Wooden table with a glass jar containing coins and a calculator situated on top

The relationship between growing up poor and one’s spending habits as an adult can actually vary quite a bit. Growing up in poverty creates trauma which will affect lifelong behaviors and attitudes around money. 

How do people respond financially to the trauma of childhood poverty?

Here are a few ways that people can respond to the trauma of childhood poverty:

Childhood poverty can actually cause increased thriftiness and financial caution. Growing up in poverty can instill a sense of frugality and caution when it comes to spending. Individuals may develop habits of careful budgeting, seeking value in purchases, and prioritizing saving for essential needs. This mindset can promote responsible financial behavior and a focus on long-term financial stability.

Childhood poverty can induce a scarcity mentality. Growing up in poverty can lead to a scarcity mentality, where individuals may feel a persistent fear of not having enough resources. This mindset can result in more conservative spending habits and hesitancy to take financial risks. It can also lead to hoarding things like food and resources, and a preference for saving rather than spending. Individuals may prioritize financial security and be more cautious about indulging in discretionary expenses.

Childhood poverty can cause emotional spending: Some individuals who grew up in poverty may develop spending habits as a means of compensating for their previous lack of resources. This can manifest in impulsive or excessive spending, particularly on items associated with status or self-worth. The desire to experience the comforts and luxuries that were previously inaccessible can drive spending behaviors.

Breaking the cycle

People can break the cycle. Growing up in poverty can serve as a motivation to break free from financial constraints and build a better future. Individuals may be driven to improve their financial situation, develop strong budgeting skills, and seek opportunities for education and career advancement. They may be more inclined to adopt responsible financial habits and make informed spending decisions.

It’s crucial to recognize that these patterns are not deterministic. Individuals can deviate from them based on various personal circumstances and individual choices. Additionally, socioeconomic factors, access to financial education, and support systems can play significant roles in shaping spending habits as well. With awareness, education, and mindful financial management, individuals can overcome the challenges associated with growing up in poverty and develop healthy and sustainable spending habits.

What are the signs that you are experiencing financial dysfunction due to the trauma of growing up poor?

Experiencing financial dysfunction as a result of the trauma of growing up poor can manifest in various ways. While everyone’s experiences are unique, here are some signs that may indicate the impact of financial trauma:

Extreme frugality

Persistent patterns of extreme frugality, such as excessive penny-pinching, may be a sign of a deeply ingrained scarcity mentality resulting from growing up in poverty. It may be challenging to find a balance between saving and enjoying present-day life.


Some people may feel compelled to have full food shelves. If your food is expiring before you get around to eating it, but you still feel the need to always have the food on hand, it could be a sign you are suffering from an extreme scarcity mentality.

Anxiety around money

Persistent anxiety about money matters can indicate the lasting impact of financial trauma. These feelings may arise from a fear of scarcity, an aversion to financial risks, or a sense of powerlessness or vulnerability when it comes to financial decision-making.

Impulsive buying

On the other end of the spectrum, using spending as a coping mechanism or seeking instant gratification through impulsive buying can be a response to past deprivation. Compensatory spending habits can lead to financial instability and exacerbate the cycle of dysfunction.

Difficulty setting financial goals

Difficulty in setting and pursuing financial goals, even with the means to do so, may indicate underlying financial dysfunction. Emotional and psychological barriers can impede progress, undermining attempts to attain financial stability.

Difficulty managing finances 

Trouble managing finances, consistently overspending, or being disorganized with bill payments can indicate difficulties in adopting healthy financial habits. Limited exposure to healthy financial practices during childhood may contribute to these challenges.

Avoiding financial matters

Neglecting financial duties, like avoiding bills or delaying decisions, may stem from emotional distress tied to financial trauma. Such avoidance can sustain financial dysfunction and result in adverse outcomes.

Where can I find a financial therapist or financial advisor to help me address my financial dysfunction?

Because childhood poverty is a real trauma, people may need to seek help or counseling to be able to overcome it. There is, of course, no more shame in needing a financial therapist than there would be in needing a physical therapist to help you heal from a physical injury. 

If you think you might need the help of a financial therapist, consider seeking one out at the Financial Therapist Association website: https://financialtherapyassociation.org/find-a-financial-therapist/

If you would like to find a financial advisor that can help you with your finances, you can answer a few questions with The Yukon Project’s finder and be paired with up to three in your area. You can find that here.

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Jonathan Walker