Is it Time to Consider Financial Therapy?

Do you lie to your spouse about your spending? Feel guilty about how much money you make? Constantly blow your budget? A new breed of expert -- the financial therapist -- is ready to help.

Also called financial psychologists, financial therapists will examine the emotional roots of your relationship with money to help resolve the underlying issue that's causing the problem, whether it's overspending on gifts to show your love for someone, or hoarding because you grew up poor.

"If you're not sticking to your budget, there's not a lot a traditional financial planner can do," says Amanda Clayman, a financial therapist in New York City. "A financial therapist will try to figure out why your budget isn't working. Is there some sort of emotional issue causing you to spend a lot of money? Was there something in your upbringing that is influencing that's how you're handling your money now?"

Blend of psychology and money is long overdueWhile the number of financial therapists is difficult to quantify, it's clear that the field is expanding. A growing number of social workers, psychologists and counselors across the country are choosing to specialize in money disorders, and at least three organizations for U.S. practitioners have been formed in recent years. The Financial Therapy Association, which was established a little over a year ago, already has 300 members, says President Sonya Britt, an assistant professor of personal financial planning at Kansas State:  "It's grown a lot faster than we expected."

Financial therapists say the blend of psychology and budget planning is long overdue. Money has long been cited as a leading cause of divorce in the U.S., and 76% of Americans named money as their No. 1 source of stress in a survey last year by the American Psychological Foundation.

"People feel more shame around money than they do around sexual problems," says Brad Klontz, a financial psychologist and author of "Mind Over Money: Overcoming The Money Disorders that Threaten Our Financial Health." "People are ashamed they have too much money or ashamed because they have too little. They think their problems with money are because they're lazy or stupid, so they don't look for help. They stick their heads in the sand."

What's your financial flash point?The therapists say most people have a "financial flash point" -- an experience early in life that leaves a lasting impression about how money works. One of Klontz's clients, for example, had a grandmother who gave $20,000 at the last minute to save the client's family home from foreclosure. The lesson she took from the experience? No matter how bad her financial troubles got, she believed someone would be there to rescue her. "The craziest money behaviors make a lot more sense when you figure out what someone's financial flash points are," Klontz says.

Financial therapists have identified and named a variety of common money disorders they can treat, including overspending, underspending, serial borrowing, financial infidelity, workaholism, financial enabling and more.

"In America, we all know what we should be doing: spending less and saving more for the future," says Klontz. "So more information about how to spend our money is not going to help. We need to look deeper, at the emotional issues behind the problem."

Does financial education trump psychology?Not everyone agrees. Michael Kothakota, a financial planner at WolfBridge Financial in Apex, N.C., says if one of his clients clearly has a psychological issue, he refers them to a psychologist. But he adds: "I don't think there are a lot of people who need treatment for money disorders. The problem I see more of is a lack of education. People don't understand complicated investments, or they don't understand interest, and they need information and help making good decisions about their future. I don't think psychologists have the training or the background knowledge to help clients make those kinds of decisions."

That's part of the reason why some financial therapists have teamed up with traditional financial advisers to offer clients a more holistic approach. That's what psychologist William Marty Martin does at Aequus Wealth Management in Chicago. "Anytime we meet with someone, I'm in the room. The planner asks about financial things. I focus on the education pieces, the emotional pieces and the relationship pieces. Then if there's a special issue that arises -- say, for example, someone is having trouble with a spending disorder or a couple is fighting over money -- that's when I get involved."

Madeline Murphy Rabb, a fine art adviser in Chicago, said the two-for-one deal is what drew her to Aequus. "I liked that I had one hard-nosed, business person talking to me about the numbers and another person talking to me about the all the things that informed my attitude toward money."

Rabb said financial therapy helped her realize that her father's extreme penny-pinching was part of the reason she had a tendency to overspend. Her therapist also gave her the confidence to have some tricky conversations with clients about what her time was worth. "He helped me examine what was keeping me from taking risks in some areas and not taking risks in others," Rabb says.

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