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What is money trauma and how can we address its long-term effects?

The effects of poverty can last a lifetime, regardless of your current financial position. So how can you recognise the damage it causes, and begin to live life on your own terms?

What is money trauma and how can we address its long-term effects?

Coming from a place of financial poverty, I have become all too familiar with money trauma.

Moving homes nine times before the age of 10 years old, I didn’t have a place to call ‘home’. Even then, when I say home, I mean a shack.

I spent part of my childhood living with my grandparents in Cairo. We didn’t have clean water, and had little food. Being the poor girl, with dirty, hand-me-down clothes from my uncles, you can imagine I wasn’t the most popular kid.

Even when I lived with my mum in the UK, and we were in a better financial position, I was still unpopular. All the other children had new clothes, video games, and went on days out – all of which were beyond me.

The teasing was humiliating. Kids would shout at me, tell me I was garbage, point, laugh, and make gestures that I smelt. One of the teachers actually joined in, publicly yelling at me for not wearing the correct uniform, because I couldn’t afford it.

As you can imagine, I felt abnormal, like there was something fundamentally wrong with me. Even though I progressed from a place of third-world poverty to the breadline, I was always falling behind. I was inferior and never good enough.

Money and self-beliefs

Anyone can see the negative impact of poverty in terms of quality of life. We hear how money worries can be stressful, but I’m not sure we appreciate its magnitude.

As a clinical psychologist, looking back at my upbringing, I know that I suffered traumas attached to money. My story is not unique, and money trauma, sadly, often leads us to have an unhealthy relationship with ourselves and with other people.

I’ll never be good enough

This was hard for me. Having those negative and critical messages from other people in society was excruciating. On top of that, the messages I received from family members were also painful (“We can’t afford X”, “We’re not good enough to deserve Y”, “We must accept being below the threshold”).

I ended up believing that I wasn’t good enough, that other people were better than me, that I deserved to be treated badly, and that was my life forever.

Unfortunately, these beliefs continued through my life, and negatively affected my self-esteem, mental health, and relationships. I would constantly be living in a state of anxiety, watching my every move to make sure I wasn’t being ‘weird’ or ‘shameful’.

I would tolerate emotionally and physically abusive behaviours from friends or ex-partners, because I felt that was what I deserved and I was worthy of no more. I would constantly try to please other people, so they didn’t have a reason to criticise me. I worried that if I voiced my needs, I would be rejected, and all I wanted was to be accepted.

I’ve got crabs, and I bet you do too

Have you ever heard of what happens to crabs in a bucket? One crab may want to escape – and why not? It’s crowded in that bucket, and there’s the entire beach outside for the crab to live freely. But, as soon as that one crab tries to escape, its efforts are undermined by the other crabs, and the herd pulls that crab back into the bucket, to struggle like the rest of them.

The effect of other people around us has a huge impact on how we view ourselves, and on our behaviours. Now, I have two successful businesses, but 10 years ago when I initially set up these businesses, and attempted to escape the family poverty, I was dragged back down.

My family would often say: “This is very risky,” “You’ll lose everything,” and “This is going to fail.” Hearing those messages was tough, but I can see that my family were trying to protect me, and were affected by generational money traumas.

They didn’t want me to fail, and so thought it was perhaps better to not get my hopes up. They had also never experienced financial success, and thus it was very difficult for them to see how it could be possible for me – and if I did succeed, it would remind them of their failure to gain financial success.

Does any of this ring true?

Money traumas are painful, and they’re hard to deal with because we are essentially looking at a multitude of issues.

I would always recommend getting support from a trained clinician or a coach, because we often have blind spots.

That’s why I developed my therapy and coaching services, to help people process traumas and get to a place of financial freedom – so they can live life on their own terms. If you’re wanting a head start on your own, here are my top tips:

Get yourself a diary

Write about, and be aware of, your experiences. Notice what kind of messages you are sending yourself, and others. Becoming aware of what is going on in your mind, is the first step.

Notice any limiting beliefs that you may have about yourself

Limiting beliefs are beliefs where we feel we are ‘bound to a line’. For example, I am not enough to cross this threshold – whether that be I’m not good enough to get that job, to go for that promotion, to ask this person out on a date, to go out to this restaurant, to wear that dress etc.

Analyse these beliefs

Are these coming from me, or are they objectively true? For example, am I really not good enough for that promotion, or do I not have the skills for it? Identifying what are beliefs, and what are facts, can help us work out the steps we need to take to move forward.

Do things that make you feel good

The more pleasurable activities we do, the better we feel about ourselves. This can make a big difference to our self-esteem, and consequently have a domino effect on other parts of our lives – relationships, work, and overall lifestyle.


If the effects of money poverty is taking a toll on your mental health, visit the Counselling Directory for more supportive content, or speak to a qualified counsellor.