Financial trauma can be a powerful obstacle, keeping you from taking the steps you know are good for your financial health. If you’ve ever struggled to set up a budget, automate your bills, or make decisions about investing, you’re not alone. For many, these avoidances go beyond simple procrastination. They’re rooted in what financial therapists call “money scripts”—deep-seated beliefs about money formed in childhood and influenced by past experiences.
Financial trauma is real, and its impact can be lasting. However, understanding the root of these beliefs and working through them with the right tools and support can transform your financial relationship. So, let’s dive into how financial trauma might be affecting you, and explore tools that can help you rewrite your money story.
We often hear that setting a budget, saving, or investing are good things to do, but it’s much harder to act on that advice if deep-rooted beliefs, or money scripts, are working against you. Money scripts are unconscious beliefs about money that influence your financial decisions. Developed in childhood, they can drive behaviors—like overspending, chronic undersaving, or avoiding financial planning—that make financial progress difficult.
Financial trauma, like witnessing a family member’s bankruptcy or experiencing significant financial loss, often triggers money scripts. Financial therapist Rick Kahler shares the story of one client who, despite earning a high income, found it nearly impossible to save. The client’s trauma stemmed from her parents’ bankruptcy, during which her own hard-earned childhood savings disappeared. The lesson she carried forward was, “Don’t save; it will only disappear.” Recognizing the impact of these formative experiences is key to understanding your own financial roadblocks.
Taking small steps toward financial health—like saving a little more each month or investing in a low-risk account—seems logical. But for those with financial trauma, even small actions can reinforce negative beliefs if deeper emotions haven’t been addressed. Georgia Lee Hussey, a certified financial planner, points out that simply trying to save or invest without first unpacking one’s underlying emotions may unintentionally reinforce harmful patterns. To make lasting progress, financial therapy can help you unpack your money story and create a solid foundation.
If you’re considering getting into money scripts but feel overwhelmed, don’t worry. We have some helpful tools that can get you started. Taking the Klontz Money Script Inventory-Revised (KMSI-R) is a wonderful first step. This free quiz, offered by Your Mental Wealth Advisors, helps identify your dominant money scripts and provides insights into how they may be affecting your financial decisions. Similarly, Hussey’s firm, Modernist Financial, offers a free resource designed to help you start a reflective conversation about your financial history.
Once you begin, it’s difficult to resist the urge to further explore your financial well-being; your next step is to consult a financial therapist.
Financial therapists specialize in the intersection of mental health and financial behavior, offering support to understand and heal from financial trauma. They can guide you through exercises such as journaling, mindful money practices, and structured interviews to bring clarity to your financial beliefs. Kahler recommends journaling and mindfulness practices focused specifically on money scripts as tools you can use independently if therapy isn’t accessible.
Once you’ve begun to uncover and understand your financial beliefs, taking small, manageable steps can be an empowering way to start building a healthier financial life. Here are a few steps to consider:
Choose a high-yield savings account (HYSA) to earn more interest: Moving your savings into a non-traditional deposit account that offers higher interest is a simple financial hack to grow wealth without much effort.
Does your employer sponsor retirement plans?: Some employers may offer their employees a 401(k) match. This is easy money as long as you can contribute enough to receive your employer’s money match. It’s a small move, but over time, these contributions and the added employer funds can grow significantly.
Be prepared, though, for old money stories to surface even with these initial steps. For instance, the idea of contributing to a 401(k) might be a trigger for someone who saw a family member suffer investment losses in the past.
Georgia Lee Hussey, a certified financial planner, shared with CityNews Ottawa in the article “Millennial Money: Is financial trauma holding you back from living your best life?” her insights on concerns some individuals have regarding 401(k) investments (Benson, 2024). Hussey provides an example of someone affected by the Great Recession: “I’m not going to invest in a 401(k) because my uncle lost all his money in one.” However, she clarifies that the uncle’s emotional decision to withdraw from the market at a low point—not the 401(k) itself—was the actual cause of his losses (Benson, 2024).
Many of us carry stories about money that have been passed down through family or cultural beliefs. Questions like, “What am I telling myself about money? Where does this belief come from? Who taught me this, and where did they learn it?” can be incredibly powerful. By tracing back the origin of these beliefs, you can begin to see how they impact your financial decisions today.
Money is more than numbers; it’s deeply personal and tied to our emotions, experiences, and relationships. Financial trauma and inherited money scripts can keep you in patterns of stress and avoidance. But with the right tools and support, you can take control of your money story and build a financial future aligned with your goals and values.
Are your money scripts affecting your financial choices? Taking the Klontz Money Script Inventory-Revised or another reflective quiz is a good first step. These tools can help you uncover subconscious beliefs that may be holding you back, allowing you to understand why certain financial tasks feel daunting.
Working through your financial trauma isn’t a quick fix, but it’s a journey worth taking. Understanding the emotions and experiences shaping your financial behavior gives you the power to make choices from a place of confidence rather than fear. With time, patience, and maybe a few baby steps, you can overcome financial trauma and start living a financially free and fulfilling life.
Sources: Benson, A. (2024, April 9). Millennial Money: Is financial trauma holding you back from living your best life? CityNews Ottawa. https://ottawa.citynews.ca/2024/04/09/millennial-money-is-financial-trauma-holding-you-back-from-living-your-best-life/