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I have a friend who can’t get his finances together. Despite a healthy understanding of how money works (he’s an accountant), he always manages to squander his above-average salary. I’ve given him plenty of advice over the years, but it never helps.

Maybe you have a friend like this, or perhaps you have chronically poor money habits yourself. Even if neither is true, you can probably recognize that managing money properly for years at a time requires more than just knowledge and skill.

For example, most adults know that racking up an increasingly high balance is not responsible credit card use, but we do it anyway. Money habits can almost be akin to personality traits. Changing them isn’t always as simple as learning all about the problems they cause.

Financial therapy is a service that goes a step beyond traditional financial advice and directly addresses behavioral issues. In this guide, I’ll cover what it entails, how it can be helpful, and when you should consider it.

What is Financial Therapy

Financial therapy is the middle ground between working with a traditional therapist and a financial advisor. The process combines an emotionally supportive, therapeutic approach with the expert insight of a financial professional.

The goal of the service is not just to educate clients but to help them make meaningful changes to their thoughts, feelings, and behaviors regarding money. You could engage in sessions for an individual, a couple, or even a family.

The idea behind the concept is simple. On some level, many of us believe instinctively that money and happiness are connected (at least in America). Because of this, our relationships with money are often deeply rooted in our broader mindset and deepest anxieties.

Because financial therapy incorporates two highly-regulated professional services, licensed practitioners agree to follow the standard of care for both (such as the fiduciary duty of the financial therapist and the doctor-patient confidentiality of a therapist).

How Financial Therapy Works

Financial therapy works a lot more like traditional therapy than consulting a financial advisor. It often consists of focused, deep work with an expert with a unique understanding of the client’s financial troubles or profession.

While you would want to meet with a financial advisor at least once a year, you would likely want to see a financial therapist at least once every two weeks. The duration of the relationship is also usually shorter than that of one with a financial advisor, which you might keep on permanent retainer for many years.

That’s because people usually engage financial therapists to help with an immediate problem. For example, you might meet with a financial therapist once a week for three months until you and your new spouse find a way to merge finances.

Preliminary studies have shown that, on average, people who go to financial therapy see a statistically significant improvement in both their financial behaviors and knowledge.

📚 Learn More: Are you interested in the other programs that can help you improve your financial situation? Check out our comprehensive guide to the various debt relief options: Debt Relief Options: Which One Should You Use?

Financial Therapists vs. Other Financial Professionals

All financial advisors, tax lawyers, and Certified Public Accountants must meet an established level of knowledge and adhere to highly regulated standards. They are all thoroughly trained on the finer points of money management, though they have no training in psychological treatment.

Meanwhile, financial therapists come from a variety of backgrounds. Most likely, they’ll begin their career in either the healthcare or financial industries. However, as the concept becomes more popular, you may see an increased number of fresh graduates entering the field.

Because of this, you may see a greater degree of variability in the financial knowledge of financial therapists than you would other financial professionals. Make sure you do your due diligence before trusting their advice, though that’s good advice with any source of information.

Who Can Offer Financial Therapy Services?

You may receive informal financial therapy from a financial advisor or a healthcare provider. Both professionals naturally have to deal with the emotional fallout from financial stress and understand the issues at play either to a reasonable or significant degree.

The relative informality around this type of therapy is because financial therapists don’t have an official regulatory body yet. However, the Financial Therapy Association (FTA) does provide a rigorous licensing process.

It includes requirements in the following categories:

  • Education: Financial therapists must hold a bachelor’s degree in a financial or emotional health-related field. Alternatively, they can have an unrelated bachelor’s degree and complete a CFP or AFC designation (or qualify for a special dispensation per review).
  • Competency Training: Financial therapists must acquire competency in the financial and mental health fields through self-study and the completion of the FTA’s educational video series (which costs $850).
  • Experience: FTA candidates must have 500 hours of experience to qualify for their license. At least 250 of them must be direct client service hours. The remainder can also include time giving professional presentations, teaching, doing peer-reviewed research, or performing financial planning and analysis (to some extent).
  • Examination: FTA candidates must pass a comprehensive certification exam consisting of 100 multiple-choice questions with a 2-hour time limit.
  • Ethical Standards: Financial therapists must adhere to the FTA Standards of Practice and Code of Ethics, including the fiduciary standard.
  • Renewal & Continuing Education: Each year, financial therapists must pay a renewal fee and complete 40 hours of continuing education.

In addition to gaining significant knowledge and training, financial therapists must cough up their own hard-earned money to receive and maintain a license. Applying, taking the exam, and certification alone cost $350. The annual renewal fee can be as much as $100.

Benefits of Financial Therapy

Successful financial therapy does more than impart knowledge. It helps mitigate or solve problems a person has with their money, especially unhealthy mindsets, beliefs, or habits.

For it to be successful, there must be a tangible improvement in the client’s life. For example, some benefits of financial therapy are:

  • Improved communication with your loved ones regarding finances
  • Less anxiety about your working arrangement or retirement
  • Tools and strategies to cope with stressful financial events
  • Discipline to change previously self-sabotaging financial habits

The length of time necessary to achieve these results through financial therapy (and the degree to which they’ll occur) will vary between patients. That said, most programs focus on the rapid reduction or elimination of a specific financial problem.

However, once you complete one, the improvements tend to continue after the therapy sessions end based on those same preliminary studies I mentioned previously.

Three months after finishing the sample program, the experimenters checked in with the therapy patients. On average, they reported even more improvement in their financial behaviors and knowledge than they did just after therapy.

When to Consider a Financial Therapist

Like any service, financial therapy is not a fit for everyone. Many people do just need to become more educated on financial matters to improve their situation. After all, you have to study to understand investing and budgeting methods

Financial therapy isn’t free, either, so it might not be the best move for someone going through a significant cash shortage (until they recover).

All that aside, you should consider financial therapy if your financial issues have more to do with sticking to plans than creating them. Here are some symptoms that strongly indicate it’s a good idea:

  • Excessive fear or anxious thoughts about money 
  • Dangerous habits like chronic gambling or binge spending
  • Relationship problems with your family or a partner because of money
  • Inability to change your money behaviors despite multiple attempts

You should always set up free consultations with a few short-listed therapists before committing to one, when possible. That will help you gauge whether the service and the provider are good fits.

How to Find a Financial Therapist

There is no regulating body for the financial therapy industry yet, so you should do even more research before picking one than you would on a member of a more tightly regulated field.

Find a candidate that you’re confident will:

  • Have the requisite competency in both therapeutic and financial matters to provide effective service
  • Have demonstrable experience with cases like yours
  • Give advice and make recommendations with your best interest at heart

You can start your search for a financial therapist with the FTA’s Find a Therapist tool. The certification provides some assurance that the therapist is educated, serious about their craft, and incentivized to exercise due care.

If financial therapy sounds like something you’re interested in, don’t hesitate to contact one today!

📚 Learn More: If you think that financial therapy sounds like overkill and you’d prefer to start with some beginner tips and tricks to personal finance, check out our introduction to budgeting: Budgeting 101: How to Budget Your Money.

Do you have any questions about the process of financial therapy? Let us know in the comments below!