If you tend to hoard money or find yourself engaging in compulsive buying when bored or stressed, you may have been labeled as someone with a money disorder. The term "money disorder," popularized by financial psychologists Brad Klontz and Ted Klontz, refers to problematic, ongoing behaviors and beliefs about money that can harm one's financial health.
Common examples of money disorders include pathological gambling, overspending, compulsive shopping, financial dependence, financial enabling, unreasonable risk-taking, underspending, compulsive hoarding, financial enmeshment, financial rejection, and even workaholism.
### A Different Perspective
While identifying someone as having a money disorder can be helpful, the psychoeducational platform *Trauma of Money* offers a critique: labeling these issues as "disorders" places undue shame and responsibility on individuals. Instead, they suggest viewing such behaviors as responses to stressful circumstances. People experiencing these challenges may be dysregulated, operating in a constant state of fight-or-flight or freeze mode, often stemming from feelings of scarcity.
The concept of "money disruption" reframes the traditional notion of a money disorder. According to *Trauma of Money*, the main issue with money disruptions is that they focus too much on individual pathology rather than examining external factors that contribute to maladaptive financial behaviors. Systemic inequality and oppression play significant roles here. For instance, research from the Brookings Institute shows that more than one-third of U.S. families—and half of families of color—lack sufficient resources to cover basic needs. Inflation disproportionately affects those already financially strained.
"When you don't have a lot of money, life becomes incredibly complex," says DJ Jack, a financial planner at Abundo Wealth. "People are juggling family, jobs, and general stress. When they delay addressing finances, it’s because they're dealing with more immediate crises."
### Systemic Inequity and Money Disruptions
Systemic inequality and oppression can significantly influence money disruptions by fostering avoidance of the financial system altogether. Uziel Gomez, a certified financial planner and founder of Primeros Financial, explains that negative experiences with banks or financial institutions—such as discrimination due to lack of representation, cultural misunderstandings, or language barriers—can lead people to reject financial products and services that could otherwise benefit them.
"This mistrust is sometimes passed down through generations," Gomez notes. "For example, someone who feels discriminated against by a bank might believe financial institutions aren't designed to help people like them. This belief can then be inherited by their children, perpetuating cycles of unbanked households."
Predatory lending practices further exacerbate the problem. Low-income communities, often lacking financial literacy, become targets for lenders offering high-interest loans. Borrowers, driven by urgent needs, accept these loans despite exorbitant fees, leading to overwhelming debt. Over time, this experience fosters distrust toward all forms of credit, which gets passed down to future generations.
### Scarcity, Survival, and Shame
"Money disruptions often arise from survival mechanisms," says Sylvie Scowcroft, a certified financial planner and principal advisor at The Financial Grove. These mechanisms stem from attempts to meet basic needs such as belonging, autonomy, safety, purpose, connection, and self-expression. When individuals operate under scarcity—whether of time, energy, or resources—it reduces cognitive capacity, impairing decision-making skills and impulse control.
Living with limited resources forces people to make high-stakes decisions while being ill-equipped to do so effectively. "It's like packing for a trip with a tiny suitcase," Scowcroft illustrates. "You spend so much mental energy weighing trade-offs, leaving little room for long-term planning. If you had more resources, this burden would disappear."
Shame about money creates a vicious cycle. Overspending, for instance, may serve as a temporary coping mechanism but ultimately leads to credit card debt and increased shame. This pattern reinforces feelings of hopelessness, making it difficult for individuals to envision a better future.
"People in survival mode prioritize immediate relief over long-term solutions," Jack explains. "They engage in behaviors like retail therapy to escape stress, but these short-term fixes create long-term problems."
### Breaking the Cycle
To reduce money disruptions and foster financial healing, systemic changes are essential. Initiatives like universal basic income (UBI), creating higher-paying opportunities for non-college graduates, reducing overdraft and late fees, and providing access to affordable small-dollar loans can alleviate some pressures.
At the individual level, exploring emotional and behavioral patterns shaping financial decisions is key. Reflecting on your "money story"—early memories, current challenges, and future goals—can reveal underlying causes of disruptive behaviors.
Community support is also vital. Joining groups like Debtors Anonymous or discussing money struggles with trusted friends can break ithe solation caused by shame. Working with a financial professional, such as a coach or therapist, can provide actionable plans to move from hopelessness to empowerment.
"Placing blame or shaming individuals won’t solve their problems," Gomez emphasizes. "Recognizing the root causes of these issues empowers people to take meaningful steps toward change."