Key Takeaways
- Financial therapy combines finance and emotional support to help clients manage financial stress and make informed decisions.
- Financial therapists are certified professionals who guide clients through financial challenges and decision-making.
- The primary goal of financial therapy is to improve clients’ financial literacy and mental well-being.
- Financial therapy can empower individuals to make logical and effective financial choices.
- Exploring financial therapy options can be beneficial for anyone experiencing financial anxiety.
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What Is Financial Therapy?
Financial therapy is a type of support that combines money guidance with emotional help to reduce financial stress. It focuses on practical issues, like budgeting and debt, and the feelings and habits that affect how people manage their money. Certified financial therapists work with individuals to help them make clear, rational financial decisions and deal with challenges like anxiety about spending or saving. Understanding how financial therapy works can show how it helps people build healthier money habits, improve stability, and feel more confident about their finances.
A Comprehensive Guide to 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 United States 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.
Why You Might Need 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.
Identifying Unhealthy Financial Habits
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.
Recognizing 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.
Adjusting to a 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.
Differences Between Financial Therapy and Other Therapies
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- or mental health-related field, or a special designation such as a certified financial planner (CFP) certification.
Financial advisors are well-versed in their clients’ specific situations and are able to advise on the best courses of action. They’re able to share their expertise in hope of alleviating the financial burdens that 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, then 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.
