How to Cope with Financial Stress and Trauma

The mere existence of an annual survey called the Financial Stress Index is a sign that financial stress is not only prevalent, but deserving of our attention.

Forty-two percent of Canadians are more worried about money than anything else, and nearly half of Canadians say financial stress is causing them to lose sleep, according to the 2025 Financial Stress Index conducted by FP Canada, a national organization for financial planners.

Most of us have experienced money stress to some degree, but it can become debilitating enough to qualify as a type of PTSD. This kind of financial trauma locks you in a state of perpetual fear that can prevent you from facing your situation or moving forward.

Preventing permanent damage from financial stress and trauma requires self-awareness, patience and in some cases, professional help.

What is financial stress?

Financial stress is worry and anxiety about money and how it affects your life. For example, you might be worried about managing your household expenses or dealing with large amounts of debt.

There’s no single definition of financial stress, and it may look and feel different for each of us.

Causes of financial stress

External factors play a part in our experience of financial stress. The 2025 Financial Stress Index found the top three external causes of money stress for Canadians to be:

These and other external factors, like rising interest rates and rent prices, are compounded by our personal financial situations and the disparity between where we are and where we want to be.

According to the 2025 Financial Stress Index, 34% of Canadians are stressed about saving enough for retirement, 37% are concerned about affording current expenses, 31% worry they aren’t saving enough for a major purchase or expense, and 30% say debt stresses them out.

Signs you’re financially stressed

A little bit of stress here or there is normal, but persistent stress (as money stress tends to be) can have adverse effects on both your psychological and physical health.

Financial stress can manifest as anxiety and depression, which may in turn affect your motivation to exercise and eat well, leading to further downturns in your overall physical health. Financial stress can also make you more likely to struggle with sleep issues, headaches and trouble maintaining personal relationships.

How to deal with financial stress

Taking measurable action to improve your financial situation is one way of overcoming financial stress. Things like:

Other actions to consider include:

Talking about it. This is difficult because of the many taboos around money, but bottling up your feelings won’t work. Set up regular times to review your finances with your spouse or family, find a friend with whom you can share, or even seek out a financial therapist.

What is financial trauma?

Living through significant or devastating financial events — even in childhood — can result in financial trauma. The symptoms of financial trauma are often similar to those of financial stress, though more pronounced; it can disrupt your personal or professional life, and cause great distress.

Causes of financial trauma

Fifty-five percent of Canadians say their adult lives are impacted by childhood experiences about money, and 42% saying these experiences have left them anxious or worried, according to a 2021 survey by Meridian Credit Union. Negative childhood experiences can include enduring poverty or financial insecurity, or major events like a messy divorce that affects family finances.

But financial trauma needn’t stem solely from childhood; any major financial event can have lingering effects. Things like foreclosure, a bad investment, being a victim of fraud, bankruptcy, or even a prolonged period of unemployment can lay the groundwork for financial trauma (sometimes referred to as financial PTSD or debt trauma).

Signs you’re financially traumatized

Three common signs of financial trauma are avoidance, obsession and distraction.

For example, you might feel overwhelmed by your debt and bills and start avoiding them entirely, even if collectors start calling. Or you might start obsessively checking your account balances and searching online for answers to unanswerable questions. Or you might distract yourself from the problems at hand by watching television or using substances to numb your feelings.

Likewise, if you find yourself overreacting to certain economic events, it might stem from trauma. For example, news about food prices increasing due to inflation might be particularly triggering if you’ve experienced food insecurity in the past.

Acute physical symptoms of financial trauma while in a triggered state include:

Emotional signs of trauma include:

How to deal with financial trauma

Recognizing that something’s wrong is the first step to dealing with financial trauma. A counsellor, support group or financial therapist may be able to help you better understand your triggers, gain perspective, and remove unwarranted biases, fears and beliefs about money that have been holding you back. Throughout this process, it’s important to be compassionate to yourself, rather than blaming or shaming yourself for your choices.

Once you have dealt with the emotional, physical and cognitive effects of the trauma, you can create a tangible action plan to deal with the financial problems themselves. Take small steps toward rebuilding your relationship with money, and celebrate wins like hitting savings milestones or paying off specific bills. And lean on others to support you, whether friends, partners or professionals — you are not alone in the journey to repair your relationship with money.