Healing from Financial Trauma as a Couple

What comes to mind when you reflect on the words “financial trauma?” 

Take a few minutes to stop, reflect, and write about what comes to mind. Allow your mind to wander and consider. 

Was it easy to come up with ideas and examples, or was it more challenging? 

​People often come up with words like

• Scarcity mindset
• Intrusive thoughts
• Negative credit scores
• Financial hardship
• Job loss
• Great Recession
• Poverty

The reality of financial trauma is far wider and deeper than most people seem to recognize. Understanding and working through your own trauma — and with your partner through their money trauma — can have significant positive effects on your financial behaviors and life together. It can lead to greater financial stability. 

Many couples start by trying to get more financial education to solve their money differences when what they need is financial therapy. Education is important, but it won’t heal your past.

The Impact of Financial Trauma

Let’s take a step back for a minute and remember that the study of trauma is a large and growing field in psychology and other social sciences. We know that there is a wide range of types of trauma people can experience. One area of increasing awareness is how generational trauma with different family members can be connected to financial struggles.

An often-used, relatable example of how childhood experiences of trauma can impact us as adults is a dog bite. A child who experiences a dog bite then becomes afraid of getting close to dogs. No matter the amount of parental encouragement, the child still fears even friendly dogs. 

Yes, some kids get dog bites and go on to love dogs without any lasting negative effects. This is part of what challenges us to understand why people respond differently to trauma. 

On the other end of the trauma spectrum are issues related to incest, war, and physical abuse that can create significant and far-reaching impacts on a person and the larger community. 

So, where does financial trauma fit in this picture? All along the continuum of experiences. It ranges from seemingly small, single events to large, long-term experiences. Financial trauma often happens in a larger, relational context between people.

A common example I work through with clients is their parents' divorce and its financial ramifications. Children develop a whole set of beliefs, thoughts, emotional reactions, and nervous system conditioning to the ways their parents treat each other, their kids, and money. Many of the symptoms of financial stress from this experience lay unconscious until they enter into their own adult relationships and struggle to trust their partner with money.  

​Some people think their lack of financial literacy is the problem, but when we consider the experiences of personal relationships and their impact on financial matters, we realize there is more than meets the eye.

What We Do in Response to Financial Trauma

Drawing from the field of trauma studies, there are some common patterns of trauma response that are independent of the type of trauma experienced. 

One of those patterns is a tendency of the mind, brain, body, and relationships to move towards either rigidity or chaos. According to Dr. Dan Siegel, when we look at a spectrum of mental health issues, we can organize them around patterns of rigidity and chaos. 

The states of our minds, brains, bodies, and relationships give rise to the way that we organize our financial lives. Our financial lives then condition our minds, brains, and bodies into patterns of response in an ongoing system of response and interaction, each fueling the other.

Financial trauma evokes responses to help us return to safety and connection. Yet when we are not able to do this, the experiences of financial trauma can have devastating effects. 

Examples of Financial Trauma Responses

Here are a few ways I’ve seen financial trauma responses play out in the lives of clients. (While either a husband or wife is mentioned in these examples, note that either partner can set up these rigid or chaotic systems for the family.)

Rigid Financial System 

The husband sets up a strict family budget and savings plan. Any time his wife spends too much money on the family, he criticizes her. When the kids ask for something that is not in the plan, he dismisses their disappointment when he tells them no to their requests for a new toy, clothing, or a school event. 

Chaotic Financial System

The wife spends endless hours working as a breadwinner, while her husband struggles to figure out what he is supposed to do with his life and struggles with financial distress. Neither of them has the energy or interest to make any real financial plans for their family. She just plans to keep making more money and hopes for the best.

Of course, there are more details and layers to each of these family stories. We don’t know each person's unique and layered past experiences with money and relationships. If we knew this information, it would add context for either the rigid or chaotic approaches to money. 

Flexible Financial System

Spouses with a flexible financial system know that personal finance plays an important role in their lives and is a tool to help them facilitate meaningful relationships and experiences for the family. Everyone is involved in understanding and deciding how money flows through the family in age-appropriate ways. There are systems in place to ensure bills are paid, savings and investing are happening, and that money is used to bring pleasure and meaning into their lives. They are comfortable and thoughtful about their wealth-building capabilities.

Flexible financial systems reflect minds, brains, bodies, and relationships that regulate themselves and maintain healthy relationships with each other. 

Healing From Financial Trauma is About More Than the Money

Financial trauma is about the money, but it’s about so much more. I often hear people on the journey of healing their relationship with money say, “It’s not about the money.” Money is an essential resource needed to meet basic needs and help fulfill self-actualization. Thanks to Dr. Sarah Newcomb for this powerful lens in her book Loaded: Money, Psychology, and How to Get Ahead Without Leaving Your Values Behind. 

Healing from financial trauma takes a layered approach. We address mind, brain, body, and relationships, as well as the functional reality of money, (i.e., how much money we have saved and how much we make). Financial trauma can cause us to evaluate our current financial situation inaccurately. 

I would like to introduce three ways to start your journey of financial healing. They include learning how to work with your autonomic nervous system (a.k.a., the fight, flight, freeze system), your patterns of attachment and bonding, and the role of financial planning. When you combine these areas of knowledge and practice, you will experience a decrease in your financial challenges and an increase in your financial health.

Rhythm of Regulation

It took me some time to appreciate the significance of my nervous system and its impact on my overall well-being and, more specifically, my financial life and decision-making. Thanks to the work of many great scientists like Dr. Stephen Porges (who helped develop polyvagal theory) and therapist Deb Dana (who translated this work into approachable terms, ideas, and practices), I now accept that my nervous system plays a central role in the way I make financial decisions and interact with my wife, kids, family, and clients around money. 

When our nervous system is dysregulated, we do not feel as connected to ourselves and others. It is hard to perceive and feel that we are safe, seen, and cared about —  all of which are conditions for navigating our financial life effectively.

Fortunately, there are many ways to become more aware of the state of your nervous system and to help you move towards more regulation. 

One practice that I have found helpful is bringing my hand to my chest over my heart when I feel anxious. This brings acknowledgment and awareness to the raised heart rate, which can signal nervous system arousal. If we are in a safe and secure relationship and our partner is experiencing distress, we can ask to bring our hand to their heart and acknowledge that they are experiencing distress. It is from a place of nervous system regulation that we can make more informed, reflective financial decisions in our lives. 

Attachment Styles

Our nervous systems are tied to our patterns of attachment and bonding. The way we experience relationships also draws on our attachment system, which is composed of many psychological and physiological elements. 

The decades of research on the development of our attachment system and the requirements to help heal our attachment system have identified just how important interactive repair is for maintaining healthy relationships. 

When we experience financial trauma, there is often an unhealthy relationship in which one person feels hurt and violated by another. These experiences left unresolved and unaddressed lead to relationship and financial issues and financial instability. This reality stretches across the income and wealth spectrum; it is not reserved for only one group of people.  

As an example, a husband who is anxiously attached and a wife who is avoidantly attached are likely to have many challenges in managing their relationship and finances. The anxious husband may chronically worry about his wife's criticisms about his spending, earning, or saving. At the same time, he may not have the relationship skills to work with her to acknowledge the role and contributions he makes to the relationship. With the wife's avoidant attachment style, she may find it hard to acknowledge some of her partner's emotional experiences around spending, earning, and investing, leaving both of them frustrated and disappointed. 

As a couple that wants to experience great financial success and collaboration, looking at both of your relationship patterns and learning how to show up for each other in more secure patterns will enhance your intimate relationship.

How Financial Planning Helps Heal From Financial Trauma

Financial trauma can negatively impact our sense of self, as well as our ability to regulate ourselves. It also can impact our ability to organize and process financial information. This is where comprehensive financial planning can be so helpful. 

Helpful financial planning gathers a family's financial information into one place, then assesses how all the moving pieces are working. From there, we review the family’s financial information and what the projections say about where the family is headed. This can be very powerful and clarifying. 

For individuals and couples recovering from financial trauma, engaging in the process can be more challenging and take a longer period of time. This is not a bad thing; it is a way of honoring your experiences with money. 

Financial planning can help create a safe place to review and reflect on our financial lives and to consider how our spending, saving, and investing goals line up with our priorities and the direction of our lives. It is a time to update ourselves on our current financial reality. Many clients I work with have a fragmented sense of their financial lives and where they are headed. 

This may mean that they feel like catastrophe is right around the corner when there is enough money and wealth to weather a financial storm. 

Financial planning can also help you gain realistic expectations about what you need to accumulate to maintain your standard of living later in life. When I ask clients how much they think they need to retire, they either struggle to come up with a number or offer one that is disconnected from their current financial reality. 

When talking with a financial planning colleague recently, he shared a story about a doctor who learned he needed $5 million to retire. He then doubled that number and, just to be safe, doubled it again to $20 million. He then set out to earn and invest enough to grow to that number, working much harder and longer hours than necessary. He did not address his emotional pain and negative thoughts related to money. I do not doubt that he has experienced money problems in life. 

What likely lies behind this mental adaptation is a fear of not having enough money. The doctor doesn't need a more concrete financial plan — he needs to work with a financial therapist. The Financial Therapy Association has a great directory of certified financial therapists available to help people work through their money trauma.  

When financial planning is done from a therapy-informed perspective, clients talk about their painful experiences with money and the ways it shapes their current and future expectations. Something I often run into initially is that people don’t want to look backward or talk about painful experiences with money. That is completely understandable at one level. The past can feel too painful to address — but that does not mean it is not impacting you. 

Finding and developing ways to work through your financial trauma matters. There is no one-size-fits-all solution. Developing your financial well-being practices can be fostered over time and with the help of Therapy-Informed Financial Planning™. 

The good news is that while it takes time, work, and vulnerability, there can be hope and healing from financial trauma.

Wishing You Healthy Love and Money,

Ed Coambs

MBA, MA, MS, CFP®, CFT-I™, LMFT