Are there risks in allowing financial-psychological issues to go untreated?
Psychological problems often manifest in money: An issue with self-worth will often show up as under-earning. Someone with narcissistic tendencies might assume an unsupportable amount of debt—and then resent having to be responsible for it. Money’s prominence means that, in some form or another, financial behavior becomes an expression of our internal psychology.
And in much the same way that money problems arise from a series of small hurts and disappointments that accumulate over time, the consequences of these problems build in a similar way. One of particular note? Relationship issues.
A fair percentage of my practice is couples-based, and there’s typically a clashing of viewpoints that they can’t resolve on their own. As a financial therapist, I seek to uncover underlying tensions. It’s in times of stress or conflict, when the couple isn’t sure how to use their strengths in better harmony, that the process of compromise breaks down.
Can you share an example of how you helped a patient overcome psychological issues related to money?
I worked with a client who struggled with anxiety and questions of self-worth. She felt deeply ashamed if she spent money on anything for herself—behavior that stemmed from issues related to her upbringing. So we worked on creating order and safety in her financial system by helping her to better manage cash-flow and debt obligations. Once we established stability, we adjusted her spending to include planned indulgences, which reinforced that it was OK to use money as a means of self-care.
Are there any strategies that people can use to strengthen their own financial psychology?
I’d recommend being attentive to your money-management practices and financial “hygiene.” In the same way that sleep can be improved with a consistent bedtime, you can decrease money anxieties by having a regular, orderly financial routine.
Also, try to create a framework for as many financial decisions as you can before you find yourself in a bad situation. If you have a friend who undermines your efforts to live on a budget, have a plan in place for what to say to that friend before the conflict occurs. If you’re expecting a tax refund, draft a plan for how to spend the refund before the money is in your hand. We all behave differently under pressure, so rehearsing a response can be extremely helpful in managing that situation.
What, to your mind, comprises a healthy approach to finances?
My goal is to promote a client’s financial wellness, which I define as understanding and accepting the role that money plays in everyday life. That includes feeling competent in making money decisions, having financial integrity when it comes to personal relationships, and, most important, possessing financial awareness. Ignoring or behaving impulsively with money is at the root of many financial issues. Sound financial health isn’t about building wealth, per se, but about self-care and self-determination.
Upon further consideration, perhaps the reference note should read thusly:
For more information on the field of financial therapy, or to find a list of registered financial therapists in your area, visit the website of the Financial Therapy Association www.financialtherapyassociation.org (and click on the “FTA Network” tab).