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Since there is news about a possible recession, I want to address how a scarcity mindset from childhood shows up in economic uncertainty, and here is how to heal it.
The word “recession” can make some of our chests tighten and brains go into overdrive. I want you to know you’re not alone. As a money coach for first-gen women of color, I’ve seen firsthand how the fear of a recession isn’t just about the economy… It’s about our money wounds.
The money wounds we’ve carried since childhood.
The money wounds we thought we “healed” once we started making more money.
The money wounds that show up loudly during times of economic uncertainty.
Yes, I panic when I hear we need to start preparing for a recession because I experienced the 2008 financial crisis, and we lost our home. I vividly remember having to move to a family member’s small in-law unit with a one-bedroom from a three-bedroom, two-story home. So, when I hear about a recession now, I am immediately afraid of losing my current home.
If you’re in the same boat, you’re in the right place.
Let’s talk about recession anxiety. Let’s name it. And let’s slowly heal it, together.
What Is a Money Wound?
The definition of a money wound is: an emotional or psychological scar formed from past experiences with financial instability, shame, lack, or trauma.
The way this shows up in behaviors like:
- Hoarding money out of fear
- Avoiding your bank account altogether
- Feeling guilt or shame around spending (even on things you need)
- Overworking because “rest isn’t safe”
- Struggling to invest because it feels risky to part with your money
Now, we combine these deep-rooted fears with the constant headlines in the news and social media about a possible recession, and boom, your nervous system is in a full-blown panic mode.
The difficult thing about money wounds and money trauma is that they often happen during our childhood. We do not have any control over what is happening, and yet it has a long-lasting emotional impact.
You may be interested in reading: I am about to give you a reason to be thankful for your debt.
Yes, I mean it! And, you need to know why.
How Scarcity Mindset Shows Up During a Recession
The scarcity mindset tells you there’s never enough:
Not enough money. Not enough time. Not enough safety. Not enough of you to go around.
And during a recession (or even just the threat of a recession), that mindset goes into crisis and survival mode:
- You stop spending—even on things that would bring relief or joy.
- You feel selfish for not helping your family more, even when you’re barely staying afloat.
- You spiral into budgeting and control as a way to feel “safe.”
- You shame yourself for not “being prepared enough,” even though no one taught you this.
Are you experiencing one or a few of the above?
It’s not because of this economy, but it’s about what your body remembers from growing up low-income, undocumented, or constantly watching your parents stretch $50 into meals for the week. You remember the financial stress and your parents telling you, “We do not have money right now.” So, it definitely makes sense why you are going into survival mode.
If you’re still stressed about money, you need to read this blog: This is why you’re still stressed about money.
Because even if you already know about money wounds, there’s another layer no one talks about, and it might be the reason you feel stuck.
What Recessions Taught Me About My Money Wounds
When I experienced my first layoff, my first thought wasn’t “I’ll figure it out.”
It was:
- I’m a failure.
- I should have saved more.
- What about my bills?
- How am I going to help my mom now?
But here’s what that recession season taught me:
Your money wound is not your fault, but it is your responsibility to heal.
Layoffs are scary AF, but they don’t have to catch you off guard. Read this blog: How to Prepare for a Layoff so you can protect your money and your peace before it happens.
I realized at the beginning of my money trauma healing that I wasn’t budgeting out of empowerment, I was budgeting out of fear.
I was building a savings to avoid feeling like I did when I was 16, translating bills for my mom and pretending everything was okay.
But now, I save to help my future self, and I invest to build wealth and for the long term, no matter if the stock market crashes, I do not panic. It is possible to heal your money wounds to avoid recession anxiety.
3 Ways to Start Healing Your Money Wounds During a Recession
1. Name the Fear and Where It Comes From
When you start noticing yourself spiraling about money, pause.
Ask yourself:
“What am I really afraid of right now?”
“Does this fear belong to this moment or a past one?”
“What part of my childhood is being triggered?”
When you start naming it, it allows you to separate past survival from current reality. You can start pinpointing what childhood memory is coming up for you, and you can start asking yourself if that is true to your current reality.
I ask myself, my 16-year-old self, is this your current reality? Is it true that if a recession happens now, you will lose your home like you did back then?
After journaling my fears and addressing my 16-year-old self, I have come to the conclusion that I have savings that can help me weather the recession. I have different skills that can help me create different revenue streams right away, if I need to. Therefore, my parents’ situation in 2008 is not my current situation.
2. Create a Budget That Supports Safety AND Joy
Yes, you need to start a budget for a recession. ASAP.
And that budget shouldn’t just cover bills, it should include things that help you feel calm, connected, and cared for during a difficult time. That’s financial self-care.
Financial self-care during a recession? YES!
Include line items like:
- Therapy or coaching
- A matcha latte budget (yes, really)
- A fun fund, even if it’s just $75/month
- Contributions to savings and small treats
The reason why you need to do this is to help you rewire your nervous system to see money as a tool for safety, not just survival. It will take a lot of intentionality and self-talk to convince you to do it until it becomes second nature.
It’s like you need to show yourself that nothing negative happens when you focus on financial self-care that includes fun! And, you can still pay all of your bills and continue to build your savings.
If budgeting always feels complicated, you need this: Here’s how to create a simple budget (even if you’re a total beginner).
3. Redefine What Preparedness Looks Like
A lot of you feel like you’ll never be ready. That no matter how much you save or plan, it’s not going to be enough.
But it is not about being “ready.” Being recession-ready is not about your bank account; it’s about your capacity:
Do you know how to pivot if you lose your job?
Do you have people you can lean on?
Do you know where you stand with your finances?
Do you know your values and what matters most when it’s time to cut back?
That’s powerful. That’s wealth.
If you are in crisis and survival mode, then your nervous system won’t allow you the capacity to think about pivoting, your support system, or how you can make your situation better.
28 Ways to enjoy life during a recession, when your budget says ‘nope.’
You Are Not Broken, You’re Remembering
If you’re feeling anxious about a recession, give yourself compassion. This isn’t just about the news. It’s about your nervous system remembering what it was like to not have enough. Your anxiety is trying to keep you safe.
But you’re not that scared little girl anymore. You’re the woman she dreamed of becoming.
You can save, invest, plan, and still enjoy your life.
You can heal your relationship with money, even in a recession. I am not promising that there won’t be tears or moments of panic, but you can work through those feelings and get yourself to safety.
