Wellness Financial Health How To Cope With Financial Trauma From Child Poverty Child poverty can cause long-lasting financial trauma, which can erode your relationship with money. Here's how you can move forward. By Michelle Polizzi Updated on January 10, 2023 Medically reviewed by Jonathan B. Jassey, DO Medically reviewed by Jonathan B. Jassey, DO Jonathan B. Jassey, DO, is a private pediatrician at Bellmore Merrick Medical. Dr. Jassey also specializes in treating ADHD, anxiety, depression, OCD, autism and other mental health issues. learn more Share Tweet Pin Email Whether it's over-drafting your bank account, losing a home to foreclosure, or going to bed hungry, having any 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 if you have experienced child poverty, here are the steps to overcome this burden. Getty Images / AdobeStock / Design by Jo Imperio What Is Financial Trauma? 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," explained licensed marriage and family therapist Carmen Schmidt Benedetti, LMFT. "When there is that threat to one's safety or wellbeing, that's where trauma symptoms can develop." What Is Generational Trauma? Sense of Safety Lost 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, said Leah Brookner, MA, MSW, Ph.D., 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," added 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. Anxiety Signs and Symptoms How Does Financial Trauma Affect Your Health? "We're not just looking at poverty or being poor; we're looking at what other risks that [this] 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," said Brookner. Brain Development Experiencing financial hardship as a child, teenager, or early adult is incredibly impactful because the brain is still developing during these periods. 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," said Brookner. During these stages, the brain is particularly malleable in response to things in one's environment—including the extent to which needs are fulfilled. It can have a neurological impact 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). Specifically, Brookner explained that poverty affects the prefrontal cortex, which 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: Self-regulation Emotional management Impulse control Task initiation Memory Brookner believed 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," Brookner explained. "[It] will really help us to understand how and why folks are suffering." Financial Stress Is a Leading Catalyst for Suicide—How To Help Save Lives Feelings of Shame Shame is one of the most pervasive of all the negative mental and emotional burdens of financial trauma. Research findings demonstrate that when a person feels ashamed of being low-income, it's often imposed by society, then reinforced by the actions and behaviors of one's (higher-income) community members. This can result in: Withdrawal Self-loathing Despair Depression 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," said Benedetti. And when a child believes from a young age that their worth depends on their financial status, the shame of being low-income can influence how they perceive themselves and their ability to succeed. 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," added 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 Dealing With Financial Trauma To overcome the burden of past financial trauma, it's important to tune into your own behavior. Pay Attention to Your Emotions "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?" Benedetti said. 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 said. Reflect on Your Past Experiences Benedetti also emphasized the importance of reflecting on your experiences and messages about 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?" Try Therapy 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 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 beneficial 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." A Quick Review Child poverty, or any problems associated with finances at a young age, can impact how you view finances as an adult. You may have financial trauma if, at a young age, your caregiver lost their job, you grew up in poverty, or your basic needs weren't met due to a financial struggle. These traumatic events associated with money can carry into your adult life. But there are ways to overcome these events. Whether you try EMDR or psychotherapy, there are plenty of resources to identify and overcome financial trauma. Was this page helpful? Thanks for your feedback! Tell us why! Other Submit Sources Health.com uses only high-quality sources, including peer-reviewed studies, to support the facts within our articles. Read our editorial process to learn more about how we fact-check and keep our content accurate, reliable, and trustworthy. National Institute of Mental Health. The teen brain: 7 things to know. Diamond A. (2013). Executive functions. Annual review of psychology, 64, 135–168. WALKER, R., KYOMUHENDO, G., CHASE, E., CHOUDHRY, S., GUBRIUM, E., NICOLA, J., . . . MING, Y. (2013). Poverty in Global Perspective: Is Shame a Common Denominator? Journal of Social Policy, 42(2), 215-233. American Psychological Association. Eye movement desensitization and reprocessing (EMDR) therapy.