If you’ve read my Clinical Psychology Reflections, then you might be aware that The Psychologist Magazine by the British Psychological Society is a major source of inspiration from time to time. Yet The Psychologist never normally inspires podcast episodes, but in December 2024, they mentioned financial psychotherapy. I had never heard of this type of psychotherapy before but it focuses on improving people’s relationship with money amongst other important behavioural and psychological processes. Therefore, in this clinical psychology podcast episode, you’ll deep dive into what is financial psychotherapy, what does a financial psychotherapist do and much more. If you enjoy learning about mental health, the psychology of money and more then you’ll greatly benefit from this episode.
Today’s psychology podcast episode has been sponsored by Introduction To Psychotherapies: A Clinical Psychology Introduction To Types of Psychotherapy. Available from all major eBook retailers and you can order the paperback and hardback copies from Amazon, your local bookstore and local library, if you request it. Also available as an AI-narrated audiobook from selected audiobook platforms and library systems. For example, Kobo, Spotify, Barnes and Noble, Google Play, Overdrive, Baker and Taylor and Bibliotheca.
Note: as always absolutely nothing on this podcast is ever any sort of official relationship, financial or other form of advice.
What Is Financial Psychotherapy?
This form of psychological therapy combines financial coaching and behavioural therapy to help clients improve their feelings, thoughts and behaviours around money. Also, this therapy helps to address the very real gap between a person’s financial health and money and their emotional health, and this is a very new discipline which is why a lot of people haven’t heard of it. The Financial Therapy Association was only established in 2010 so it is very new.
To help clients with their attitudes towards money, financial therapists help people to understand their fears and worries around money, so this guides the client towards a lightbulb moment. As well as the difference between a financial therapist and a financial advisor is that a therapist explores the beliefs and feelings that a client has behind their financial habits whereas a financial advisor focuses on helping a person reach their financial goals.
In addition, to become a certified financial therapist, both financial and mental health professionals can become one by meeting specific requirements in financial planning, financial counselling, financial therapy as well as you need to have therapeutic competencies. Also, in the United States, this certification comes from the Financial Therapy Association.
However, I must note here that a financial therapist is NOT a protected title so anyone can call themselves a financial therapist regardless of the amount of training that they have done. This is good because it means there are financial professionals who aren’t credentialled therapists but they can still help clients with their money. Therefore, whilst this is not always a problem because there are a few behavioural therapists that focus on finance and do not have financial qualifications, it can be a problem because people without behavioural therapy or financial qualifications can and do call themselves financial therapists. You need to be careful of that.
How Does Financial Psychotherapy Help People?
Typically, a client who wants financial therapy has limiting beliefs about money and this can stop them from reaching their financial goals. Yet there are other impacts too. For example, sometimes these limiting beliefs stop people from enjoying the fruits of their labour too because they have fears round spending money or buying non-essential items.
As a result, a financial therapist can help a client to identify their limiting beliefs and their emotions. For instance, some people, especially individuals who grew up in marginalised communities, have certain money stories that they tell themselves that developed in their childhood. These stories can hold them back or push them towards their goals.
Personally, because of my childhood trauma and my social environment telling me that if certain people found out I was gay then I would be beaten, killed or made homeless. I was always very careful with money because in my mind, I needed to save it as much as possible so I could survive once I was homeless. That summed up my childhood, and even now, I don’t really want to dip into my savings at all, just in case I need it to survive once more.
Equally, I come from a very poor and deprived area and have a lot of friends at university, so our attitude towards money is we need to be careful. Money has always been something that must be used wisely, but money is a tool to get us closer to things and activities that we enjoy too.
Money is a balance.
As a result, financial therapy can help clients to focus on their money story to identify their limiting beliefs, emotions and whether or not these emotions and beliefs are pushing them towards or away from their financial goals and improved emotional health.
Financial Therapy Helps Start Small and Considers Passive Investing
A smaller aim of financial therapy is to help clients take small steps towards changing their financial habits. For example, within financial therapy, a client could do research into whatever is making them uncomfortable. Like, in the United States, if a client wanted to get information about a 401K or a Roth IRA then they could investigate those options and then decide what their goals are based on that information. This would allow the client to move forward in a way that feels right for them, their life and their financial goals.
Additionally, financial therapy can help clients understand passive inventing, a long-term strategy for building wealth by buying securities that mirror stock market indexes for the long term. For clients, passive investing might be a great way to take the pressure off themselves, even more so if they’re struggling to understand the complexities of the finance world. Since it’s a hands-off form of investing that means clients do not have to learn complex processes or take high risks that naturally come from investing. Forms of passive investing can include index funds, mutual funds or ETFs.
In other words, passive investing allows compound interest to do the work for clients, because if they put a small amount of money into a mutual fund then it can be very energising to see their money start to grow. This can enable the client to take another step forward in their financial plan.
Financial Therapy Helps Clients To Envision Retirement
Finally, other clients can be very stressed about retirement and other clients still might not be thinking about retirement, because it is decades away. In these sorts of situations, recurring expenses take priority and other clients prefer to use their money to help them live in the moment. Again, if we bring this back to helping clients focus on their financial goals, if they struggle to take steps towards their goals, it might be because they struggle to focus on the future. This is where financial therapy can help them.
Typically, financial therapy stresses the importance of compound interest because this helps clients to grow their money, and whilst inflation reduces the spending power of their investment over time. The longer a client saves for retirement, the better.
One strategy that financial therapists might use to help clients in this regard is getting a client to imagine a person who is at retirement age and how they’re currently living. This can help a client to connect to the future so the client can envision what they want for themselves as well as put a plan together so they can achieve that retirement goal.
Equally, it can be helpful for clients to think about future generations too. For example, getting them to think about steps they could take now to help their children and grandchildren be set up for success in the future.
Clinical Psychology Conclusion
In the Further Reading section of the blog post at the bottom of the page, there’ll be references for you to read more about this, but there is a relationship between poverty and mental health. Of course, financial therapy is not about poverty, it is about helping people’s thoughts, feelings and behaviours round money to become more adaptive so the clients can reach their financial goals. Yet I am mentioning this poverty fact to stress that money does have a major impact on our mental health and emotional health. If a parent cannot feed their children, if they cannot afford to heat their homes, if they cannot afford to do fun things for their children when all the children’s friends can, that will negatively impact their mental health.
That is only one example.
I know from how bad Postgraduate Loans are in the United Kingdom that I am stressed and I am concerned about my ability to pay rent, food and my university’s tuition fees. Yet there is a reason I cannot mention publicly why I am stressed about the university. This is why I work a lot of Outreach work opportunities so I can get money to live on, because even though the business is going well thanks to you wonderful readers and listeners. I am still building the business so I really do not want to take money out of it for living at the moment.
Money has a massive impact on our mental health.
Therefore, at the end of this psychology podcast episode, I want to mention that financial psychotherapy, whilst it is something I would never focus on or want to be trained up in. I am glad there is a psychological intervention for people who are struggling with their cognitions and behaviours around money. As well as they can get help learning about passive investing, envisioning retirement, identifying their limiting beliefs and their emotions, and taking small steps towards their financial goals.
I think the question I want to leave you with is,
What are your thoughts about money? Are they pushing you towards or away from your financial goals?
I really hope you enjoyed today’s clinical psychology podcast episode.
If you want to learn more, please check out:
Introduction To Psychotherapies: A Clinical Psychology Introduction To Types of Psychotherapy. Available from all major eBook retailers and you can order the paperback and hardback copies from Amazon, your local bookstore and local library, if you request it. Also available as an AI-narrated audiobook from selected audiobook platforms and library systems. For example, Kobo, Spotify, Barnes and Noble, Google Play, Overdrive, Baker and Taylor and Bibliotheca.
Have a great day.
Clinical Psychology References and Further Reading
Archuleta, K. L., Mielitz, K. S., Jayne, D., & Le, V. (2020). Financial goal setting, financial anxiety, and solution-focused financial therapy (SFFT): A quasi-experimental outcome study. Contemporary Family Therapy, 42(1), 68-76.
Blea, J., Wang, D. C., Kim, C. L., Lowe, G., Austad, J., Amponsah, M., & Johnston, N. (2021). The experience of financial well-being, shame, and mental health outcomes in seminary students. Pastoral psychology, 70(4), 299-314.
Burns, J. K. (2015). Poverty, inequality and a political economy of mental health. Epidemiology and psychiatric sciences, 24(2), 107-113.
Frankham, C., Richardson, T., & Maguire, N. (2020). Psychological factors associated with financial hardship and mental health: A systematic review. Clinical psychology review, 77, 101832.
https://www.nerdwallet.com/article/investing/how-financial-therapist-shift-your-money-mindset
Marbin, D., Gutwinski, S., Schreiter, S., & Heinz, A. (2022). Perspectives in poverty and mental health. Frontiers in Public Health, 10, 975482.
Simonse, O., Van Dijk, W. W., Van Dillen, L. F., & Van Dijk, E. (2022). The role of financial stress in mental health changes during COVID-19. npj Mental Health Research, 1(1), 1-10.
Smith, M. V., & Mazure, C. M. (2021). Mental health and wealth: depression, gender, poverty, and parenting. Annual review of clinical psychology, 17(1), 181-205.
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