Growing up poor usually motivates people to work hard and strive for financial stability and security. I find, however, that underneath all this culture of working and overworking lies a reality we do not discuss as a Black community of people who were previously disadvantaged: the impact of childhood trauma on our relationship with money. Emotions intertwined with financial decisions, influenced by past experiences, shape our spending habits, saving tendencies, and how we handle money.

Last year, I engaged Zanie’s post on X (formerly known as Twitter) about how certain people’s relationship with money immediately alerts you that they had a traumatic childhood or past.

It was easy for me to find interest in this particular topic because the nuances of how trauma can shape your thinking and how you manage your finances is something I am continually working on. To understand this and my conversation with Zanie, we first had to distinguish between what trauma from growing up poor is and how different it can be from what is called financial trauma.

Defining Financial Trauma:
Financial trauma is categorised as experiences of extreme financial distress, such as bankruptcy, foreclosure, or significant loss of income, that profoundly impact a person’s sense of security and well-being.

“Unlike the challenges of growing up poor,” I mention to Zanie (28), “which may involve prolonged financial strain, this kind of trauma often arises from sudden, unexpected events that disrupt stability and instil fear and uncertainty.”

The two can be used interchangeably, but not all the time, because the emotional and psychological distress from the experiences is enough to impact how we move as people and how we handle our finances. We use money from a position of trauma.

As someone with a lived experience of this and is still recovering from it, I have a very unhealthy relationship with money. If I am not overspending to compensate for not having a regular source of income, I am hoarding to the point where I will penny-pinch even when I don’t have to.

Nokwanda (21), a young call centre agent, co-signed this by saying, “Whether or not you’re reckless with your money or you’re big on saving, we arrive at this point on the same vehicle.”

Stingy or Reckless: Two Sides of One Coin Called Financial Trauma
“Poverty has contributed to a scarcity mindset that negatively affects oneself and, as a result, personal relationships,” Zanie said. “You can end up adopting stingy financial habits by wanting to spend less even when you can afford things.”

This mindset comes from the fear of returning to past struggles, forcing people to hoard money and other things to protect themselves from this uncertain future. One lives in the shadow of this fear so much that it affects how they spend on themselves, their friends and whatever life experiences arise that require money. This echoes Zanie’s sentiments that stinginess emerges as a coping mechanism rooted in the trauma of scarcity.

Similarly, the experience of financial trauma can trigger reckless behaviour in managing money. I know this one very well. Losing money or being unable to afford things can lead to a sense of helplessness and desperation, pushing people to seek escape from impulsive spending or making unwise financial decisions. When I was in this position of financial recklessness, I did it because I did not have much financial education to help me manage my money or inspire me to use it better. In trying to make myself feel better for not always having money, I found myself plunging into chaotic situations that often hurt my money matters more than they helped.

How Trauma Affects Our Relationship with Money:
Having mentioned to my brother Lindokuhle (20) that I’m writing this article, I realise that while we may have had similar experiences growing up, we did not turn into the same person or deal with things the same. He makes his money from working as a tailor and is somewhat healthily saving it to fund his photography passion, and I find that commendable because I cannot save to save my life, haha. He is younger than me but has a much healthier relationship with money.

Understanding that trauma affects how we navigate our financial situations is important in fostering healthier relationships with money. It starts with recognising why we overspend or save too much and working through that to adopt a plan that works for us.

This begins by seeking therapy or financial counselling. We can get closer to working on our issues and becoming well-rounded people who know the full value of having and not having money, treating ourselves with empathy and communicating more when we feel that we are not doing well.

How has your own experience with financial stability or instability influenced your relationship with money, and what steps are you taking to address any impact from past traumas or challenges?