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How To Transform Your Money Trauma

In addition to poor financial literacy, I’m convinced that many bad money habits and unhealthy financial decisions originate from unprocessed trauma. This certainly rings true for some of my financial mistakes and those of my family members.

As a result, most self-help books on finance are stuffed with useful information yet fail to produce the lifestyle transformations needed to build wealth or use it productively.

For example, one of my relatives is in a downward spiral of poor money decisions, living paycheck to paycheck on the edge of a swamp near a homeless encampment. Paying his bills is a struggle because all his money goes to cigarettes, lottery tickets, and the next consumeristic fix of useless knick-knacks which stuff his ramshackle home.

I wonder if it’s because he’s never processed the trauma from extreme abuse in his childhood, the difficulties of living for decades with a mentally ill spouse, or the grief from his daughter’s suicide. Rather than face his anguish, he splurges what little money he has on anything that will assuage his chronic depression and anxiety.

My relative’s compulsions are understandable given his life story and are worthy of compassion for the heartache he’s suffered. Still, if we don’t transform our trauma, we are destined to continually relive and transmit it. 

It’s equally painful to see his trauma passed down to his remaining children, who each have their own psychological struggles and money issues.

So how do we end this chain of emotional and financial pain that potentially stretches into the infinite future?

There are many therapeutic models for dealing with our trauma; most will work if done with intention. But there are three steps that I’ve seen transform people’s relationship with themselves and, therefore, with their finances.

The first and often hardest step is to face your pain unflinchingly. It is vital to rest uncomfortably in our traumas so we can fully grieve, and it’s best to do this with the help of a professional therapist.

Most of us, myself included, tend to mask our pain and avoid it as much as possible because we fear that looking at it would destroy us. When I ask my relative about his trauma, he refuses to admit he has any and responds with anger when others lament their own. 

But only when we crack open from our pain and fall into disorder can we reorder the broken parts in a healthier way. As Rumi said, “The wound is the place where the Light enters you.”

Compassion means “to suffer with,” and it is impossible to live in loving solidarity with a broken world unless we admit our own brokenness.

The second step is forgiveness of the hurts heaped upon you. It’s crucial not to forgive too quickly, as anger can be a useful tool to extract us from an abusive situation. But as Lily Tomlin once said, “Forgiveness means giving up all hope for a better past.”

Finally, after forgiveness comes love. It’s challenging to love those who wound us, but the alternative is that we inflict more suffering on ourselves and those dear to us. Nelson Mandela aptly summed it up, “Resentment is like drinking poison and then hoping it will kill your enemies.”

Once you unflinchingly see and accept all your pain, forgive the causes of your suffering, and love reality as it is, true magic happens. Only after you experience love and compassion for, not despite, the messiness of life can you redeem all of reality in your own eyes. Then, all of existence becomes a blessing.

From a stance of radical acceptance and compassion, money becomes a powerful tool to help yourself, care for your loved ones, and heal our broken world. 

It’s not easy to transform your trauma, and I haven’t mastered it yet, but I know the effort is worthwhile. Having seen firsthand where doing nothing leads people, I’d rather keep struggling forward.


Doug Lynam is a partner at LongView Asset Management in Santa Fe and a former monk. He is the author of From Monk to Money Manager: A Former Monk’s Financial Guide to Becoming A Little Bit Wealthy — And Why That’s Okay. Contact him at douglas@longviewasset.com.