Will Your Trauma Impact Your Financial Decision Making?

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Getting over a painful experience is much like crossing monkey bars. You have to let go at some point in order to move forward.

C. S. Lewis

Earlier trauma and financial distress are often interconnected.

They are affecting the cognitive, behavioral, emotional, and relational aspects of people’s lives.

Strong emotions, such as shame, can be a response to traumatic experiences. In turn, it can lead to a threat to one’s self-esteem. Financial trauma, or financial stress brought about by past traumatic experiences, does not exist in a vacuum. But, it occurs within a complex interlocking system of social structure and meaning.

Researcher Kaplan described an intersection between money, sex, and power. And, the integrated categories of financial shame can be adapted as follows:

Pervasive discomfort in talking about personal finances 

  • including an inability to express financial needs, feelings, fantasies, and frustrations.

Significant lack of information or confidence about aspects of personal finance 

  • such as guilt over personal financial curiosity, inquiry, and exploration.

Heightened perspective that “financial sins” are the worst of all sins

  • possibly due to inaccurate or over-emphasized focus on the potential evils of money.

Low financial entitlement for expressing financial needs, financial pain, or trauma 

  • where individuals do not believe they deserve or have the right to voice their financial feelings or desires.

Varies painful and traumatic memories can leave individuals trying to

Past trauma impacts your current financial decision. regret. anger, anxiety.

Satisfy inner and outer voids through “irrational” behaviors, such as spending money impulsively, hoarding money, or controlling the access to or limitation of money. Exploring the multifaceted and adverse effects of early psychological trauma can expand the understanding. And it also helps people to gain greater self-awareness in their narratives and stories, to link the impact on those earlier thoughts, behaviors, emotions, and relational, and financial aspects.

Financial therapists, by utilizing a narrative financial therapy framework, can use the four-part financial shame schema to anticipate current and future financial triggers. They can help develop anticipatory experiences of financial beliefs. Financial therapy can also increase the ability to use the thickened storyline to navigate formerly distressing financial cognitions, emotions, or behaviors.

Book a Financial Therapy session now.


Ross, D. B., & Coambs, E. (2018). The Impact of Psychological Trauma on Finance: Narrative Financial Therapy Considerations in Exploring Complex Trauma and Impaired Financial Decision Making. Journal of Financial Therapy,9(2).

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One Reply to “Will Your Trauma Impact Your Financial Decision Making?”

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