Why “Money Mindset” Isn’t Enough For Entrepreneurs Who Have Financial Trauma

Directional signs for money, method, mindset pointing to different directions

Does any of this sound familiar?

  • I’m just bad with money.
  • I’m stuck in scarcity.
  • I feel guilty about having money.
  • I avoid my finances.
  • I undercharge but over deliver and I’m burning out.
  • I’ve been under-earning all my life. I could ask for more but I’m afraid to.

There is a lot of talk about money mindset in the self-help and self-improvement sphere. Out of curiosity, I checked for books on money mindset at Amazon.ca and 10,000 showed up in the search. 10,000!!

Financial literacy and investment advice abounds as well–both online and elsewhere. Financial education and investment advice can be accessed for free through your bank and there is an abundance of money coaches online.

So with all these resources and support available, you might be asking yourself:

“Why can’t I get my act together financially?”

“Why do I feel anxious about money even though I have plenty?”

“I’ve made a ton of budgets but can never stick to them.”

“I know I shouldn’t spend money on certain things but I can’t seem to stop myself.”

“I’ve done all the affirmations and journalling and exercises and I can’t seem to change my money mindset.”

The thing is, it is important to see and understand how you think about money, money and survival are related.

When your survival is threatened, either physically or psychologically, it creates a kind of imprint in your mind, body and nervous system that can stand in your way unless you offer it care.

What is mindset

Stanford psychologist Carol Dweck wrote the book on mindset (Mindset: the New Psychology of Success). Dweck explains that mindset is a set of beliefs that shape how you make sense of the world and yourself. 

These beliefs influence how you think, feel, and behave in any given situation.

If you think certain things aren’t possible, or that you are limited in some way, these beliefs may obscure the actual truth of a situation and the available options from you.

What is a “money mindset”?

Money mindset is the set of beliefs that shape how you make sense of money and finances and your relationship to them.

Your money mindset determines how you think about finances and money.

How you think about finances and money–your money mindset–determines how you relate to them.

Your money mindset affects your saving, spending and debt-related behaviours.

Your money mindset also influences how you feel about these behaviours, and about yourself as a result.

Examples include:

  • Moralizing about money and money behaviours
  • What you think is possible and impossible for you with money 
  • Questions of worth and deserving in relation to money
  • What you think you should do to manage your money (spending, giving, saving, borrowing)
  • How you believe you should manage your debt and what you think about yourself as a result of having debt
  • Belief in your ability to grow wealth
  • Your confidence about handling your finances and money

But money mindset–your thoughts, beliefs and emotions about money–doesn’t just come out of nowhere.

These thoughts, beliefs and emotions are formed by experience and by the messages to which you are exposed about money and finances.

We live under capitalism. Capitalism is a system that places profit over everything. In capitalism, money means survival. It also ties our value as humans to having (or not having) money.

Chantel Chapman, co-founder of The Trauma of Money teaches that under capitalism, our survival and worth are constantly threatened. Both of these are tied directly to having or not having money.

When your worth or life is threatened, that can be traumatizing. Therefore, living under capitalism is traumatizing, and will affect your relationship with money. 

Galen Buckwalter is a researcher who studied the physical, emotional and psychological effects of financial stress on Americans.

In the research he looked at how personality relates to financial behaviors, assuming that the findings would map onto the five dimensions of personality from the field of psychological research.

Unexpectedly, a separate factor came up, which the research team labelled “factor fear” because it related to fears but didn’t relate to any of the five personality traits. 

Previously, Buckwalter had conducted studies on PTSD at the University of Southern California. In the context of his financial research, it occurred to him that the experiences people were reporting in the financial study were much like the experiences of folks with PTSD. He concluded that “factor fear” was in fact financial PTSD.

As I mentioned above, living under capitalism is traumatizing, and while we might not all have what Buckwalter calls financial PTSD, the money trauma we experience under capitalism still has an impact across many dimensions. Experiencing money trauma can affect your body, mind emotions and spirituality, all of which will come into play when you are dealing with money.

Without an awareness of this impact and the opportunity to care for it, money will automatically elicit a stress response, and what’s more, you won’t know how to handle it constructively.

When we are stressed, we have tunnel vision. We can’t concentrate, focus or take in new information.

When the mind is limited in this way, we can’t engage in positive and healthy money-related behaviours that serve us and our values.

How does financial trauma show up?

People who have financial trauma will have intense emotional and physical reactions to money and finances.

They find their attempts to change their money behaviours blocked. 

They may 

  • repeat unwanted patterns of money behaviour. 
  • experience constant worry, jumpiness and insomnia.
  • feel isolated from others because of their financial situation.
  • feel hopeless about their financial future.

What’s different about financial stress?

Because worries about money, or not having enough money are survival issues, they are ongoing in the back of the mind at all time. This constant activation in the mind keeps the body activated on an ongoing basis. 

Because it is adaptive, the body-mind’s stress reaction itself is not a problem. But chronic stress—being in a constant alarm state without a rest-and-digest cycle— is a problem. Without the rest-and-digest cycle, your body is constantly mobilizing to provide exceptional resources. This drains the body and nervous system, and causes dysregulation.

Chronic stress takes a toll on the systems that are your weakest. So for some people, that’s heart disease, for others that’s diabetes, and for others that’s mental illness.

Buckwalter said that his research repeatedly found that more than 20% of the population meets his research criteria for financial PTSD. I’d be willing to bet that percentage is higher for business owners.

Money mindset isn’t enough

It’s clear that working with your thoughts, while important, is not enough, and not even the first step, in addressing your challenges with money and finances.

There are three aspects of the work you need to do to heal your financial and money trauma and develop a new relationship to money.

The first is to offer yourself care for your stressful history with money, the financial traumas you’ve experienced and their impact on you. 

This includes developing tools for working with your nervous system when it gets activated around money. This way you’ll be resourced, instead of only anxious, when you come to deal with your money.

This also involves unpacking capitalism and its impact on you so you can heal the shame you carry around any money challenges you’ve experienced.

The second is to address your actual financial problems.

This process is not linear, but it does need to start with the emotional work because when you’re emotionally activated, you can’t focus enough to understand your finances, let alone change your behaviours.

Buckwalter said, “It starts with being able to talk about this. I’ve found that by simply discussing their experiences, people with Acute Financial Stress can find a sense of relief and realize they’re not crazy, and that this is a real issue. There’s no personal failure here, just circumstances that are troubling and can in fact be managed.”

If you’re looking for support to explore and heal your financial traumas, find out about working with me here

About the author 

Shulamit Berlevtov  -  Shulamit (she/her) is the Entrepreneurs' Therapist. She is working passionately to mitigate the entrepreneurial mental health crisis through keynote speaking and educational workshops and by supporting women entrepreneurs 1:1 to care for their mental and emotional wellbeing and their money psychology in an era of relentless stressors that can make you want to lose your crap on the daily.

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