Financial therapy is a holistic approach that recognizes the interconnectedness of mental health and financial well-being. It may not be as prevalent as traditional therapy, but its importance is central to addressing financial stress and negative financial behaviors. This is because money habits like shopping addiction or gambling induce long-term emotional implications like depression, anxiety, etc.
What Is Financial Therapy?
Financial therapy is an interdisciplinary field 1 Sudarsana, G. N., Hidayah, N., Ramli, M., Atmoko, A., & Suarni, N. K. (2023). Financial therapy in esports: addressing impulsive buying, mental health, and financial well-being in Indonesia. Journal of public health (Oxford, England), fdad253. Advance online publication. https://doi.org/10.1093/pubmed/fdad253 that combines the principles of psychology and finance to help individuals and couples address financial stress, and emotional and behavioral aspects of their finances. Therapists venture into client’s emotional and conviction of finances, uncovering the contributing factors such as childhood experiences, family life, etc. that influence financial attitudes. For instance, a client’s early exposure to financial instability may shape his/her current financial decision-making and habits.
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Why Does One Need Financial Therapy?
Financial therapy incorporates several strategies of psychotherapy 2 Bhatia, S., & Singh, S. (2023). Exploring financial well-being of working professionals in the Indian context. Journal of Financial Services Marketing, 1–14. Advance online publication. https://doi.org/10.1057/s41264-023-00215-x , because of which it is also known as financial psychotherapy. To people dealing with the financial stress and turbulent emotional aspects of their financial lives, this form of therapy is important. It focuses on identifying and altering negative habits that lead to overspending or avoidance of financial responsibilities.
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By unearthing the causes and encouraging favorable changes in behavior, financial therapy enables people to negotiate their way through the maze of financial intricacies and promote a healthier attitude towards money, mental health, and life as a whole. For instance, financial therapy among couples aims at improving couple’s money talk, helping partners understand one another’s different financial values, resolving conflicts, and coming up with common financial objectives together.
Goals Of Financial Therapy
The common goals 3 Bai R. (2023). Impact of financial literacy, mental budgeting and self control on financial wellbeing: Mediating impact of investment decision making. PloS one, 18(11), e0294466. https://doi.org/10.1371/journal.pone.0294466 of financial therapy include:
- Empowering individuals and couples to take control of their financial lives.
- Emotional awareness of how our emotions and money are tied together. This involves assessing and acknowledging problematic spending patterns.
- Alleviating financial stress by addressing emotional roots and building coping mechanisms related to finances.
- Addressing and changing negative financial habits and behaviors.
- Guiding clients in realistic, value-based financial goal setting.
- Providing training for practical financial skills and informed financial decision-making.
- Improving communication and exchanges on financial matters, especially in couples and families.
- Providing tools for resolving conflicts arising from financial differences.
- Facilitating collaboration between financial and mental health professionals for long-term financial stability.
How Can Financial Therapy Help Mental Health Functioning?
Research 4 Farrugia, M., Yu, H., Ma, S. J., Iovoli, A. J., Erickson, K., Wendel, E., Attwood, K., Wooten, K. E., Gupta, V., McSpadden, R. P., Kuriakose, M. A., Markiewicz, M. R., Chan, J. M., Hicks, W. L., Jr, Platek, M. E., Ray, A. D., Repasky, E. A., & Singh, A. K. (2021). Financial Counseling Is Associated with Reduced Financial Difficulty Scores in Head and Neck Cancer Patients Treated with Radiation Therapy. Cancers, 13(11), 2516. https://doi.org/10.3390/cancers13112516 attributes a number of ways as to how can financial therapy help mental health:
- Financial therapy provides a sense of control and empowerment over one’s finances, particularly supporting the achievement of realistic financial goals.
- Financial psychotherapy enhances emotional regulation related to money.
- Financial therapy alleviates financial stress (its source and consequences 5 Guan, N., Guariglia, A., Moore, P., Xu, F., & Al-Janabi, H. (2022). Financial stress and depression in adults: A systematic review. PloS one, 17(2), e0264041. https://doi.org/10.1371/journal.pone.0264041 like depression and substance abuse) and helps to develop healthy coping strategies.
- Financial therapy addresses negative financial behaviors, like emotional spending, shopping addiction, hoarding, gambling, etc.
- Financial psychotherapy fosters healthy communication and conflict resolution in matters of finances—thereby supporting healthy familial dynamics and positively affecting mental health within the family/social unit.
How Does Financial Therapy Take Place?
The process 6 Birkenmaier, J., Maynard, B., & Kim, Y. (2022). Interventions designed to improve financial capability: A systematic review. Campbell systematic reviews, 18(1), e1225. https://doi.org/10.1002/cl2.1225 of financial therapy involves numerous steps:
- Assessment: Evaluate financial situation and goals in the client.
- Emotional Exploration: Explore emotions and beliefs related to money.
- Financial Goal Setting: Establish realistic, values-based financial goals.
- Behavioral Analysis: Identify and analyze negative financial behaviors.
- Communication Enhancement: Improve dialogue, especially in couples or families, related to finances.
- Conflict Resolution: Provide tools and strategies for resolving financial conflicts, like open communication, budgeting, planning, etc.
- Financial Education: Guide on developing practical financial and decision-making skills.
- Empowerment: Empower individuals to actively manage their financial well-being.
- Coping Strategies: Develop healthy mechanisms for handling financial stress.
- Follow-Up Sessions: Regularly track progress in financial behavior and reinforce positive changes.
- Interdisciplinary Collaboration: Collaborate with financial and mental health professionals to help with finance-related mental health conditions.
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Tips To Avail Financial Therapy
In order to enjoy the best of what financial therapy has to offer, consider 7 Lone, U. M., & Bhat, S. A. (2022). Impact of financial literacy on financial well-being: a mediational role of financial self-efficacy. Journal of Financial Services Marketing, 1–16. Advance online publication. https://doi.org/10.1057/s41264-022-00183-8 :
- Recognizing and defining specific financial challenges and goals.
- Choosing a qualified therapist with dual expertise, who can effectively help you in finance-related mental health.
- Being open and co-operative during sessions for effective therapy.
- Collaborating with the therapist on planning realistic financial goals and exploring emotional aspects of your problematic financial behavior.
- Adopting financial therapist-recommended behavioral changes 8 Kelley, H. H., Lee, Y., LeBaron-Black, A., Dollahite, D. C., James, S., Marks, L. D., & Hall, T. (2023). Change in Financial Stress and Relational Wellbeing During COVID-19: Exacerbating and Alleviating Influences. Journal of family and economic issues, 44(1), 34–52. https://doi.org/10.1007/s10834-022-09822-7 and be patient with the process.
- Including your partner or/and family for a supportive environment during therapy.
- Continuously assessing and adjusting financial goals and strategies to meet changing needs.
Takeaway
Financial psychotherapy/therapy stands as a valuable resource for individuals and couples seeking to understand and transform the intricate relationship between emotions and financial behaviors. As the field continues to evolve, it plays a crucial role in empowering individuals to navigate the complexities of their financial lives and associated mental health and relationships with resilience and confidence.
At A Glance
- Financial therapy is a holistic approach that recognizes the interconnectedness of mental health and financial well-being.
- It is also known as financial psychotherapy.
- It helps individuals and couples address financial stress, and emotional and behavioral aspects of their finances.
- The goals of financial therapy are to foster emotional awareness, modify negative financial behaviors, and empower individuals to achieve sustainable financial well-being.
- Optimize financial therapy by identifying challenges, choosing a qualified therapist, fostering communication, and developing coping strategies of financial health.
Frequently Asked Questions (FAQs)
1. What Can One Expect From A Financial Therapist?
A financial therapist helps individuals navigate the emotional aspects of money, addressing behaviors, attitudes, and fostering a healthier relationship with finances.
2. Who Can Be A Financial Therapist?
Anyone with a background in mental health, finance, or counseling can become a financial therapist by obtaining relevant training and certifications.
3. Is Financial Therapy A Private Pay Service?
Yes, financial therapy is often a private pay service, with individuals directly covering the cost of sessions as it may not always be covered by insurance.
