Why I launched a guide to trauma-informed design for economic systems
I still laugh to myself that I’m starting a newsletter on a subject like finance. I’ve always seen it as a rational, male-centric subject that I - a self identified ‘emotional’ female, wouldn’t find myself anywhere close to. But I, like many, fooled myself in the irony of trying to split the subject so complex into such a limiting binary. If we just tune in and lean into the reactions of people around us in response to the current layoffs, inflation, rising gas prices and threat of all kinds of social and economic collapses - it’s clear that money invokes anything and everything but the rational. And that’s because the way we interact with money isn’t rational - 90% of all money behaviors are made emotionally.
As a product designer who worked in the crypto sector, being confronted with graphs and charts of cryptocurrency market trends plummeting funnily, brought me right back to memories of my childhood. I have a Malaysian-Chinese heritage, and grew up in ‘New Money’ - everyone around me coming from generations of poverty to suddenly having more wealth than they’ve ever had before. Although we no longer had to be preoccupied with survival, it was clear that our relationship with money was still dysfunctional. I grew up surrounded by plenty of unhealthy financial behaviors - reckless spending, risky investments, gambling. In conversations around career, there was plenty of status seeking, dirty competitiveness. Families around me had disputes around inheritances that involved betraying those closest to them.
Money was always laced with a tinge of bitterness. It’s as if the culture was still collectively organized in fear, and even though memories of poverty were rarely mentioned like it never existed. It’s as if being thrown back into a life without safety was always lingering behind us, even if we had moved forward.
It was a gradual process to realise that my resistance to anything financial was much more than a theoretical hesitance - it was deeply emotional. And I know this isn’t just my story, but the story for so many of us in the world.
The term ‘trauma’ in common conception is still used to refer significant one-time events. It’s associated with war, PTSD, violence, natural disasters or horrific accidents. A single, one time event which significantly affects the individual who experiences them. Psychologists call this ‘Big T’ trauma. What’s less spoken though - is ‘little t’ trauma, that derive from much more ‘ordinary’ life experiences. Granted, the framing of ‘little’ doesn’t mean the effect of it is any lesser. Financial trauma is currently considered under this branch. I’m going to cover a bit about this right now, but if you’d like a deeper dive, read my next article The Anatomy of Economic Stress & Trauma.
The concept of money, financial or economic trauma will be intuitively familiar to mostly all of us around the world. You might have heard of the ‘scarcity mindset’ - a belief system that’s obsessed with never having enough. Then there’s the ‘abundance mindset’ (the one everyone tells us we should have). A belief that there’s always enough, everything is an opportunity. However, where it lacks more depth is the acknowledgement that these mindsets do not arise in a vacuum. It does not just innately come from ourselves as individuals. The systems we are a part of, internalized beliefs and our experiences play a significant role in psychological & physiologically impacting from which perspective we look at the world. Most proposed solutions are just to simply alter our scarcity mindsets into abundant ones. Just look at the bright side of life and the problem is solved!
This is easier said than done, especially if you’ve experienced chronic volatility with security or very little personal financial safety. Narratives such as “I will never be able to make enough money” or “I am not loved and successful without money” are highly likely to emerge from a period of chronically not being able to meet one’s needs. The traumatized brain is more likely to suffer from compromised executive function, which affects problem solving, multi-tasking & long term decision-making. It may also have a lack of what trauma psychologist Gabor Maté calls ‘response flexibility’ - the ability to pause, calm oneself, and make a rational decision between stimuli and reaction.
What does this mean with one’s behavior with money? People with financial trauma are more likely to make make risky investments, take on debt they cannot pay back, spend impulsively and save less. They can also act on the opposite spectrum and become frugal - anticipating lack of security with every life decision, many times to unhealthy levels.
This is the psychology behind what’s commonly known as the ‘poverty trap’ - alongside societal factors like racism, class exclusion, domestic and sexual violence and colonialism that make social mobility and holistic wellbeing an unrealistic ladder to climb for many. But these factors altogether are still rarely framed as a trauma - which is so much more powerful than seeing the ‘human condition’ as static and unresolvable.
Trauma is having a big boom in public dialogue, at least in some circles in the West, where I live. Self love and going to therapy are gaining more and more traction as topics in the household. However, it’s still largely discussed, and treated, as a personal issue. How did your childhood fuck you up? How did your parents treat you?
Many people going through the process of resonating with their own adolescent histories slowly come to a realization that their parents were imperfect humans too. We might start investigating that perhaps mum and dad were really stressed, and that was at their root of their addictions, neglectful or abusive behavior. Perhaps dad overworked all the time and was isolated from emotional support networks that could support him. Perhaps they were both immigrants and found it extremely difficult to adapt to a whole new world. Perhaps that new world was hostile, and the tools that were available to them were ill equipped to actually help them. They couldn’t help but continue living in survival and passing it down onto you - no matter if we find that it makes them more forgivable as parental figures or not.
I would love for everyone to have a financial therapist and heal their money trauma, maintain tools that help them keep their wealth, as well as feel secure while navigating the challenges of society - but that probably isn’t realistic. Individual change is powerful and neccesary, but feels only like a surface level intervention when the reasons why they become traumatized in the first place, are systemic.
The systems we are a part of, the tools we use, and our cultural and relational norms have a huge impact in our ability to navigate life as healthy people. To be successful in society today, it is expected for us to have a secure relationship with money. We should know how to get opportunities to earn it, spend it, manage it, invest it. There is a myriad of financial advice, but most of them hardly ever touch upon how a negative relationship to money and work could be correlated with toxic stress and trauma.
Most economists only know how to rationalize our financial habits through the lens of behavior, but never the origin of stress. An analysis on behavioural economics states that this leads to “to the underdevelopment of behavioural theory examining the choices or motivations of individuals within these environments, resulting in sub-optimal models and policy.”
