You’re Not Bad with Money—You’re in a Trauma Response: The Psychology Behind Overspending, Avoidance, and Financial Shame

Struggling with overspending, money anxiety, or chronic scarcity? Discover how financial trauma shapes your nervous system and money habits and how somatic therapy, EMDR, and trauma-informed care can help you create a safer, more empowered relationship with money.

You’re Not Bad with Money; You’re in a Trauma Response: The Psychology Behind Overspending, Avoidance, and Financial Shame

Have you ever looked at your bank account and wondered, “Why can’t I get this right?”
Do you find yourself swinging between compulsive spending and total avoidance?
Are you stuck in a constant state of financial fear even when there’s technically enough?

You’re not irresponsible. You’re not broken.
You may be living in a trauma-induced financial survival state.

At Embodied Wellness and Recovery, we frequently encounter high-achieving, deeply capable individuals who feel intense shame around money. Not because they lack financial literacy, but because their nervous systems are locked in a pattern of fight, flight, freeze, or fawn when it comes to money. In this article, we’ll explore the neuroscience of financial trauma, the roots of scarcity-driven behaviors like overspending and avoidance, and what you can do to create a new, more compassionate relationship with money.

What Is Financial Trauma?

Financial trauma is a chronic emotional and physiological response to perceived or real economic insecurity. It’s often rooted in childhood experiences of poverty, neglect, or unstable caregiving environments, but it can also arise from adult experiences like job loss, divorce, bankruptcy, or growing up in aY household where money was a source of fear, control, or unpredictability.

The body remembers. Even long after external circumstances change, your nervous system may remain stuck in survival mode. According to polyvagal theory (Porges, 2011), trauma dysregulates the vagus nerve, which plays a central role in your sense of safety and ability to regulate emotions. If your early experiences taught you that money is associated with fear, shame, or abandonment, your nervous system may react to even small financial decisions as if they are life-or-death threats.

The Neuroscience of Scarcity and the Survival BrainT

Neuroscientist Dr. Bruce Perry explains that trauma keeps the brainstem, our most primitive, survival-oriented region, hyperactivated (Perry & Szalavitz, 2017). When this system is dominant, we’re less able to access the prefrontal cortex, where logic, planning, and executive function reside.

This means that even when we know what we “should” do financially, our brain is hijacked by fear or shame. We overspend to soothe anxiety. We avoid checking accounts to avoid triggering panic. We feel paralyzed when faced with budgeting or bills.

These are not character flaws. They’re nervous system adaptations to past conditions of unsafety and scarcity.

How Trauma Shows Up in Your Relationship with Money

Trauma doesn’t just affect your emotions; it impacts behavior. Here are some of the most common trauma-informed financial patterns we see at Embodied Wellness and Recovery:

1. Overspending as Soothing

Impulse shopping or retail therapy often isn't about greed; it’s about regulation. Swiping a credit card gives a short-lived dopamine spike that temporarily quiets internal chaos. But once the high fades, the shame returns, reinforcing a cycle of self-blame and emotional spending.

2. Avoidance and Dissociation

Avoiding bills, not opening bank statements, or delaying tax filings can be forms of dissociation, a freeze response in which the nervous system shuts down to protect you from overwhelm. Many clients report a numbing feeling around money, accompanied by guilt or helplessness.

3. Chronic Scarcity Mindset

Even with a stable income, trauma survivors often feel like it’s never enough. This can manifest as hoarding, under-earning, undercharging, or refusing to invest in necessary self-care. It’s not about financial reality; it’s about an unresolved lack of internal safety.

4. Financial Codependency or Fawning

Some trauma survivors fear conflict or abandonment so deeply that they hand over financial control to others, ignore red flags, or sacrifice their own needs to feel secure. This is common in relationships where money has been historically weaponized or made conditional.

Why Shame Doesn’t Work—And What Does

Shame is often the uninvited guest at the table of financial healing. But shame only reinforces the trauma response by activating the same stress pathways that block clarity, motivation, and executive functioning. Telling yourself to “just budget better” or “stop being stupid with money” will never override a nervous system stuck in survival mode. What works instead is trauma-informed care that addresses the root of these patterns, not just the symptoms.

How We Help at Embodied Wellness and Recovery

At Embodied Wellness and Recovery, we specialize in helping clients understand how trauma lives in the body and how it shows up in patterns related to money, relationships, sexuality, and self-worth. We combine the latest neuroscience with proven therapeutic modalities, including:

EMDR Therapy

Eye Movement Desensitization and Reprocessing helps rewire core beliefs, such as “I’m irresponsible” or “I’ll never be secure.” By targeting the origin of financial trauma, EMDR allows your brain to release outdated narratives and install new neural pathways of empowerment and worthiness.

Somatic Therapy

Money stress isn’t just cognitive; it’s somatic. We help clients become aware of and shift how financial fear manifests in the body, such as a clenched jaw, shallow breathing, or tension in the chest or gut. Somatic practices enhance your ability to remain present with discomfort without dissociating or reacting impulsively.

Parts Work / Internal Family Systems (IFS)

Many clients have inner “parts” that sabotage financial stability because they’re stuck in old protective roles. We help clients build compassion and communication between their inner spender, inner child, inner avoider, and inner protector, fostering internal trust and integration.

Rewriting Your Money Story

Healing your relationship with money is not about spreadsheets; it’s about rewriting your internal story of safety, enoughness, and worth. You are not doomed to repeat the same patterns forever. With the right support, your nervous system can unlearn survival mode, settle, and embody a more empowered way of being.

Reflective Questions for Financial Trauma Recovery

     — When did I first learn that money was unsafe, shameful, or tied to my worth?
     — How does my body react when I check my bank account or talk about money?
     — What part of me feels afraid to let go of scarcity or survival thinking?
     — What would “safe” feel like, not just financially, but emotionally and physically?

These aren’t easy questions, but they are doorways to freedom. At Embodied Wellness and Recovery, we’ll walk beside you as you ask them.

Redefining Your Relationship with Money

You’re not bad with money; you’re navigating a system wired for survival, not abundance. Trauma may have shaped your relationship with money, but it doesn’t have to define it.

Let’s help your body, brain, and beliefs remember what it feels like to be safe. Not just financially, but in your whole self.

Contact us today to schedule a free 20-minute consultation and begin your journey toward embodied freedom, clarity, and confidence.

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References :

Perry, B. D., & Szalavitz, M. (2017). The Boy Who Was Raised as a Dog: And Other Stories from a Child Psychiatrist's Notebook. Basic Books.

Porges, S. W. (2011). The Polyvagal Theory: Neurophysiological Foundations of Emotions, Attachment, Communication, Self-regulation. W.W. Norton & Company.

Schore, A. N. (2012). The Science of the Art of Psychotherapy. W. W. Norton & Company.