Child Poverty Causes Long-Lasting Financial Trauma—But Can Be Overcome
Whether it's overdrafting your bank account, losing a home to foreclosure, or going to bed hungry, having any kind of experience with economic hardship (especially as a child or young adult) may result in long-lasting financial trauma—which can erode not only your relationship with money, but also your sense of self-worth. Here's how child poverty manifests as adult financial trauma, and steps those of us who have experienced it can take to overcome this burden.
How financial experiences are traumatic
While trauma is often understood as something caused by a singular event, such as witnessing a death, it can also be caused by challenging circumstances or environments. "Trauma is witnessing or experiencing a real or perceived threat to our safety or others' safety," explains Licensed Marriage and Family Therapist Carmen Schmidt Benedetti, MA. "When there is that threat to one's safety or wellbeing, that's where trauma symptoms can develop."
Living in a financially unstable environment can threaten a child's sense of safety because it may mean they can't access basic needs—like food, shelter, and healthy relationships—on a consistent basis. Whether such instability is experienced for a short period, such as after a parent's job loss, or is chronic, as in the case of generational poverty, financial trauma can result in a host of additional traumatic experiences, says Leah Brookner, MA, MSW, PhD, a professor in the School of Social Work at Portland State University,
"Not having health needs met is a trauma; having food insecurity is a trauma; having parents who aren't home because they're working three jobs is a trauma; living in an environment surrounded by pollution and toxins is trauma," adds Brookner.
Financial trauma, and poverty in particular, can't be fully understood without considering intersecting oppressive systems like racism and classism—as well as untreated mental health conditions, addiction, and substance misuse—which make it harder to achieve social mobility.
"We're not just looking at poverty or being poor; we're looking at what other risks that then exposes young people to. And it turns out, a whole lot of other risks are correlated with not having your needs met over a lengthy period of time," says Brookner.
Economic insecurity and brain development
Experiencing financial hardship as a child, teenager, or early adult is especially impactful because the brain is still developing during these periods (research shows that the human brain continues maturing well into one's mid-twenties).
"People don't think about the brain of an adolescent as much as the brain of a newborn or toddler, but in both, neurological structures are in such rapid growth," says Brookner.
During these stages, the brain is particularly malleable in response to things in one's environment—including the extent to which needs are being fulfilled. When basic needs aren't met consistently due to financial instability or poverty (the latter of which is often systemic, multi-generational, and difficult to overcome), it can have a neurological impact.
Specifically, Brooker explains that poverty affects the prefrontal cortex, which is what enables us to perform advanced cognitive tasks. "It has an impact on the ability of the brain to make executive functioning decisions."
Executive functioning includes tasks like self-regulation, emotional management, impulse control, social competence, task initiation, and more. Research also shows that experiencing financially-induced stress at any age can result in financial disorganization, irrational avoidance, as well as symptoms associated with Post Traumatic Stress Disorder (PTSD), like self-destructive behavior, irritability, and isolation.
Brookner believes that understanding the relationship between financial hardship and the brain is key to overcoming its effects: "If we conceptualize poverty as trauma, then any of what we know about trauma would apply to poverty," she explains. "[It] will really help us to understand how and why folks are suffering."
Grappling with money shame
Of all the negative mental and emotional burdens of financial trauma, shame is one of the most pervasive. Scientific findings demonstrate that when a person feels ashamed of being low-income, it's often imposed by society at large, then reinforced by the actions and behaviors of one's (higher-income) community members. This can result in withdrawal, self-loathing, despair, depression, and a reduction in personal agency.
"If you think about a child that's going to school, maybe they're getting bullied because they don't have the nicest clothes," says Benedetti.
And when a child believes from a young age that their worth is dependent on their financial status, the shame of being low-income can influence how they perceive themselves and their ability to succeed in life.
"A sense of insecurity around money can translate into beliefs about self and create a feeling of scarcity, like there's not going to be enough," adds Benedetti. "That could really be a blockage for someone to move forward, because it's this mindset of: 'no matter how hard I try, I'm not going to be able to be enough, or do enough, or have enough.'"
Identifying and overcoming financial trauma
To overcome the burden of past financial trauma, it's important to tune into your own behavior.
"Pay attention to your reactions to financial situations or discussions about money: What are you feeling? How are you behaving in reaction to that? What emotions do you associate with money?" says Benedetti. Let's say you feel anxious or angry in response to a simple conversation about budgeting with a partner or friend, for example. That could be a sign to dig deeper.
"If something is really emotionally-charged, that gives you information about it being connected to something else, right? There's probably more to that in terms of shame, financial insecurity, or financial trauma that you may have experienced."
Benedetti also emphasizes the importance of reflecting on the experiences and messages you had relating to money growing up.
"Was money talked about—or was the way it was talked about negative? What did your family associate with money? [Are] the ideas behind that about never having enough, or does money equal success and happiness?"
Therapeutic interventions, like eye movement desensitization and reprocessing (EMDR), may also help you overcome the effects of financial trauma. EMDR can make it possible to access and process adverse life experiences associated with financial stress and reframe such memories with new, less disruptive associations to make money management less triggering.
Another modality that can help individuals process financial trauma is Internal Family Systems (IFS). This form of psychotherapy acknowledges the multiplicities of human personality and seeks to establish harmony between the self, and the numerous subpersonalities that exist.
Such treatments could be particularly helpful for minimizing the shame associated with monetary distress because they foster the awareness needed to identify the root cause of shame (and other challenging emotions) involving finances.
"Having that awareness then gives you a choice, because we can't change something if we're not aware that we're even doing it or that it's affecting us."