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Forbes
05-08-2025
- Business
- Forbes
The Truth About Generational Financial Trauma
Generational financial trauma has a profound impact on your relationship with money and often starts before you are born. This article explores the first of the 6 hidden sources of financial Is Generational Financial Trauma Generational financial trauma refers to physical, psychological, and emotional inheritance of attitudes and beliefs that are influenced by financial stress and financial anxiety experienced by previous generations. People often feel the effects of this source of financial trauma without direct experience with the original trauma, or as a compounding variable present in the trauma from their lived experience. Many of the scripts you carry about money come from what you have seen, heard, were told, or felt as a child. The idea that 'money is the root of all evil,' or that 'the banks are going to steal your money if you keep large sums there', may come from the experiences your parents, grandparents, and great-grandparents had and have passed down consciously or unconsciously through their words and my forthcoming book Overcoming Financial Trauma: How to Break Free From Guilt, Build Wealth, and Redefine Success (Wiley, 2025) I discuss my 2019 TEDx talk where I describe the feeling of 'aspiring to be poor' that came as a result of observations and associations I made about money from watching how it was managed in my household. This feeling didn't come from a direct conversation or explicit instruction; it came from a survival-induced reaction that planted a seed that grew into what felt like a natural and rational aspiration. This may present what has classically been referred to as the nature vs. nurture phenomenon. The belief that socialization and exposure to education, or a lack thereof, have the greatest influence on individual outcomes. That is because although generational financial trauma is often discussed through the lens of attitudes and beliefs that impact behavior, it's not as often discussed from a physiological or embodied perspective. What Epigenetics Tells Us About Money Trauma The study of epigenetics explores how gene expression can be influenced by the environment without fundamentally altering the original gene structure. When trauma researchers like Rachel Yehuda began to explore epigenetic impact on the expression of genes by way of stress and trauma, what they found was astounding: that the environment of stress–like that of financial anxiety caused by financial instability or economic oppression–can have a biological impact on gene expression in current and future trauma research not being performed through a financial specific lens, this provides a completely different dimension to the idea of generational financial trauma, as this research supports the expansion of how financial trauma is recognized from experiences that impact attitudes and beliefs, to biological responses that impact inherited sensitivity to financial stress via cortisol responses and hypervigilance with money despite never experiencing the trauma directly. Epigenetic inheritance doesn't require storytelling or modeling. It only requires exposure in previous discussing financial trauma with some audiences, I get responses like 'I didn't have that experience!' or 'Fortunately, I've not experienced financial trauma because growing up, we've always had money.' This presents two myths that should be dispelled in financial wellness and education conversations: These myths perpetuate harm in a few ways including but not limited to the rewarding of stress responses expressed with money at high income levels, but demonization of those same responses expressed at lower income levels and, targeted weaponization of guilt and shame infused financial literacy curriculum against individuals impacted by generational financial trauma whether viewed through a nature or nurture perspective. It also leaves vulnerable the population of high earners struggling with financial trauma who experience guilt or shame for seemingly getting it right on paper, but don't have the vocabulary to describe why they engage in the cycles they do, because they have money. How Generational Financial Trauma Shows Up In Your Life Generational financial trauma can show up in your life both psychologically and physiologically, with more emphasis often placed on the psychological impact. Due to financial socialization and normalized overstimulation, individuals can easily overlook the body's response to the real or imagined threat associated with money. The tightness in your chest when making spending decisions or overreaction to financial stressors are common physical symptoms of financial anxiety, but epigenetic expression can modify those responses genetically as altered cortisol receptor expression, or it may contribute to lower resilience or exaggerated stress responses when navigating financial challenges. These physiological impacts, either originating with you or prior generations, have a profound impact on how you may seek relief through money behaviors that would classically be considered poor financial effects of generational financial trauma can show up as a scarcity mindset, guilt associated with financial success, or hypervigilant associations with money as a form of control or validation. Why We Don't Talk About Generational Financial Trauma The truth is that as financial trauma grows in recognition and popularity, there are increased discussions about generational financial trauma occurring; it's just occurring through a lens of poverty and financial struggle almost exclusively. Additionally, the acknowledgement of epigenetic impact creates an avenue for discussion around the convergence of racialized and institutional trauma on the present day financial circumstances of the descendants of exploited groups, starting with enslaved Africans at the establishment of the United States of epigenetic and intergenerational trauma research continues to emerge, its convergence on behavioral finance and subsequently the way financial education is delivered is both timely and may also be a taboo among high earners to explore the generational impacts of financial trauma due to socialized pride in seemingly escaping its clutches. It's important to reiterate that money alone will not insulate you from the impact of financial trauma in its various forms and expressions. The First Step Toward Healing Generational Financial Trauma Whether your money wounds were due to inherited money beliefs modeled in childhood or silently embedded in your body's stress response, naming them is the first act of power in changing your money mindset, which is why in my framework, The 3E's of Overcoming Financial Trauma™, the first E stands for Exposure. I explore this framework deeper in my book, Overcoming Financial Trauma, and the workshops and lectures I give, starting with explaining the 6 sources of financial you can name the sources of financial trauma, like generational financial trauma, and understand its impact, you can begin to consciously audit the behaviors, beliefs, and responses (both physiological and psychological) you have to money. Some questions I often ask my clients include, 'Do you feel safe in your body when you think about money?' or 'Are you financially irresponsible, or are you just spending money in an attempt to regulate your nervous system?'To close out, I'll ask you the same. Feel free to comment directly to share your thoughts or responses.
Forbes
29-07-2025
- Business
- Forbes
The 6 Hidden Sources Of Financial Trauma—And How To Begin Healing
The roots of financial trauma go deeper than debt. These six sources, ranging from generational trauma to systemic harm, offer a new framework for understanding money wounds. News headlines and money representing an economy in recession 'I'm doing all the right things financially and still feel stuck.' This is the reality I hear from many of my clients. Student loan debt, lay-offs, and the increasing cost of housing and insurance might be some of the more easily identifiable sources of financial anxiety and financial stress, but they hardly scratch the surface of what trauma-informed financial planning professionals, financial counselors, and financial therapists are coming to recognize as financial trauma in their clients. Financial trauma is any instance observed or experienced that has a negative impact on the way someone views, interacts with, or believes about money. While it has largely been described as direct and prolonged first-person experiences that impact one's emotional relationship with money – and is often framed through a lens of financial struggle and a scarcity mindset–the definition provided above widens that scope to include six sources of financial trauma I've identified in both my lived and professional experience as part of my proprietary framework 'The 3E's of Overcoming Financial Trauma™' that is explored deeper in my book, Overcoming Financial Trauma: How to Break Free From Guilt, Build Wealth, and Redefine Success (Wiley, 2025). These six sources are: Naming these sources addresses the psychological impact of money through various lenses that incorporate financial therapy as a foundation with interdisciplinary expansion into the study of epigenetics, neurobiology, and social theory. Through this framing, it also repositions financial trauma as a universal experience rather than its more common framing as an issue that only affects those experiencing financial stress and financial shame due to low income or prolonged experience with 6 Sources of Financial Trauma Generational or genetic financial trauma refers to physical, psychological, and emotional inheritance of attitudes and beliefs that are influenced by financial stress and financial anxiety experienced by previous generations. Through trauma research attributed to Rachel Yehuda, we now have evidence that the effects of stress and trauma can travel from generation to generation. When viewed through the lens of intergenerational trauma transfer, generational financial trauma is one of the six sources not requiring direct experience with the initial trauma and can exist as a form of trauma without context. From an embodied perspective, generational or genetic financial trauma can show up as physical expressions of previously experienced trauma related to money in how genes are expressed or where someone physically holds trauma in their body. When working with clients, it's not uncommon for me to remind them to breathe, to ask them where they feel the trauma in their body, or to recommend a somatic practice as part of overcoming financial or observational financial trauma is another one of the six sources the individual doesn't have to directly experience to be impacted by. Vicarious financial trauma can refer to the negative associations one makes with money due to what they have observed. Whether that's seeing your parents fight and argue over money, hearing an account of a bad experience turned to financial advice from an influencer or someone deemed a financial authority – credit cards are bad, stay away! – or witnessing the way someone is treated due to their financial status, like the criminalization of homelessness. Not only do these observations shape how someone may view, interact with, or believe about money, but they can also shape how the individual wants to be perceived with money, which may contribute to financial shame and money avoidance cycles, due to living above one's instability or poverty are the most frequently referenced sources of financial trauma and are usually directly experienced. Job loss, eviction, and repossession are just a few of a long list of triggers that can be sudden and financially traumatic. However, long-term experiences with poverty that are often lifelong speak to a deeper reinforcement of financial trauma that can persist even when the threat of poverty is no longer or employment trauma related to money is an often overlooked source due to socialized norms around the need for employment wages. Workplace trauma can stem from wage theft, discrimination, and exploitation, as well as more nefarious, extreme examples, but can also take subtle forms that show up as workplace culture and expectations that keep the corporate machine running. 'Code switching,' for example, is a practice employed by some non-white employees in predominantly white spaces to indicate professionalism, compliance, or a cultural fit. Code switching is often subconsciously done in an attempt to engage in economic warfare with the intention of securing, prolonging, or advancing employment, sometimes to the detriment of the employee due to misalignment with their true self. These employees may experience resentment or adopt narratives around workaholism and money as a form of power and control in other areas of their life that lead to burnout or attempts at coping with money stress through vices like gambling, drug or alcohol use, hypervigilance with money, or money financial trauma is another subtle form of financial trauma that is embedded in the financial and educational systems we navigate. Redlining, financial exclusion, and predatory lending are just some of the ways dominant financial systems have caused harm. While the aforementioned examples represent a not-so-distant past across financial systems and institutions, there are present and recent-day examples of institutional harm that show up in banking, real estate, consumer and business lending, credit scoring models, and more. Institutional financial trauma can show up as mistrust in financial systems, the number two self-reported reason for unbanked populations, according to survey data from the FDIC. While it can be tempting to assume that financial literacy solves this problem, addressing the deep-seated psychological impact of money in relation to these systems is a step towards acknowledging the mistrust and works to financially empower people to engage in healing money wounds prompted and exacerbated by financial institutions over and societal sources of financial trauma can be perpetuated unintentionally due to cultural expectations related to money. Some examples of this include gendered norms around money like who the breadwinner should be and what associated financial responsibilities look like, religious expectations around money, financial obligation of children to their parents (or parental financial abuse of their children), elder abuse, fraud, and The Black Tax (or adjacent experiences showing up in other cultures).Why Naming the Source Of Financial Trauma Matters As part of my framework, The 3E's of Overcoming Financial Trauma™, the first E stands for exposure. Naming the source as part of the exposure phase is important because it provides language for what many are experiencing but can't articulate due to financial socialization or a lack of trauma-related information. There is healing power in awareness that allows those impacted by financial trauma and trauma-informed practitioners to identify the source of behaviors that manifest as: These patterns are often interpreted as personal failings due to the manner in which traditional financial education is delivered, when they are often protective responses to past and continuing harm. That's why in Overcoming Financial Trauma, I offer tools to not just identify these six sources, but actively work towards healing money You Can Do Next Engaging in financial healing is possible. There are several organizations and credentialing bodies that focus on the psychological impact of money on behavior, as well as the four steps to financial healing I identify in my book. If you want to start with a DIY approach or work with a professional, you can:It's important to remember that you are not alone in this. There are professionals, educational materials, collaborative practices, and more that can help you. Financial trauma is real, it's valid, and many people are experiencing it without even knowing it.
