Do You Have Financial Trauma? Here’s How To Find Out (And What To Do About It)


  • There is a strong connection between our emotions and finances.
  • Financial trauma can manifest in many ways, including divorce.
  • Gen X women are more susceptible to financial trauma than others.
  • Financial trauma can be overcome by adopting new habits and mindsets.

When we invest finances into our lives, external pursuits, and even other people, we often fail to appreciate the extent to which we equally invest our emotions. Despite its logical, numerical facade, money is supercharged with feelings, from joy and comfort to stress and anxiety. 

In today’s money-driven society, financial well-being is just as critical as our physical, mental, and emotional states. When significant events alter these states of being for the worse, it can result in trauma. Financial trauma is certainly no exception. 

And in many ways, Gen X women are more susceptible than most to this type of severe stress. I sat down with Seattle-based money coach Mikelann Valterra to discuss what financial trauma (FT) is and how to identify and remedy it.

The Emotion-Money Connection

As a money coach, this connection is Valterra’s bread and butter. “It’s not just numbers,” she begins. “[Money] is more emotional for women than men, and that’s not a bad thing. We are emotionally wired as women—why would that stop at the door of finance?”

However, this increased sensitivity also makes women more susceptible to financial trauma. Trauma, Valterra continues, “is usually defined as a large, negative event that causes a lot of negative consequences that go into your psyche and affect you psychologically and emotionally.”

Identifying Causes Of Financial Trauma

Valterra says that there are many examples of financial trauma, but some of the most common include:

  • Divorce
  • Bankruptcy
  • Losing money on investments
  • Gen X upbringing: sandwich generation, latchkey kids
  • Early or childhood exposure to severe financial stress

Additionally, Forbes defines financial trauma as “when expenses outweigh income for an extended period of time. It is not the inability to pay that creates the trauma; it is often the string of events that follow.” 

“It really builds on itself,” Valterra adds. “People say, ‘oh, but money isn’t emotional.’ You feel like you’re crazy, like, what’s wrong with me that I feel so icky and bad and stressed about money? But I would say you’re completely normal and human to feel emotional around money.”

Financial Trauma Or Regular Stress?

Of course, not everyone who experiences one of the above situations will experience financial trauma. Moreover, not all money-related stress is traumatic. “The way that you know something is traumatic is that you can’t let it go,” Valterra explains.

She offers some additional signs that you might be suffering from financial trauma (and not plain old stress):

1. It Triggers A Fight Or Flight Response

For some financially traumatized individuals, their response to money management would be to flee or freeze. “I know I should deal with this—maybe move money around, talk to a friend about borrowing, look at financing, and I don’t,” Valterra explains.

“I completely freeze, put my head in the sand, and I disappear, and more negative things happen as a result of that. That would classify as trauma because we don’t feel resilient enough to deal with something.”

2. You’re Self-Isolating

“As women, we have a huge strength in reaching out to people and talking to people. But when you find yourself isolating, that can be a sign that, emotionally, you’re feeling very traumatized,” she continues. “Hiding it, isolation, secrecy—there are so many different examples of how people handle it.”

3. You Pretend The Problems Aren’t There

Valterra says another indicator of financial trauma is an inability or unwillingness to acknowledge financial hardships. “If I pretend it doesn’t happen, I’m going to continue my spending in other areas,” she explains.

“I have this huge financial trauma happen, and yet I still pull the trigger in buying international airplane tickets. I don’t look at changing what I’m doing with my money in light of this big event. A lot of people cope with trauma by not coping with trauma.”

How Gen X Women Can Overcome FT

As a self-described “personification of Generation X,” Valterra is acutely aware of how FT can manifest in the demographic that was constantly told ‘women can have it all.’ “We are the DIY generation—the latchkey kids,” she says.

However, “the dilemma of ‘you can have it all’ is just because you can have it all doesn’t mean you should have it all. There’s this sense that A.) we should do it all, and B.) we should be able to figure it out. You’re not going out and trying to get help.”

So, how do the self-sufficient (s)heroes of the world overcome a problem as big as FT? Valterra offers this advice to her fellow Gen-Xers.

1. Start By Talking To Someone

Valterra says the first step in conquering FT is to acknowledge it. “When people come out of secrecy and start sharing [their FT], it is one of the things that dissolves it. We know this is true from talk therapy. Every time you retell it, some of the charge comes off. It gets easier and easier.”

Talking to other people about your FT can help lead you toward the grieving process, which Valterra says is necessary for overcoming these emotional events. “You’ll move through the anger, bargaining, acceptance—but as long as you’re in silence, it’s very hard to move into the grieving process.”

2. Be Kind To Yourself

“Women, more so than men, beat themselves up,” Valterra continues. “When something happens, women blame themselves. Men blame something outside of themselves.”

“It also applies to money. Talking with people helps you go, okay, you know what? It’s not all my fault. How do we get out of beating ourselves up?” Valterra suggests the third step as a good starting point.

3. Normalize The Money-Emotion Connection

Valterra says the misconception that everyone else knows what they’re doing with their finances only exacerbates the traumatic experience. “Guess what—you all think that everybody else has it figured out, and the reality is most people don’t.”

“Everybody thinks that everyone else has the secret key,” she continues. “[It’s important to normalize] that A, money is emotional, and B, there is help that’s out there. One of the downsides of Gen X is we’re not as plugged into the resources that are available. Millennials are much better at seeking out and asking for help.”

4. Aim For Elegant Simplicity

How can you start translating this guidance to your cold, hard cash? Valterra suggests aiming for elegant simplicity around money. “People have complicated their finances so much. Just because you can open a special account online doesn’t mean you should. People have so many accounts and think they should have a dedicated account for everything, and they’re overwhelmed.”

Valterra says that while these extra accounts (savings, fun, groceries, etc.) are good-intentioned, “we have no idea how much money we need to earn because we can’t figure out where our resources are going. The more accounts you have, the more financial anxiety is just free-floating.”

5. Keep Your Money Personality In Mind

Valterra ended our conversation with a final warning regarding online research (read: panic Googling). “A lot of people writing about money are of a very particular personality type. They’re the savers—the security-, numbers-minded people.”

If you don’t feel like you can relate to these articles, it’s likely because you’re part of the other half of the population that isn’t wired that way. And Valterra says that’s okay, too. Seeking out support, talking about your problems out loud, and simplifying finances are all great ways to start overcoming your financial trauma. 

With time, patience, and practice, you can get to a point where you can use your finances to bolster your overall well-being as opposed to having it be an anchor weighing you down.

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