What is financial therapy and do I need it?

• Financial therapy is a branch of therapy that focuses on the emotional and psychological side of money.
• Financial therapy is often helpful for people who may be financially literate, but can’t bring themselves to practice good financial habits.
• While financial counselors can provide some level of counseling and can receive FTA certification, only licensed therapists can become financial therapists.
• Read more Personal Finance Insider stories.

Money can be a very touchy subject. In fact, it is a national taboo in the United States. A 2018 survey found that 39% of people consider salary or income to be a taboo subject among friends, which is higher than marital problems at 20% or political views at 17%.

However, most people in the US feel stressed about money. According to a FINRA survey, 60% of respondents said they feel anxious about personal finances. It can be difficult to express these anxieties when money remains such a touchy subject. In these cases, it might be beneficial to consider financial therapy.

What is financial therapy?

Financial therapy is a branch of therapy that focuses on the emotional and psychological side of money, rather than the logistical. Lindsay Bryan-Podvin, a financial therapist in Michigan and author of “The Financial Anxiety Solution,” says “it’s less about how to budget and more about what gets in the way of budgeting.”

Financial therapy stems from the idea that our relationship with money is based on emotion and psychology, not boundless rationality. In the 1970s, psychologists Amos Tversky and Daniel Kahneman identified consistent judgment biases, including perspective theory, which is the idea that investors view profits and losses differently and are more loss-averse than others. to potential earnings. They laid the foundations for behavioral economics on which financial therapy is now based.

Financial therapy vs. other types of therapy

Although behavioral economics as a field of study has been around for decades, financial therapy is a relatively new concept. The Center for Financial Social Work (CFSW), which certifies financial therapists, is just under 20 years old, having been founded in 2003. The Financial Therapy Association (FTA), another accrediting organization, was founded in 2008.

Financial therapy is a specialization in therapy. That means they must acquire financial therapy certification from a financial therapy association. In practice, this means that a general therapist could engage with money issues at a higher level without delving too deeply into any of the details.

“My training as a clinical social worker taught me that if someone brings up money issues, refer them,” says Bryan-Podvin. “If someone said, ‘I’m stressed about my

credit score

, or I’m worried about what’s going to happen if I buy a house,’ I was trained to say, ‘Great, that’s not my job. There’s someone else here you can call.'”

When do I need a financial therapist?

When people think of financial therapists, they may associate it with financial trauma caused by stress related to finances and money, which can manifest as PTSD-like symptoms. People with financial trauma may feel extreme anxiety or discomfort when talking about money or feel that they don’t deserve to express their financial aspirations. Financial trauma can be resolved with a financial therapist.

However, trauma is not the only reason to see a financial therapist. Financial therapy is based on the idea that everyone has a relationship with money based on a number of factors, such as the culture they grew up in, their gender, or their religion. If someone grew up in a culture where money and finances are more taboo, that may affect how they view money today.

Although each case is unique, Bryan-Podvin finds that many of his clients are financially savvy. They know what they should be doing to manage their money, but they discover that there is a barrier that prevents them from forming good financial habits.

“They often describe it as a feeling,” says Bryan-Podvin. “I’m often told, ‘I know intellectually that this is the case, that I’m okay financially, or that my partner and I are okay financially. But emotionally, I can’t seem to really believe it.” .’ So there’s a disconnect between what’s on paper and what they’re experiencing emotionally.”

How to find a financial therapist

The FTA has a directory that lists financial therapists. However, not everyone listed on the website is a financial therapist. “Anyone can get listed on the Financial Therapy Association website for a fee. So you have to be very careful,” says Bryan-Podvin. She says the directory is a good starting point, but it’s important to take a close look at the disciplines of each person on the list to determine if they are actually financial therapists.

Once you’ve identified a few potential therapists, determining which therapist is right for you comes down to a process of trial and error. Although you can read a therapist’s biography to get an idea of ​​what a therapist is like, the best way is to try a session, which Bryan-Podvin acknowledges can be frustrating. She recommends giving any therapist three sessions before deciding if he or she is the right therapist for you.

“You can have all these certifications, all these letters behind your name,” says Bryan-Podvin. “But at the end of the day, what research shows is that the best possible outcome for a client seeking therapy is ‘fit,’ that is, whether or not they get along with a therapist, trust or not trust the therapist, have or they don’t feel like that therapist is compassionate towards them.