What Is Money Shame?

What is Shame?

Shame is an internal feeling that comes when we believe we are bad. We often use the terms "guilt" and "shame" interchangeably, but there is a subtle and powerful difference between the two. In a nutshell, guilt is external, "I did something bad," whereas shame is internal, "I am bad." This is why people talk about a "shame spiral." A shame spiral is when we do something we are ashamed of and beat ourselves up, which sets off a chain reaction in your mind to try and find evidence of all the other times you were "bad." Shame is so uncomfortable for humans because it is tied to our identity, whereas many other emotions we can separate from who we are.

Shame Spiral Example

I'm an experiential learner, which means I need examples to understand new concepts. Here's an example of how a shame spiral might look. You trip over the dog and yell at him. Your thoughts become, "I'm a terrible dog mom. My dog deserves better. Maybe I'm not cut out for this; I'm such a jerk. This is just like the time I snapped at my partner for no reason." You put this in your mental "bank" as another example of "proving" you are a bad person.

What is Money Shame?

When we apply what we know about shame to our relationship with money, a similar pattern emerges. Money guilt is, "I made a mistake with my money," whereas money shame is internal, "I am bad with money." This perception of money shame causes a similar shame spiral that can make it hard for us to come back from real or perceived money mistakes and further isolate us from engaging with our money in a meaningful way.

What Makes Money Shame Worse? 

According to shame researcher Brené Brown, three components make shame worse. Secrecy, silence, and judgment. These three shame components run rampant in the personal finance community (think, "buying a latte is pissing away money!" or "You bought a house before you paid off your student loans, what an idiot!"). 

Money isn't polite to talk about in most societies, so there is built-in secrecy and silence. There is money judgment coming at us from all directions: personally, professionally, religiously, and culturally, contributing to money shame. Again, I'm an example person so let me illuminate how money shame might be made worse by secrecy, silence, and judgment. 

Money secrecy can look like shredding credit card statements, so your partner doesn't see them. Money silence can look like avoiding discussing money, for example, changing the subject when your sibling brings up the importance of talking to your parents about affording long-term care. Another money silence example would be going silent when your partner asks you about an increase in credit card spending. Money judgment can be self-judgment or others' judgment of us, aka what we went over earlier with money shaming. Money judgment often takes the form of beating yourself up, "should-ing" yourself, or somehow believing you deserved a negative financial outcome. For example, "I should have known better before signing that lease on the apartment. It's no wonder I'm struggling financially each month!"

What Makes Money Shame Better? 

Brené Brown also shares that the four factors that quiet down shame are naming shame, empathy and compassion, social support, and education. When it comes to money shame, naming it can look like acknowledging the shame with transparency or labels, getting community or peer support, and creating meaning to the perceived mistake. 

Naming It

Naming a money mistake might sound like, "I was too nervous about shopping around for different car loan interest rates, and ended up going with the loan option the car dealership recommended. I'm paying more than if I'd gone with a credit union, and I'd been shaming myself for that mistake."

Empathy and Compassion

Practicing financial empathy and compassion means being nice to yourself for the mistake. Many clients I work with believe that empathy and compassion are about letting yourself off the hook for making mistakes. That couldn't be further from the truth. Acknowledging a mistake, owning up to it, and not beating yourself up is one of the most emotionally mature ways to cope with mistakes. 

Financial empathy and compassion mean being kind, realistic, and looking at the behavior with a lens of resilience or adaptation. Financial empathy and compassion could look like, "Even though I was too nervous about shopping around, I'm proud of myself for acknowledging I made a mistake."

Support From Others

Getting peer or community support means sharing with others what happened, with the idea that a true friend or support person won't pile on additional judgment. In this example of the car loan interest rate causing money shame, getting peer support could be telling a friend what happened and asking them if they have any recommendations for online banks or credit unions that have lower interest rates. Finally, in creating education or making meaning out of the mistake, a person can acknowledge what they've learned and how they'll change, either in behavior or in thoughts, moving forward. Keeping with the car example, the lesson might be, "when I get nervous about money stuff, I can reach out to others for help to ensure I don't make decisions based on anxiety." 

How to Implement

In my money shame release parties, I guide participants through these various steps. We talk about our money shame or money story that's causing money shame (naming it), practice empathy and compassion by verbalizing our shame amongst others in a safe space and create meaning by acknowledging any lessons we learned from our money mistake. All of this is done with peer support in a non-recorded group setting. You can learn more about these money shame release parties right here. 

Another way I help people with money shame is through financial therapy and financial coaching. If you are interested in one-on-one work with a shame-free financial therapist, you can see if coaching or therapy services might be right for you. 

Money Shame in Individuals, Couples, and Entrepreneurship

Money shame can look different between individuals, couples, and small business owners. I talk about the entrepreneurial money shame I experienced in the summer of 2020 that made me feel like a hypocrite and fraud in this Instagram live video. By sharing with my audience my money shame story, I was practicing coping with money shame. I labeled it, gave myself compassion for my mistake, shared it out loud with others, and made meaning of it by vowing to be kinder to myself and follow my intuition more as a small business owner. 

Money Shame Recap

Et voila! There you have it! A deep-dive into what money shame is, how money shame is different from guilt, what makes money shame worse, and tips to cope with money shame. Money shame is a shared experience, but with some tips on alleviating money shame, it doesn't have to be so frequent in your life.  

As a shame-free financial therapist and speaker dedicated to destigmatizing the emotional side of money, I offer insights and strategies to help folks have a healthier relationship with money. Reach out today to bring this transformative conversation to your organization or community. 

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I spoke with Liz Weston about money shame, along with Tammy Lally and Ed Coambs. Check out the piece here.