How Money Trauma Shows Up for Entrepreneurs

Money trauma is a term used to describe the emotional distress and psychological distress that results from our relationship with money. Because work and income are inextricably connected, money trauma is a common issue faced by entrepreneurs. 

Ted and Brad Klontz, pioneering financial psychologists have identified several common money disorders. Often stemming from how we experienced money in childhood, these disorders can have a significant impact on our work and professional lives, leading to decreased productivity, increased stress, and strained relationships with customers and clients.

Here are four common money disorders and how they can show up at work:

1. Money Avoidance Disorder

Money avoidance disorder is characterized by a fear of facing financial realities and a tendency to avoid money-related tasks. This disorder can manifest in a number of ways in our businesses such as procrastination, neglecting to manage finances, and avoiding discussions about money.

For example, an entrepreneur with money avoidance disorder may struggle to reconcile their expenses and may constantly avoid creating a budget. This can lead to financial mismanagement and a lack of accountability, which can harm the business as a whole.

2. Money Worship Disorder

On the opposite end of the spectrum is money worship disorder, characterized by a preoccupation with money and a belief that financial success is the key to happiness and fulfillment. This disorder can lead to a tendency to prioritize money over all other aspects of life, including relationships, health, and ethics.

As entrepreneurs, this disorder can show up as an excessive focus on profits and a disregard for our own rest and well-being. For example, a manager with money worship disorder may prioritize working late over having a work-life balance. 

3. Money Status Disorder

Money status disorder is a condition in which an individual is overly concerned with their financial status and compares themselves to others based on their wealth. This disorder can lead to feelings of shame and inadequacy, as well as a tendency to constantly compare oneself to others. Entrepreneurs can suffers from comparisonitis especially if looking at competitions on social media (on Instagram are there any coaches confessing to making under $10,000 per month?) 

This disorder can result in a lack of confidence and a focus on competing with others, rather than collaborating with them. It can also lead to a preoccupation with earning more money, rather than finding fulfillment in one's work.

4. Money Scarcity Disorder

Money scarcity disorder is characterized by a fear of spending money and a tendency to hoard it. This disorder can result in a lack of ability to make necessary purchases, such as paying bills or investing in personal development, as well as a constant state of anxiety and stress.

In our businesses, money scarcity disorder can lead to a lack of investment in the business, such as neglecting to purchase necessary equipment or failing to pay employees a fair wage. This can harm the business and lead to decreased productivity and strained relationships with employees.

The Impact of Money Trauma on Mental Health and Well-Being

The effects of money trauma go beyond just the workplace, impacting an entrepreneur's overall mental health and well-being. This can lead to symptoms such as anxiety, depression, and stress, which can have a ripple effect on all aspects of life.

In our businesses, this can result in decreased productivity, illness, and strained relationships with collaborators and clients. It can also lead to burnout, which is a state of physical, emotional, and mental exhaustion caused by excessive and prolonged stress.

How to Overcome Money Trauma

The first step in overcoming money trauma is to acknowledge its existence and understand the impact it has on your life. This can involve reflecting on your relationship with money and examining any negative beliefs or behaviours that may be contributing to your financial stress. 

Here are some practical steps you can take as an entrepreneur to break free from money trauma:

1. Seek Out Professional Help

Financial therapy or coaching can be a helpful resource for those struggling with money trauma. A financial therapist can help you understand the root of financial fears and offer strategies for overcoming them. They can also help create a financial plan that aligns with values and goals, reducing the stress and anxiety associated with managing the financial side of your business.

2. Take Financial Literacy Training

Financial literacy is key to overcoming money trauma. It's important to educate yourself on personal finance, including budgeting, saving, investing, and debt management so that you have the tools to make informed financial decisions and reduce stress. Find an accountant who works with you to help you understand your money. 

3. Increase Feelings of Psychological Safety

The safer entrepreneurs feel in terms of things like having a financial cushion, building a supportive community, and shedding toxic clients, the more regulated the nervous system becomes. That helps you get into the rational brain that can make financial plans and good work decisions. 

4. Prioritize Wellness

You can learn to self-regulate your emotions by incorporating wellness practices at work. Encourage deep breathing at the beginning of meetings. Encourage people to have boundaries around work and home, and take your lunch hour to recharge. 

Money trauma is a common issue that can have a significant impact on our professional and personal lives. By recognizing the signs and taking steps to overcome it, you can thrive as an entrepreneur.