Healing financial trauma: steps to reclaim your money mindset

While financial trauma has the power to unravel lives and cause analysis paralysis when it comes to money decisions, there are ways to address this underlying issue head-on to become financially fruitful.

Being born in January, a month when money was always tight, meant birthdays felt like an afterthought. Gifts were often necessities, like a school uniform or a replacement for a lost umbrella, rather than items I truly desired. These moments, though seemingly small, left lasting imprints on my relationship with money. For people with financial trauma, stress isn’t just an occasional burden; it runs deep, shaping the way they think, feel, and make financial decisions long into adulthood.

Money trauma can stem from a variety of factors, from large-scale issues, like the recent global pandemic or an economic recession. It can also emanate from personal experiences, such as losing a loved one who may have been the breadwinner, getting divorced, or losing a job. However, one significant factor contributing to financial trauma is a history of poverty or generational financial struggles.

The reality in South Africa is that some people are more vulnerable to financial trauma than others. Growing up experiencing persistent financial hardships can create a cycle of adversity that perpetuates the trauma across generations,” she added. “Limited access to resources, education, and a stable job can make it challenging to escape financial distress.

Once you recognise the signs of financial trauma, you can work towards a solution. Your financial trauma stems from unique circumstances that only you have experienced. Here are a few ways you can break free from the trauma to experience financial peace of mind and freedom in decision-making:

Identify and challenge your triggers

Recognising what triggers your financial stress is the first step toward healing. It’s the anxiety you feel when checking your bank balance, the guilt of spending on yourself, or the fear of making financial decisions because of past mistakes. Once you identify these triggers, challenge them. Ask yourself: Is this fear based on past experiences rather than my current reality? Am I holding onto money beliefs that no longer serve me?

Ask for the right help

Overcoming financial trauma means addressing the issue in two ways, i.e., the financial aspect, and the trauma you have been left with.

As such, your emotional, psychological, and social well-being depends on the state of your mental health. To help you manage stress, anxiety, and other mental health issues, a psychologist can help you improve your thought process.

Likewise, the help of a financial adviser can empower you to create a personalised plan that aligns with your unique financial circumstances and goals. Part of the advisor's task is to help you understand what is involved in meeting your future goals. Don’t be afraid to let this person into your personal space – they are there to help.

Set boundaries to take charge of your budget

Start seeing financial boundaries not as restrictions but rather as empowerment. Setting clear limits on spending and defining your financial priorities can help you regain control and prevent unnecessary stress.

Start by reflecting on past financial decisions. Were there moments when emotions led to overspending? Identifying these patterns allows you to put safeguards in place, whether that’s setting a spending cap on non-essentials, avoiding impulse purchases, or having an accountability partner.

Whether it's planning for retirement, saving for a major purchase, or simply ensuring you have the means to handle unexpected expenses, you are preparing yourself for life's financial challenges and opportunities. Because of this, having access to professional financial advice is important; it goes beyond just tracking your spending, as you are securing your financial future by learning the skills to empower you to make smarter money choices.

Trauma writes scripts in our minds and develops a narrative that leads us to different painful, disruptive behaviours and money disorders. Without changing the scripts, healing that financial trauma will only help superficially. Recognising financial trauma in your own life is an important part of taking control of your finances. In this way, you can take steps to recover and start building the life you want for yourself.

* Madonsela is a chief marketing officer at Momentum Group.

PERSONAL FINANCE