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Most of us know that money can be a great source of stress and anxiety, whether those feelings are persistent or only arise intermittently. A financial therapist can provide support to those experiencing money-related stress by helping them overcome emotional barriers to achieving their financial goals. In other words, financial therapy combines mental health treatment and financial planning services.
A financial therapist can help you work to change your mindset and behavior by digging deep to address trauma. “In general, therapy helps clients work through issues affecting their mental health,” financial therapist Clare Dubé said. “The work is focused on improving clients’ situation and overall wellbeing. Financial therapy does much of the same thing, whereas its main focal point pertains to money.”
Dubé went on to explain that in simple terms, financial therapy is different from financial advising in that it is more focused on the emotional side of finances, and less on the mechanical side of money management.
Let’s take a closer look at when it may be a good idea to pursue financial therapy.
When financial therapy may make sense
Financial therapy doesn’t offer a single cookie-cutter solution. Instead, financial therapists work with each patient individually, helping them overcome financial biases, create better money habits, and understand why money makes them feel the way it does. These are some examples of when it can make sense to explore financial therapy, but many other scenarios could be applicable as well.
You feel depressed, anxious or obsessive about your finances
Feeling negative emotions when you think about money may stem from the fact that you truly are struggling financially and can’t find a way out. Other times, you may be quite secure financially but still struggle with depressed, anxious or obsessive thoughts about money. Either way, this is where a financial therapist can help. They’ll help you understand your feelings, giving you a safe place to explore and unravel them. From there, a financial therapist can help you create an actionable plan that can help you work towards feeling more secure.
Say you earn a good income, have savings and no debt, but still feel very anxious when spending money. A financial therapist can help you examine your feelings, identify where they stem from and create a financial plan that gives you the extra security you need. Perhaps having additional safety nets like an emergency fund or an HSA will help lower your anxiety. At the same time, while you’re working on financial solutions like saving money, you can work with your therapist on emotional strategies.
You acknowledge but struggle to change poor money habits
Often, those seeking financial therapists know what they need to do but lack the ability to follow through. You might consistently over- or under-spend, fail to earn steady income, avoid planning for the future or struggle with financial abuse. Viewed in black and white, it’s easy to see how each of these situations hurts you, but they can be complicated to remedy.
If you’ve been wanting to change your situation but lack the motivation or confidence to do so, this is where the financial planning aspect of financial therapy can come into play. A licensed financial therapist is equipped to help you create a responsible financial plan, which is not something a normal therapist can do. They are legally bound by fiduciary duty to advise you in a way that serves your best interests. They can also support you by holding you accountable with regular check-ins.
Maybe you struggle to pay your bills on time. You know that paying late is bad, but month after month, you still rack up late fees. A financial therapist can help you create a plan that prioritizes your bills. For example, they may help you create a thorough budget, encourage you to set up direct deposits from your paycheck into an account with money set aside for bills, and then suggest you set up autopay for all of your bills. Then the financial therapist can help you address why you struggle to pay your bills on time, to see if there’s a bigger issue than simply forgetting.
You and your partner don’t see eye to eye
Managing your money with a partner can bring extra challenges to the table, especially if you don’t see eye to eye on spending and savings goals. Some partners may struggle with one partner spending more money than agreed upon, not communicating well, avoiding stressful money conversations, hiding credit card statements or having different financial goals.
“I typically work with couples, and oftentimes they seek help with what I refer to as ‘money thought misalignment,’” she says. “They find themselves wanting the same end result and being caught up in different opinions on how to achieve said result. The reason this can be so challenging is because both parties are in a thought loop based on their own perspective. They lack the ability to communicate their thoughts in a way their partner can hear and understand.”
Dubé provided a real-life example of how, through her work as a financial therapist, she was able to help a couple get on the same page.
She was working with a couple, who we’ll call Ed and Marie, after they reached out due to an ongoing argument about how to best provide for their family. Both valued family and security. However, their approaches to aligning their financial behaviors and values were very different.
The couple were partners in business and life. They operated a real estate development entity. Ed was confident in his ability to create profitable projects. His confidence often included what both parties referred to as “risky decisions.” Ed believed the greater the risk, the greater the reward. Marie was more risk-averse. Too many times, Ed’s decisions heightened Marie’s stress and anxiety. The risky and challenging projects fueled Ed. He would get excited and energetic. Marie would be stressed, anxious and frustrated. Each time the risky project was profitable, it became harder for Marie to get Ed to understand the stress it brought her.
The common goal for the couple was to provide financially for the family. The issues that presented were:
- What is the definition of “provide”?
- How could their goal be achieved while giving both partners a sense of wellbeing?
Marie wanted to have a steady stream of income that would allow for better cash flow. Ed wanted to create generational wealth to provide for not just the immediate family but for future generations. After examining their socioeconomic backgrounds to better examine what motivated them and caused them concerns financially, Dubé was able to help them come up with a plan for moving forward.
“Through our work, we were able to create a new scope of work in their business that included real estate management,” Dubé says. “This gave the steady income Marie desired. Ed would continue to seek out risky projects, and he and Marie would work out the project budget with contingencies factored in that would give Marie peace of mind.”
Your business is struggling
Speaking of businesses; working for yourself can be incredibly liberating, but it can also be a huge strain on your mental and physical health. Similar to how Dubé was able to help Ed and Marie find a new revenue stream that gave them both what they needed, a financial therapist can work with any business owner to find a way to make their business and personal finances work.
A financial therapist can help a business owner understand why their business is struggling, identify where they can cut back on spending and make an improvement plan.
Cost of financial therapy
Financial therapists are obligated to clearly disclose their fees and billing structure to clients, as part of their client engagement. There is no standard cost, as financial therapy service providers all charge varying rates. While some health insurance policies may cover this type of therapy, unfortunately this isn’t common.
“Generally, financial therapy is not covered directly by insurance,” says Dubé. “To be considered, sessions need to be with a licensed psychotherapist. It is important to review any health insurance policies you have, to see if services are covered.”
Those who may struggle to afford financial therapy services may instead want to turn to a credit counselor, if they need help getting their financial life in order. Credit counseling organizations are usually non-profit organizations that offer free workshops and educational materials. These counselors can advise you on how to manage your money and your debt. It’s worth looking into organizations that offer these services for free — although they won’t be able to address your mental health like a financial therapist could.
Should I seek a financial therapist or financial planner?
Another option you have for seeking out financial help is to hire a certified financial planner (CFP). A CFP has to meet strict education standards and has a fiduciary obligation to their clients like a financial therapist does. The main difference between a CFP and a financial therapist is that a CFP can’t address your mental health. If you feel that simply getting your finances in order is all you need, you may find that a CFP can get the job done. But if you’re experiencing feelings of anxiety, depression or compulsive behavior due to your financial life, a financial therapist is likely a better fit.
If you feel like you need ongoing support, a financial therapist may be a more affordable route. A 2020 analysis by Kitces Research found that the median cost of a comprehensive financial plan from a CFP was $2,500. The median hourly rate was $250, and the median monthly retainer fee was $4,000.
While you may find that price to be worth it to go over your finances once a year, chances are you won’t want to turn to a CFP for ongoing guidance and accountability. The field of financial therapy is new and a standard rate isn’t widely known yet, but with the average base salary for a therapist being $33 an hour, you can expect to find a financial therapist that charges less than a CFP.
The bottom line
Working with a financial therapist can help you create an action plan to better manage your finances and reach your goals while addressing how money affects your mental health. If you’re struggling with financial anxiety, you may find this combined form of treatment to be effective.
According to Dubé, one of the best ways to find a Financial Therapist is to start with The Financial Therapy Association. Therapists accredited by this association have a dual duty to adhere to the highest standard of care owed to both clients of mental health professionals and clients of financial advisors.