Healing your money wounds and breaking free from financial trauma

Few South Africans escape life without some form of financial trauma – whether it's growing up watching your parents struggle to make ends meet or facing a life-altering financial setback as an adult. These experiences shape our relationship with money often leading to fear, anxiety or destructive financial habits. But healing is possible. By understanding the root of your money wounds and shifting your mindset, you can take control of your financial future and build a healthier, more empowered relationship with money.

According to Nontokozo Madonsela, Chief Marketing Officer at Momentum Group, while financial trauma has the power to unravel lives and cause analysis paralysis when it comes to money decisions, there are ways to address this underlying issue head on to become financially fruitful.

Nontokozo Madonsela

Nonto vividly recalls the sting of her financial trauma from childhood: being born in January, a month when money was always tight, meant birthdays felt like an afterthought. Gifts were often necessities, like a school uniform or a replacement for a lost umbrella rather than items she truly desired. These moments though seemingly small, left lasting imprints on her personal relationship with money. “For people with financial trauma, stress isn’t just an occasional burden, it runs deep, shaping the way they think, feel, and make financial decisions long into adulthood,” she says.

Money trauma can stem from a variety of factors, from large-scale issues, like the recent global pandemic or an economic recession. It can also emanate from personal experiences, such as losing a loved one who may have been the breadwinner, getting divorced or losing a job. However, one significant factor contributing to financial trauma is a history of poverty or generational financial struggles.

“The reality in South Africa, is that some people are more vulnerable to financial trauma than others; growing up experiencing persistent financial hardships can create a cycle of adversity that perpetuates the trauma across generations,” she added. “Limited access to resources, education and a stable job can make it challenging to escape financial distress.”

On a positive note, Madonsela advised that once you recognise the signs of financial trauma, you can work towards a solution, adding that your own financial trauma stems from unique circumstances that only you have experienced. Here’s a few ways on how you can break free from the trauma to experience financial peace of mind and freedom in decision-making:

Identify and challenge your triggers
Recognising what triggers your financial stress is the first step toward healing. It’s the anxiety you feel when checking your bank balance, the guilt of spending on yourself, or the fear of making financial decisions because of past mistakes. Once you identify these triggers, challenge them. Ask yourself: Is this fear based on past experiences rather than my current reality? Am I holding onto money beliefs that no longer serve me?

Ask for the right help
Overcoming financial trauma means addressing the issue in two ways i.e. the financial aspect, and the trauma you have been left with.

As such, your emotional, psychological, and social wellbeing depends on the state of your mental health. To help you manage stress, anxiety and other mental health issues, a psychologist can help you improve your thought process.

Likewise, the help of a financial adviser can empower you to create a personalised plan that aligns with your unique financial circumstances and goals. Part of the advisor's task is to help you understand what is involved in meeting your future goals. Don’t be afraid to let this person into a personal space – they are there to help.

Set boundaries to take charge of your budget
Start seeing financial boundaries not as restriction but rather as empowerment. Setting clear limits on spending and defining your financial priorities can help you regain control and prevent unnecessary stress.

Start by reflecting on past financial decisions. Were there moments when emotions led to overspending? Identifying these patterns allows you to put safeguards in place, whether that’s setting a spending cap on non-essentials, avoiding impulse purchases, or having an accountability partner.

Madonsela added that whether it's planning for retirement, saving for a major purchase, or simply ensuring you have the means to handle unexpected expenses, you are preparing yourself for life's financial challenges and opportunities. Because of this, having access to professional financial advice is important; it goes beyond just tracking your spending, as you are securing your financial future by learning the skills to empower you to make smarter money choices.

“Trauma writes scripts in our minds and develops a narrative that leads us to different painful disruptive behaviours and money disorders. Without changing the scripts, healing that financial trauma will only help superficially,” she concluded. “Recognising financial trauma in your own life is an important part of taking control of your personal finances. In this way, you can take steps to recover and start building the life you want for yourself.”