Fixing Your Emotional Relationship with Money

I’m going to let you in on a secret. Most people aren’t bad at handling their money. Most people are bad at handling their emotions about money. When you can hone in on your emotions, your finances fall into line. Why? Because emotions and money are deeply connected.

I’d be willing to wager that almost everyone has faced some sort of financial burden or hardship in their life. If you haven’t, congratulations. But with the financial crisis of 2008 and then the pandemic in 2020, America has been hit with economic hardship over the decades. And even if those two events didn’t affect you, you might still have lost a job, been underpaid, or never learned about finances.

If you have struggled financially, you’re not alone. According to the Federal Reserve, in 2022, 13% of American adults said they would be unable to pay a $400 unexpected expense by any means. If you have even that much in savings, you’re doing better than a lot of us out there. But if you can’t handle an emergency expense, chances are you’ve dealt with financial trauma.

I don’t want you to feel shame about that, though. Many Americans are in your boat, and before I learned about the intersection of finances and emotions, I was too.

This article will break down how emotions and finances meet, how they could be affecting your credit, and how to heal from financial trauma if you’ve experienced it. These tips are also helpful to build your relationship with money, even if you haven’t experienced financial trauma.

How Emotions and Finances Meet

I spoke to financial therapist Lindsay Bryan Podvin about financial trauma and the intersection of emotions and finances. As one of only 14 accredited financial therapists in America, she had tons of helpful insight about dealing with finances and trauma.

A lot of people think that money and emotions are completely separate, but she disagrees. “This isn’t the most helpful. As humans, we’re going to have emotions. Instead of stuffing them down, it’s better to look at their emotions.”

Sometimes, when we’re feeling negative emotions, like stress or anger, we label them as “bad” emotions. Emotions aren’t bad; they just tell us that something is going on. For example, spending money often gives us a rush of dopamine. “Look at me, I’ve collected something,” our brain celebrates. And that’s not inherently bad, but it could use a reframe, Bryan Podvin suggests. Because ultimately, “the way we feel impacts the choices we make with our money.”

If we can make better decisions in response to our emotions, our relationship with finances is going to improve. That’s because those two are inherently linked. Bryan Podvin couldn’t stress that enough during our conversation, and it should be your main takeaway from this article. If you start dealing with your emotions in a healthy way, you’re going to be able to make wiser financial decisions.

How Emotions Affect Credit

Since we’ve established that money and emotions matter and are interconnected, it could explain some behaviors you might have toward spending. If you’re low on funds, you might feel like you have to spend or disregard your budget because “it doesn’t matter, I’m broke anyway.” That is an emotional response to financial stress that doesn’t set up good money habits. You could get yourself into credit card debt and ruin your credit by thinking this way.

You might be obstinate toward your creditors and choose not to pay because “they’re only after my money.” That’s an emotional response to spending that will ruin your credit. Instead, you should recognize that you got yourself into debt and take the steps needed to pay it off. That will help you with your credit.

There are plenty of emotions that affect your spending and cause you to spend recklessly. If this is you, take a moment to reflect on why you’re spending and put together a safety plan to keep you from spending unnecessarily.

If you’re not ready to own a credit card, and there’s no shame in that, consider becoming an authorized user on someone else’s account. If you need help budgeting, check out our guide to budgeting here.

What to Do If You’ve Never Dealt With Hard Emotions

If you’ve never dealt with hard emotions, that’s okay. Not everyone has access to a good therapist who will help them deal with these types of issues. But that doesn’t mean that you’re exempt from dealing with them. “I think the cool thing is that all of us have the opportunity to figure out what might be under our emotions without therapy,” says Bryan Podvin about dealing with hard emotions surrounding money.

She says that you can track your spending in a journal. When you spend money on something, what do you feel inside? What about after you look at your bank account? These emotions can help you find your spending triggers. Over time, there might be a pattern.

Bryan Podvin says if money makes you feel like a hamster wheel, then your money narratives might not be helpful. A money narrative is something that you believe about money and yourself. We often don’t recognize them until we go looking for them because they’re ingrained into the core of ourselves. I have an unhelpful money narrative that happens when I drop below a certain number in my bank account. It’s that I will never have money again, so I should consume the resources I do have. That causes me to spend too much money and then feel shame afterward. It’s a hamster wheel. But I can stop the cycle by reminding myself I have a steady job and money will come into my account again.

Not everyone’s money narratives are the same. Athena Lent, budgeting coach and author of Budgeting for Dummies, recently said in a talk that she gave, “One of my money narratives was that my teeth were ugly, so I had to spend a lot of money on makeup to make up for it. So I spent money instead of saving for braces, which would have fixed the issues.”

Taking time to think about why you spend can help you trap some of those unhelpful money narratives and turn them into positive money narratives instead.

Steps to Heal From Financial Trauma

Bryan Podvin has five steps that she recommends when trying to heal from financial trauma: talk, education, self-care, healthy boundaries, and reducing money shame. She said that combined, these strategies help even people who are not going to therapy overcome some of the financial barriers and live a healthier financial life.

Talk

Talking and getting your feelings out there in the world is a huge step to recognizing your feelings. While it’s ideal to work with a financial therapist, that’s not the only route you can pursue. Online community groups are also another option. If you’re a woman or non-binary individual, Women’s Personal Finance is a group on Facebook that I’ve found to be very inclusive and non-judgemental. Millennial Money Man’s group is also a great one to join.

Even talking to your friends, in person or online, could be a great place to start. I’ve met some of my closest friends through talking about money. Talking also helps reduce the shame around money if done mindfully.

You can also consider finding a budgeting coach to get you on the right path. Budgeting coaches help guide you through all the steps to get your feet on the right path, and they tend to be less expensive than therapy.

Education

Financial education is huge when dealing with the logical side of budgeting. If you don’t know how to make a budget, check your credit score, or save for retirement, you’re going to have to learn about those things.

While education for financial literacy is essential, it isn’t the be-all and end-all when it comes to educating yourself. Maybe even more important than financial literacy is educating yourself on your own trauma.

It can be painful to look back and realize, “Oh, that’s what made me do that.” For example, I grew up food insecure for a period of time. At one point, all we had to eat were molding tomatillos. Years later, I saw tomatillos in the grocery store, and they triggered me into a frenzied state. I bought, I kid you not, $400 worth of groceries. But after I realized what I’d done, I sat down with myself and said, “Wow, I made an emotional decision. What can I do to protect myself from that again?”

Sometimes education can only happen experientially. And you’re not going to make efficient decisions all the time. Like me, you’re going to have moments where you act out of an old trauma. And it’s critical to educate yourself about that trauma, even if it’s uncomfortable to look back. If I had been more in touch with my emotions, I would have said, “Wow, it’s really uncomfortable to be around tomatillos right now. I want to buy everything in the store. I should stick to my list.”

Self-Care

Self-care is often portrayed in the media as taking a nice, luxurious bubble bath. And while that’s a step in the right direction, that’s not all there is to it. True self-care requires getting nitty-gritty with yourself about life. And sometimes that’s painful. The National Institute of Mental Health says that self-care consists of the following:

• Get regular exercise. Regular exercise can help your mental state. NIMH recommends getting at least 30 minutes a day. But if that’s a daunting number (and I know for me it is), then try to start at 10 minutes and then work your way up to 30, adding 5 minutes a week. Over time, you’ll start to see an improvement, and you can use that to motivate you to exercise more.
• Eat healthy, regular meals, and stay hydrated. Eating healthy and staying hydrated are great ways to care for yourself. I meal prep every Saturday, so I have a healthy, balanced lunch every day of the week. It takes me three hours, but I feel much better than I did when I was eating takeout most days.
• Make sleep a priority. Lack of sleep compounds and can negatively affect your mood and health in many ways. Getting adequate sleep is essential.
• Try a relaxing activity. Relaxation looks different for everyone. While I hate coloring, my sibling has a stack of coloring books. I prefer to read self-help books. A bath could be in this category as well. 
• Set goals and priorities. Using SMART goals is a great way to get things done that you’ve been wanting to do. If you’re taking on too much and start to feel overwhelmed, remember that “no” is a complete sentence. 
• Practice gratitude. Gratitude is an excellent practice. I try to remember one thing a day that I’m thankful for. If you’re remembering a friend, be sure to let them know you’re thinking of them to brighten someone’s day. 
• Focus on positivity. Focusing on the positive helps boost your mood. You need to Identify and challenge your negative and unhelpful thoughts and turn them into positive ones. This isn’t saying that you have to only feel positive emotions, but it can help to reflect on negative thoughts and see if you can turn them around. 
• Stay connected. It’s crucial that you stay connected to other people who will help ground you on your journey.

Healthy Boundaries 

Healthy boundaries are crucial to maintaining financial security. If you don’t have boundaries around yourself and your money, eventually, you’re going to find yourself in an uncomfortable position. And potentially in a position that harms your current or future self.

When setting boundaries, you need to use “I” language. That could look like “Thank you for the invite, but I won’t be able to afford to go out this week. We could meet at the park instead.” “I” Language keeps the onus on ourselves and it’s about what we will and won’t tolerate.

If you’ve never set a boundary before, then it might feel a bit tricky and uncomfortable at first. You might start by saying no to smaller things and work toward larger things. For example, pick something small—like going out for drinks. Practice articulating an “I” statement, such as “I won’t be able to make it this week, but thank you for the invite.” That’s a boundary.

You can also just say, “No.” No is a complete sentence. It’s a hard sentence, but it can be said.

If you feel anxious about setting boundaries, role-play with a close friend or family member to practice saying the words out loud. If you have no one to role-play with, you can practice the interaction in your head and then say your boundary out loud to a mirror. Tell yourself that you’re the kind of person who sets boundaries. Eventually, setting boundaries will become easier and easier for you.

Reducing Money Shame

“Often with trauma, we assume we somehow are responsible for the trauma that happened to us. Creating a practice of self-forgiveness and self-trust can help us heal from financial trauma,” Bryan Podvin says about reducing money shame. Small mantras like “I trust that I can take steps to improve my financial life,” or “I paid more than the minimum on my credit card.” can go a long way in reducing the shame we feel about financial trauma.

When you’re working through these positive mantras, it might feel like you’re a fraud. But you’re not. You’re just new at something. And when you’re new at something, you’re going to feel clunky at it. Think of healing financial trauma like learning to ride a bicycle. You’re going to crash a lot, but eventually, you’ll get better. And soon, it’ll be an activity you can’t forget.