When Family Financial Dynamics Become Toxic: A Therapist’s Perspective
As a Marriage and Family Therapist specializing in financial therapy, I’ve witnessed how money can become the battleground where family dysfunction plays out most visibly. Recently, I worked with a client navigating an extraordinarily complex family financial crisis that illuminated something crucial: sometimes the healthiest thing you can do is accept that someone has resigned from their role in your life.
The Resignation Framework
In one particularly powerful session, I introduced a concept that seemed to resonate deeply: viewing a parent’s behavior not as abandonment or betrayal, but as a resignation. Just as someone might quit a job, a parent can effectively resign from their parental role through their actions and choices.
This reframing isn’t about excusing harmful behavior. It’s about creating psychological distance that allows you to stop fighting against a reality you cannot change.
When my client expressed ongoing rage at her mother’s favoritism and financial manipulation, I suggested: “She’s resigned. She’s quit the job of being your mom.”
The beauty of this framework is that it allows you to:
- Stop seeking validation or fairness from someone who cannot provide it
- Release yourself from expectations that will never be met
- Accept the relationship for what it actually is, not what you wish it would be
The Psychology of Money Relationships
One of the most fascinating aspects of financial therapy is recognizing that people have fundamentally different relationships with money—and these differences aren’t always pathological.
Some people operate on what I call a “negotiation-as-lifestyle” approach. They:
- Strategically delay payments to negotiate better terms
- View financial maneuvering as a skill to be proud of
- Experience genuine joy from “winning” financial negotiations
- See paying full price or on time as foolish when alternatives exist
For someone who values financial security and straightforward dealings, this approach can feel morally wrong, even abusive. But understanding that it’s a different psychological framework—not necessarily a mental illness—can help you navigate family dynamics more effectively.
The Comparison Trap
My client struggled intensely with the belief that her lifestyle choices were objectively “better” or “healthier” than her brother’s. She couldn’t understand how living on the financial edge could be anything but destructive.
Here’s what I’ve learned through years of financial therapy: what creates stress for you might not create stress for someone else.
The healthiest financial lifestyle is the one that causes you the least amount of stress while aligning with your values. For some, that’s having a substantial cushion and paying bills early. For others, it’s constant negotiation and strategic risk-taking.
The problem arises when these different approaches collide within a family system—especially when money is commingled or inheritances are involved.
Compartmentalization as a Survival Tool
When you can’t cut family members out entirely but recognize fundamental incompatibilities, compartmentalization becomes essential. Think of it like a prenuptial agreement in marriage: you can love someone while also protecting yourself legally and financially.
I advised my client to:
- Separate the familial relationship from the business/financial component – Your brother can be your brother in one context and a poor financial partner in another
- Stop being the family spokesperson or rescuer – Each adult sibling must navigate their own relationship with parents
- Focus on what’s within your control – Pursue legal remedies for money owed, but release responsibility for others’ choices
When Narcissistic Systems Meet Money
Family systems with narcissistic dynamics often use money as a control mechanism. The patterns include:
- Creating dependence through strategic financial support
- Playing favorites to maintain power
- Using money to punish independence
- Gaslighting about financial facts and history
In these systems, the “scapegoat” child—often the most independent one—faces unique challenges. They’re simultaneously criticized for not helping enough and excluded from family decision-making.
The Hardest Skill: Doing Nothing
At the end of our session, my client asked: “So I just do nothing?”
Yes. And it’s incredibly difficult.
“Doing nothing” doesn’t mean passivity. It means:
- Not expending emotional energy trying to change people who won’t change
- Not inserting yourself as mediator in sibling conflicts
- Not seeking justice or fairness from a system designed to be unfair
- Pursuing your legal and financial interests while releasing the emotional hooks
Moving Forward
If you’re in a similar situation, ask yourself:
- Am I trying to force someone to be a parent/sibling/family member they’ve shown me they cannot be?
- Am I confusing different relationships with money as moral failings rather than different approaches?
- Can I separate the business/financial aspects of family from the relational aspects?
- What am I actually trying to control that isn’t within my control?
The goal isn’t to become callous or cut off all feeling. It’s to develop what I call informed detachment—understanding the psychology at play while protecting your own wellbeing.
Sometimes the most loving thing you can do for yourself is accept someone’s resignation and stop showing up for a job they’ve already quit.
Marina Edelman, MFT, specializes in financial therapy, helping individuals and couples navigate the complex intersection of money, family, and emotional wellbeing. Her work has been featured in The Wall Street Journal and The Lilly.
Connect with me: @marina.on.marriage
