Guest blog written by Amanda Kruger, LPC, EMDR, Copper Well Counseling

Recently Amanda Kruger, LPC, EMDR, presented to The Pledgettes about Financial Trauma. It mades sense to me that it would exist but it wasn’t until Amanda deeply described it that I had a better understanding of what it could do to people on their personal financial journey. I asked Amanda if she would write a guest blog for us so you could learn more about Financial Trauma, identify if you have experienced it, and work through it with some tips from Amanda. If you have experience Financial Trauma, working with a professional, like a Financial Therapist, may benefit you and your financial journey. Without further ado, let’s dig into it.

Let’s start by talking about Trauma. Trauma is the brain’s reaction to an adverse event. This could be a singular event, a series of events, or simply too much stress for too long. Trauma happens when the brain and nervous system can’t make sense of what has happened. These events leave their marks on our brains and our bodies and will continue to impact us until we resolve this trauma. When we are confronted with triggers or trauma reminders, the brain becomes overloaded which impacts our ability to manage these triggers. This is a defense mechanism that is meant to keep us safe, but is not always the most helpful. 

Trauma has a huge impact on our Core Beliefs. Core beliefs are beliefs that we hold at the center of who we are. They may or may not reflect our reality or what we would like to believe. We are often not conscious of these beliefs, but at the end of the day, it is these core beliefs that are making the vast majority of our decisions. When a trauma occurs, it changes the way we see ourselves and the world. Gaining awareness of your core beliefs is often the first step to overcoming trauma. 

What is Financial Trauma?

Many, many people have experienced adverse events in their lives that have led to trauma diagnoses such as PTSD. However, many of us discount the traumas we have experienced because they don’t fit into what we think of as “a trauma event.” A trauma is any moment when things substantially changed for the person. Their outlook on themselves, the world, or their relationships takes a negative turn. Sometimes we can’t even immediately identify what these moments are. Trauma doesn’t always present itself through nightmares and flashbacks either. Avoidance, indecision, and shame can be symptoms of trauma as well. 

Financial Trauma can be extremely painful and complex because it often is not a singular event, but a string of events or a prolonged state of scarcity and chronic stress. Financially traumatized people are also constantly facing retraumatization and triggers because money is something we interact with daily. This form of trauma is particularly painful because money is so closely connected to our survival and our ability to care for our loved ones. 

When a trauma is related to money, finances, or the economy, we call it financial trauma. This type of trauma can have a profound impact on our ability to make and manage money, as well as how we feel about money. Some research estimates that 1 in 4 Americans has experienced financial trauma. This issue disproportionately impacts younger generations. 1 in 3 millennials are estimated to have PTSD like symptoms after a financially stressful event.  This research was conducted before the COVID-19 pandemic! I can only imagine how many people have experienced a financial trauma since then. I am very curious to see how this impacts our Gen Zs and Gen Alphas. 

What causes Financial Trauma?

That negative turn in our money relationship can be linked to many, many events. Some of the more commonly seen events are:

  • Poverty, especially in childhood, especially when prolonged
  • Scarcity of necessities such as food and clothing
  • Bankruptcy
  • Financial abuse
  • Sudden job or income loss
  • Large or unexpected medical bills
  • Not being able to provide for loved ones
  • Receiving money (or other expensive items) with manipulation, guilt, or harmful expectations attached
  • Economic events (recessions, wars, pandemics, resource scarcity)
  • Parents frequently arguing about money
  • Toxic Work Environments
  • Excessive arguing about inheritance

The causes of financial trauma are vastly varied, and the events that cause trauma for one person may not be traumatizing at all to another. This is all due to our genetic makeup, buffers, other resilience factors, and the individual’s relative experience of what happened. I haven’t seen much research yet, but I am confident the COVID-19 pandemic along with other recent national and international events have been traumatic in some way to nearly everyone. It is a tough and unpredictable world we’re living in. 

How do I know if I am experiencing financial trauma?

You’d have to seek out a mental health professional to really know if what you’re going through is related to a past trauma. However, I can give you some clues and signs to look out for.

  • Avoidance – not opening bills, not checking bank accounts, not applying to new jobs when needed
  • Overspending – getting into the habit of spending whatever resources you have because you don’t know when they will be taken away
  • Underspending – hoarding resources or excessive concern around saving money
  • Sleep problems
  • Reckless Spending
  • Anxiety or discomfort during transactions
  • Class Anxiety – Stress caused by interacting with or moving between various social and  economic classes.
  • Poor Boundaries – often borrowing or lending money without a clear plan to pay it back
  • Indecisiveness – another form of avoidance. Putting off large and small financial decisions
  • Shame 

These and other responses to trauma are not good for our money relationships. Remember, trauma impacts how we see ourselves, the world, and our relationships and not in a good way. Money is so intimately attached to all three of these things. We might lose faith in ourselves and our competence in managing money. We may see the world as a less friendly and safe place. We may lose faith in our ability to prosper in this world. And the big one – our money relationship. If money suddenly left you before or caused you some kind of pain; it might be harder to trust that it will be there for you in the future. Our money relationship might have to be healed and cultivated. 

How can I start to heal from this trauma?

Take care of your nervous system

When trauma occurs, it damages the nervous system. Focus on caring for yourself and your body in order to keep your nervous system in a healthy and regulated space. This includes all the things that we need to do to care for ourselves as human beings. Stay hydrated, eat nutritious foods, try to maintain a healthy sleep schedule, get sunshine daily, and include some form of movement in your day. 

These little things are annoying to maintain, but do make a big difference in our ability to maintain our mental health. If you are doing your best to implement these things, and have not seen success, it is time to consider professional help such as therapy and/or psychiatry. 

Identify your Core Money Beliefs

Set some time aside to get intune with yourself and your core beliefs. Spend some time observing, reflecting, and journaling on the feelings and thoughts that come up for you in money situations. 

Separate yourself from your money

Like any relationship, we can become codependent in our money relationship. Try to avoid thinking of your financial situation as being a reflection of your worth. Your worth does not change just because your bank balance does. 

Stop Avoiding

If you feel emotionally capable, try to stop avoiding dealing with your money issue. Open your bills as soon as you receive them, and pay them if you can. Check your bank balance and accept where you are today. Avoiding these issues doesn’t make them go away. Confronting them can help you gain clarity and a more concrete idea of how to move forward. That being said, try to set yourself up for success and do these financial tasks when you are not already on the edge of a breakdown.

Schedule a Money Date

You have to spend time with your money in order to have the healthy relationship you want. Schedule a time when you (and your partner if you have one) can sit down and gaze deep into the eyes of your finances. Spend this time reviewing your financial goals and your progress towards them. Wine and dine yourself in the process. Make this date more pleasant by setting the mood with things you enjoy. This could include uplifting or relaxing music, a favorite meal or dessert, etc. Again, choose a time you feel confident you won’t be stressed from the get go.

Rename and Reframe your Shame

All that shame you have over the debts you have incurred or investment that didn’t pan out? Change how you label them in your mind and your chart of accounts. For example, instead of labeling an expense in your budget “Credit Card Debt,” label it “Life Changing Paris Experience.” While you are working to improve your finances, remember what these expenses add to your life or what you learned from them.

Practice Healthy Coping Skills

Instead of soothing yourself by overspending, hoarding, or avoiding. Implement healthy skills that meet the same need. This could include making coffee at home with a friend or developing a self affirmation practice instead of seeking external affirmation.

Seek a Professional

During a money date, spend some time contemplating or researching professionals that might be helpful on your healing journey. This could include a financial planner, manager, coach, therapist, etc.

I would encourage anyone who suspects they are dealing with trauma to seek a trained trauma therapist who can assess and treat. Look for a professional who has specific training in treating trauma and financial stress.

Post Traumatic Growth

On your journey through healing from trauma, I hope you recognize the ways it made you stronger, more resilient, more creative, and more successful. When we heal from trauma, we are able to put what happened into perspective and realize the survival skills we acquired. Never forget that the challenges you have experienced in your life don’t have to hold you back. You deserve healing and post traumatic growth.

Amanda Kruger is a Licenced Professional Counselor in the state of Colorado. She is a Trauma and Financial Therapy specialist. Copper Well Counseling ( is Amanda’s therapy practice where she offers financial therapy, EMDR, and Ketamine-Assisted Psychotherapy. Amanda is passionate about helping people move forward from trauma and embrace a life of personal and financial peace.