “deserve” to have a good-paying job and a financially abundant life?
Financial trauma is not your fault, and you are not alone. Many people have grown up with unhelpful attitudes or negative social conditioning about money. One way to fight financial trauma is to break through the money taboos. The Wells Fargo and Female Quotient survey found that people who are unhappy with their personal finances are less likely to share details of their financial lives with others (like their salary, debt amounts, or credit score).
But your money problems don’t have to be a dirty secret or a source of shame. Many people are struggling to save as much as they’d like, to invest for the future, and to feel better about their monthly finances. If you can find a few trusted friends to talk about money with, you might realize that many people are in a similar situation. You don’t have to feel alone. You can find a sympathetic ear, and maybe help each other work toward your financial goals.
Too often, people treat spending money like a fun social activity and view saving money as a form of solitary suffering. What if you could help heal your financial trauma by flipping this script, and turn financial wellness into a social activity? Find a group of friends who are willing to share financial goals and hold each other accountable. You can:
- Host potluck dinners instead of dining out.
- Sign up for budgeting apps together.
- Show each other how you’re improving your credit score with credit monitoring services.
- Open high-yield savings accounts and do a fun savings challenge as a group.
Having friends in your corner can help all of you make faster progress toward healthier personal finances. And it might help defeat some of that financial trauma.
Bottom line
No matter what kind of money lessons you learned growing up, as a hard-working adult, you deserve to have a better relationship with your money. And it’s not too late to change your personal finances for the better! By talking openly about your money stresses and financial trauma, you can get on a path to better financial wellness.
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