What is Financial Therapy and How to Understand the Benefits

Financial Therapy and How to Understand the Benefits

Financial therapy is a relatively new approach to helping individuals and couples overcome financial difficulties that affect their overall well-being. The field of financial therapy combines the principles of traditional psychotherapy with financial planning and coaching. The goal is to help individuals develop a healthy relationship with money and financial decision-making, resulting in improved financial security, emotional health, and overall quality of life.

Understanding the Roots of Financial Therapy

The concept of financial therapy emerged from the realization that traditional financial planning methods often failed to address the emotional and psychological factors that influence financial decision-making. Financial planners typically focus on creating budgets, setting goals, and investing for the future. However, many people struggle with financial management due to deeper issues such as anxiety, stress, and even trauma.

The idea of financial therapy is to help individuals identify the underlying emotional and psychological factors that affect their financial behaviors. A financial therapist works with clients to understand the root causes of their financial stress or difficulties, and then collaboratively develops strategies to address these issues. This can involve a range of techniques, including traditional talk therapy, cognitive behavioral therapy, and behavioral finance.

Financial Therapy Techniques

Financial therapy can be approached in a variety of ways, depending on the individual’s needs and goals. Below are some of the most common techniques used by financial therapists.

Cognitive Behavioral Therapy

Cognitive-behavioral therapy (CBT) is a common psychotherapeutic approach that helps individuals identify and modify negative thought patterns that can lead to unhelpful behaviors. In the context of financial therapy, CBT can be used to help individuals identify and challenge beliefs that may be holding them back financially, such as “I’m not good with money” or “I’ll never be able to get out of debt.” By reframing these negative beliefs, individuals can develop more positive attitudes and behaviors towards money.

Behavioral Finance

Behavioral finance is a field of study that explores how psychological biases can influence financial decision-making. Financial therapists use the principles of behavioral finance to help clients understand why they make certain financial decisions and how they can adjust their behavior to achieve better outcomes. This can involve teaching clients about common cognitive biases, such as the tendency to overspend or to be overly cautious with investments.

Mindfulness-Based Stress Reduction

Mindfulness-based stress reduction (MBSR) is a technique that involves focusing on the present moment and accepting thoughts and emotions without judgment. In the context of financial therapy, MBSR can help individuals develop a more mindful approach to money management. By learning to accept their financial situation without judgment, individuals can reduce stress and anxiety around financial decision-making.

Financial Coaching

Financial coaching is a technique that involves working with a coach to develop a personalized financial plan. The coach helps clients set financial goals, develop a budget, and make informed financial decisions. Financial coaching is often used in conjunction with other therapeutic approaches, such as CBT or MBSR.

Benefits of Financial Therapy

Financial therapy can be beneficial for individuals and couples who are struggling with financial stress or difficulties. Below are some of the primary benefits of financial therapy.

Improved Financial Management Skills

One of the primary benefits of financial therapy is improved financial management skills. Financial therapy helps individuals identify the root causes of their financial stress or difficulties and develop strategies to overcome them. By learning new skills and techniques for managing money, individuals can improve their financial security and achieve their financial goals.

Reduced Stress and Anxiety

Financial stress is a common problem that can lead to anxiety, depression, and other mental health issues. Financial therapy helps individuals reduce stress and anxiety around money by developing more positive attitudes and behaviors towards money. By addressing the emotional and psychological factors that contribute to financial stress, individuals can improve their overall well-being.

Improved Relationships

Financial difficulties can strain relationships, causing tension and conflict between partners or family members.

How to Understand Financial Therapy

If you’re considering financial therapy, here are some tips on how to make the most of it:

Be Honest

It’s important to be honest with your therapist about your financial situation, including your income, debts, expenses, and financial goals. This information will help them develop a personalized plan to help you improve your financial situation.

Set Realistic Goals

Setting realistic goals is crucial to the success of financial therapy. Your therapist can help you identify achievable goals that align with your values and priorities, and develop a plan to achieve them.

Develop Healthy Habits

Financial therapy is not a one-time fix. It involves developing healthy financial habits that will last a lifetime. Your therapist can help you identify behaviors that are sabotaging your financial goals and develop strategies to overcome them.

Be Patient

Achieving financial stability takes time, and there are no quick fixes. It’s important to be patient and stay committed to the process. Your therapist can help you stay motivated and focused on your long-term goals.

Communicate with Your Partner

If you’re in a relationship, it’s important to involve your partner in the financial therapy process. This will help ensure that you’re both on the same page when it comes to managing your finances and can help prevent conflicts down the road.


Financial therapy is a valuable tool for individuals looking to improve their financial situation and achieve financial stability. By addressing the psychological and emotional aspects of money management, financial therapy can help individuals develop healthy habits and behaviors that lead to better financial outcomes. If you’re struggling with money-related issues, consider seeking the guidance and support of a financial therapist to help you achieve your goals.

Listen to Rick Kahler’s podcast called “The Financial Therapy podcast” to learn more about financial therapy.