Do you remember the first time you couldn’t pay off your credit card statement in its entirety?
I remember my first time.
Staring at the four-digit balance that remained left me with a whirlwind of thoughts and emotions. Even though I told myself my situation was only temporary, part of me wasn’t sure that was the case. I had lied to myself before about money. Was I really going to hold myself accountable this time?
The Rise of Financial Therapy
It’s no secret that credit card debt is emotionally taxing. But like many of you, the world of finance was foreign and intimidating to me. I pigeonholed myself as a writer, predominantly interested in social issues, and allowed my profession to act as a crutch for the less-than-ideal financial situation I created for myself.
Until, that is, I read Mind Over Money by Drs. Brad and Ted Klontz, a father-son team who helped pioneer the new field of financial psychology.
In their book, the Klontzes describe the 12 most common “money disorders” that many of us developed during our childhood, which in turn shape our perception of money. The authors stress that it is possible to overcome these negative and self-defeating patterns of thinking by replacing them with better, healthier thoughts about money.
But in order to make those mental adjustments for how we perceive spending, saving, budgeting, etc., we first have to acknowledge we need help.
Enter the growing field of financial therapy.
Focus on Finance
The practice of financial therapy is relatively new, first surfacing about a decade ago, but continues to gain traction as more and more individuals realize their relationship with money may not be exactly healthy.
“No one thought about going to therapy for sex addiction 30 years ago, but now it’s become normalized,” notes marriage and family therapist Ed Coambs, MA, MBA, LMFTA, CSAT-C, CFP.
If it’s up to Coambs, financial therapy will be the next big niche in the world of psychology.
“Mental health professionals are really good at diagnosing mental health issues and understanding how experiences affect us mentally and emotionally; however, their financial sophistication is typically a little lower than a [certified financial planner],” says Coambs, who’s also a member of the Financial Therapy Association.
The point of financial therapy is not to just review your finances, but to look at you as a whole person.
Just like some people looking to lose weight increase their exercise regimen or turn to a strict diet, others need additional support, says Coambs. They need someone to motivate them and counsel them on what behaviors are counterproductive and which ones will help them reach their goal.
A financial therapist, unlike a CFP, will meet with you on an ongoing basis and walk alongside you as you figure out what’s going on when it comes to your financial situation.
“Are you anxious? Addiction prone? Depressed? Did you experience some form of trauma? Essentially we want to know who are you and what happened in your life that impacted your ability to manage your finances,” Coambs said.
Who benefits from financial therapy?
Financial therapy is not just for those with debt. Coambs says there’s a continuum of individuals who would benefit from financial therapy.
On one end of the spectrum you have those persons who avoid their finances at all costs – they have unopened bills or unopened financial statements. These individuals won’t look at their finances because “looking at financial information can evoke a lot of negative narrative on who they are like ‘I’m stupid,’ ‘I’m not good enough,’ or ‘I’m a bad person,” according to Coambs. “’I’m not worth it’ is also common,” he added.
On the other end of the continuum, you have individuals who are obsessed with their finances and are constantly watching their debt balances and investments.
On this end of the spectrum, Coambs notes, it’s common for individuals to have a large amount in their savings but they have growing amounts of credit card debt. When he meets with these persons, Coambs says he tries to help them discover why they are not using the return on their investments to pay down high interest debt.
A Worthwhile Investment
If your relationship with money is of concern to you, financial therapy can be beneficial even if it seems costly at first, according to Coambs.
“It’s a difficult dilemma, especially for people stuck in a cycle of debt, to pay $150 per session to meet with a financial therapist,” said Coambs. He noted that meeting with a financial therapist on a weekly basis for one month would cost about $600. However, Coambs sees financial therapy as an investment in yourself.
“If you spent $4,000 in a year on financial therapy and were able to start saving, or spend less mental energy avoiding money or obsessing over debt,” it may be worth it a try, Coambs says.
The key, says Coambs, is to not wait until you’re experiencing a financial crisis to seek help.
“If you have the cold or flu you go to the doctor. You don’t wait for six months when you’ve developed pneumonia then go to the doctor,” he said. The same is true for financial problems. You’ll have a much easier time correcting the situation when you first experience mild distress versus a full-blown crisis.”
I’m interested in financial therapy. Where do I go?
Anyone looking to find a financial therapist should visit the Financial Therapy Association website and use the FTA’s therapist directory.
“Take some time to do some research and see who you feel comfortable with,” Coambs advises. “If it’s not a good fit with the first person or the first few people, it can be challenging and frustrating, but continue to seek that right person.”
A word of caution. Due to the infancy of financial therapy, the entire industry is currently unregulated. Coambs advises that if there is abuse or trauma in your background that you believe may be contributing to your less-than-ideal financial situation, to first meet with a therapist who specializes in that form of trauma.