Money can be a very sensitive topic. In fact, it’s a nationwide taboo in the US. A 2018 survey found that 39% of people consider salary or income a taboo subject among friends, which is higher than marital problems at 20% or political views at 17%.
Yet, the majority of people in the US feel stressed about money. According to a FINRA survey, 60% of respondents said they felt anxious about personal finances. It can be difficult to voice these anxieties when money is still such a touchy subject. In these cases, it might be beneficial to look into financial therapy.
What is financial therapy?
Financial therapy is a branch of therapy that focuses on the emotional and psychological side of money, instead of the logistical. Lindsay Bryan-Podvin, a financial therapist in Michigan and author of “The Financial Anxiety Solution,” says that “it’s less of how to make a budget and more what is getting in the way of you making a budget.”
Financial therapy stems from the idea that our relationship with money is based in emotion and psychology, not unbounded rationality. In the 70s, psychologists Amos Tversky and Daniel Kahneman identified consistent judgment biases, including prospect theory, which is the idea that investors view gains and losses differently, and are more averse to losses than potential gains. They laid the foundation of behavioral economics that financial therapy now stands on.
Financial therapy vs. other types of therapy
Though 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 grants certification to financial therapists, is just under 20 years old, founded in 2003. The Financial Therapy Association (FTA), another accrediting organization, was founded in 2008.
Financial therapy is a therapy specialization. That means they need to acquire financial therapy certification from a financial therapy association. In practice, this means that a general therapist might engage with issues about money on a higher level without getting into too much depth on any specifics.
“My training as a clinical social worker taught me that if anybody brings up money concerns, refer them out,” Bryan-Podvin says. “If somebody said, ‘I’m stressed out 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. Here’s somebody else you can call.'”
When do I need a financial therapist?
When people think of financial therapists, they might associate that with financial trauma caused by stress around finances and money, which can manifest as PTSD-like symptoms. People with financial trauma can feel extreme anxiety or discomfort when talking about money or a feeling that they don’t deserve to voice their financial aspirations. Financial trauma can be worked through with a financial therapist.
However, trauma isn’t the only reason to see a financial therapist. Financial therapy is built 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 can affect how they view money today.
Though each case is unique, Bryan-Podvin finds that many of her clients are financially literate. They know what they should be doing to manage their money, but they find that there’s some barrier that prevents them from forming good financial habits.
“Often they describe it as a feeling,” Bryan-Podvin says. “They’ll often say to me, ‘I know intellectually, that this is the case, that I’m fine financially, or that my partner and I are fine financially. But emotionally, I just 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. “Anybody can list themselves on the Financial Therapy Association’s website by paying a fee. So you have to be really careful,” Bryan-Podvin says. She says that the directory is a good starting point, but it’s important to look closely at the disciplines of each person listed to determine if they are actually a financial therapist.
Once you’ve identified a few potential therapists, determining which therapist is right for you comes down to a process of trial and error. Though you can read through a therapist’s bio to get a sense 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 they’re the right therapist for you.
“You can have all of these certifications, all these letters behind your name,” Bryan-Podvin says. “But at the end of the day, what research shows the best possible outcome for a client who seeks out therapy is the ‘fit,’ meaning whether or not they get along with a therapist, whether or not they trust the therapist, whether or not they feel that that therapist is compassionate toward them.”
