What is Financial Therapy?
Everyone has the best intentions regarding their finances. Whether it’s contributing to your savings account each month or making a larger payment towards your credit card debt, we all have monetary goals. However, if you find yourself falling short on fulfilling the goals you’ve set for yourself, you may need to rethink your strategy.
It could be more than just your lifestyle that’s preventing you from achieving financial well-being—how you approach your finances and spending can have a significant impact. For example, In the last few years, close to 96% of Americans have reported impulse shopping, either in-store or online1, and that can hinder progress to financial goals.
For some, addressing impulse spending may seem like an insurmountable challenge (and of course, it’s not the only behavior that can cause problems). If you find yourself with spending habits that keep you from meeting your financial goals, financial therapy could offer solutions that might work for you.
Financial Therapy vs. Financial Advice
Financial therapy “is a process informed by the 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.”2 Rather than focusing on the strategy to reach your goals, financial therapy incorporates more of your behavior, thoughts, and feelings about money into your financial planning.
Financial therapy explores your behavior around finances as part of developing a comprehensive financial plan that works for you, so you can meet your goals in the long run. This plan can include identifying your stressors when it comes to money, how you may be using money as a reward, and other behaviors that can put an extra strain on your finances.
Is Financial Therapy Right for You?
Often a taboo subject, you may not have the opportunity to discuss money with family and friends very often. You may not be familiar with healthy money habits or how your family or friends have approached finances in the past. And money decisions can be confusing, making it hard to see the best way forward. Financial therapy can be the answer for those who are looking to discuss ways to budget, save, and consume in ways that support their needs and lifestyle.
Many financial planners incorporate some techniques of financial therapy in their services, but seeking out someone who specializes in financial therapy can be helpful to those who experience extreme behavior with money.
If, like many people, you find yourself tending to over-shop to the point that you’re unable to achieve your monetary goals, a financial therapist can work with you to determine where this impulse is coming from and how to address it.
Others have a problem with hoarding money, to the point where they forego addressing their needs. People who save and dismiss spending on necessities like healthcare, fresh food, and other similar items can be operating out of fear of scarcity. Financial therapy can help individuals to address where this fear comes from and how to spend in a healthy way.
Taking a behavioral approach can make it easier to have a healthy relationship with saving, spending, and achieving your financial aims. If you find that you’re unable to meet your goals even after having a financial plan, financial therapy may provide you with the help you need. When seeking out a financial therapist, be sure that they are a licensed specialist and have experience addressing the various barriers you are facing. Learn more about financial therapy or find a financial therapist at financialtherapyassociation.org.