Financial Therapy

What Is Financial Therapy?

Financial therapy merges finance with emotional support to help people cope with financial stress. Financial advisors and other professionals who are certified as financial therapists often provide therapy to clients in order to help them make logical monetary decisions and deal with any financial issues they might be facing. Financial therapy is a specialized type of therapy that requires certification from an organization like the Financial Therapy Association.

The Financial Therapy Association defines financial therapy as "a process informed by both therapeutic and financial competencies that helps people think, feel, and behave differently with money to improve overall well-being through evidence-based practices and interventions."

Key Takeaways

  • Financial therapy is a specialized type of therapy that exists at the intersection of the therapeutic and financial fields.
  • The goals of financial therapy include aiding people in thinking, feeling, and behaving differently with regard to money in an effort to improve overall well-being.
  • Financial therapy can address past financial trauma, underlying causes of unhealthy financial behaviors, and more.
  • Financial therapists typically come from either a therapy or a financial background and receive special certification by a designating body such as the Financial Therapy Association.

Understanding Financial Therapy

Money plays a large role in a person's overall well-being, and the stresses of managing money and dealing with financial pitfalls can take a huge toll on one's emotional health. If left uncontrolled, this emotional burden can spread into other areas of a person's life. A recent study by the Financial Industry Regulatory Authority (FINRA) suggested that 60% of adult respondents in the U.S. felt anxiety surrounding their personal finances.

Just as with any other form of therapy that addresses other aspects of a person's life, financial therapy provides support and advice geared specifically toward the financial realm and the stresses that go along with it. While financial therapy may focus on aspects of financial literacy, it also addresses an individual's underlying emotional and psychological relationship with money.

Reasons for Seeking Financial Therapy

There are a range of reasons why a person would seek out or need financial therapy. Similarly, certified financial therapists include professionals with expertise across a range of fields, including financial advisors, psychologists, social workers, and more.

Unhealthy Financial Behaviors

In many cases, behavioral issues cause a person to adapt unhealthy financial routines, including unhealthy spending habits (such as gambling or compulsive shopping), overworking oneself to hoard money, completely avoiding financial issues that must be dealt with, or hiding finances from a partner. Often, bad saving, spending, or working habits are a symptom of other bad habits related to mental or physical health.

Experience of Financial Trauma

Individuals who have experienced financial trauma—personal experiences that have caused one's relationship with money to change in a negative way—may find themselves anxious or stressed when confronted with financial matters at later points in life.

Navigating New Financial Culture

Some financial therapy patients may have experience in a culture or life setting in which finances or financial knowledge were considered taboo. These people may benefit from financial therapy as their circumstances change in order to avoid feeling overwhelmed and stressed about adapting to a new financial culture.

Distinguishing Financial Therapy From Other Types of Therapy

The most effective forms of financial therapy involve a collaboration between a person's financial advisor and a licensed therapist or specialist. Both the financial advisor and the therapist have unique qualifications that the other does not possess. Because of this, it's hard for one to provide complete financial therapy support, and trying to do so could potentially steer a person in the wrong direction and violate ethical codes. The Financial Therapy Association typically requires that applicants to its Certified Financial Therapist program possess a bachelor's degree in a finance-related field or a mental health-related field, or a special designation such as a Certified Financial Planner (CFP) certification.

Financial advisors are well-versed on their clients' specific situations and are able to advise on the best courses of action. They're able to share their expertise in the hopes of alleviating the financial burdens their clients face. However, therapy is not a financial advisor's area of expertise, and if a person requires real emotional support or needs help breaking bad habits, a licensed professional should be involved. The financial advisor tends to be more adept at providing advice on how best to move forward with financial issues, while the licensed professional can provide support that gets to the root of a deeper problem.

What Is a Financial Therapist?

A financial therapist is a certified professional who provides therapy services aiming to help people think, feel, and behave differently regarding money.

Who Should Seek Financial Therapy?

Financial therapy patients include people who have had past financial trauma, those seeking to address the underlying causes of their negative financial behaviors, and individuals navigating a large-scale change in financial culture, among others.

Can Financial Advisors Be Financial Therapists?

Yes, but only if they are certified by an organization like the Financial Therapy Association. Financial therapy exists at the intersection of the financial and therapeutic fields, and both financial advisors and licensed therapists may become certified as financial therapists with additional training.

Article Sources
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  1. Financial Therapy Association. "Homepage."

  2. FINRA. "Large Number of Americans Reported Financial Anxiety and Stress Even Before the Pandemic."

  3. Business Insider. "Financial Therapy Can Help You Confront Bad Money Practices as a Result of Financial Trauma."

  4. Business Insider. "5 Tips From Financial Therapists to Start Working Through Financial Trauma."

  5. Financial Therapy Association. "Financial Therapy Association CFT-I Practitioner Handbook," Page 6.

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