AMany people seem to be feeling happy about their financial lives right now. In the US, 63% of Americans cited money as a “significant stressor” in their lives, according to the American Psychological Association’s 2023 Stress in America report. Among those aged 18 to 34, that number rose to 82%. In the United Kingdom, a November 2023 poll found that a third of adults felt anxious about their personal financial situation in the past month, and 9% reported feeling “hopeless”.cdxnmgh
There are concrete reasons for this anxiety. In the US, high inflation gave consumers a grim prospect on the economy, and a cost of living crisis seized the UK.
But there is also something else. Because how central money is in our lives, many of us were never explicitly taught about it; some of us are expressly prohibited from discussing it. Instead, we learned about finances by watching our family and friends handle them. We drew conclusions – often incomplete – and then brought them with us into adulthood. Is it any wonder then that so many people have a fraught relationship with money?
Enter financial therapy.
Another relatively young field, financial therapy was born in 2008 when a small group of therapists and financial experts collect in Garden Grove, California, to discuss how to bridge their two areas of study. A year later, they founded the Financial Therapy Association (FTA) to help shape and standardize the practice, develop ethical and training requirements, and grow the profession.
“Most people don’t initially recognize the connection between their upbringing and beliefs, and what they do with their money,” says Dr. Traci Williams, a clinical psychologist and certified financial therapist (CFT). We spoke with five CFTs to learn how to build a healthier, happier relationship with money.
Know the basics
“A lot of people don’t know how much they earn. They don’t know what their actual salary is and what deductions come from it,” says Williams.
Take stock of your current financial situation, experts say. Determine at least how much money you bring in each month and how much you spend. And then, be honest about it.
Avoiding conversations about money is common, especially with couples, says Lauren Staley, a CFT and marriage and family therapist. If couples do not discuss financial issues, there is no way to resolve them. There is a sense of “if we don’t talk about it, it will go away.”
Don’t be down on yourself
Staley says the financial issue her clients struggle with the most is shame.
Many people are aware that there are tools and resources available to help them save more or get out of debt – such as budgeting apps – but can’t bring themselves to use them, she says. “It brings a lot of embarrassment and it brings a lot of shame.”
Letting go of your shame can help you move forward, she says. In order to do that, however, you need to figure out why you’re carrying so much financial baggage in the first place.
“Getting to the root of why you do what you do can help you break free from feelings of ‘I’m not good enough,'” she explains.
Find out your money script…
Just as people fall into certain patterns in their romantic relationships, they can also fall into financial patterns. Traditionally, in the field of financial planning, there are four so-called “money scripts” that people tend to follow that shape their financial behavior, says Bill Nelson, a CFT and certified financial planner: money avoidance, money worship, money vigilance and money status.
Money avoiders may try to avoid thinking about money at all costs, while money worshipers may believe that financial wealth is the key to happiness. Those with money vigilance may obsessively track every penny in and out, while those with money status may feel their self-worth is inextricably linked to how much they make.
Nelson argues that there are actually many more than four money scripts, and that people can fall into several different buckets. But in most cases, he says, our personal money scripts are “incomplete or partial truths” that are capable of being changed.
“Everyone has these underlying principles that we can uncover with a little digging and reflection. Then the question is: which of those money beliefs are problematic, and which are the ones driving the financial outcomes we want to change?”
… And your partner’s money document
When couples fight about money, it’s often a result of not understanding each other’s “internal wiring,” says Elana Feinsmith, a CFT and financial coach.
“If one person has a very strong money script that says money is supposed to be spent, and the other has a very strong money script that says money is supposed to be saved, then those scripts go into every conversation the couple has fought,” she says.
Don’t try to do too much too fast
Staley says that she has some clients who, when trying to understand and improve their finances, can sometimes take on too much at once. They create spreadsheets, download personal finance apps, read books and listen to podcasts. While this may be helpful for some people, it may be too much for others.
“It doesn’t have to be so complicated,” she says. “You can do something simple and take some of the anxiety away and still be very successful.”
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To start, she often encourages her clients to create a Google spreadsheet of their income and expenses, and to spend five to 10 minutes a day logging the money they have in and out. “I find that committing to a smaller chunk of time helps people feel that it’s achievable,” she says.
Make a realistic plan
It can be as small as a weekly or monthly budget, or as large as a five-year plan, says Williams.
“One of the things I repeat at least once a week in my work is that if you don’t tell your money where to go, it will go where it wants,” she says.
If you’re struggling to figure out what you want to do with your money, Nelson says it can be helpful to reflect on your goals and values. He says he encourages couples he works with to come up with a family mission statement that defines who they are and what is important to them. For example, is their goal to stay debt free, or to invest in a growing business? Is travel a priority, or is saving for their children’s college education more important?
“When you have that clarity about who you are and where you want to go, it can make some of the more difficult financial decisions – especially the emotional financial decisions – feel a little easier,” he says.
Stay with it – but be flexible
To paraphrase the famous poem, the best financial plans often go awry when, for example, your car’s engine stops working, or your dog swallows a toy and needs emergency surgery.
One of the biggest challenges with budgeting is that expenses vary from month to month, says Kelly Reddy-Heffner, a CFT and financial planner. While surprise costs are inevitable, Reddy-Heffner says it’s important to try to stick to your budget, even if it means making small adjustments.
“You may not always be able to follow your plan to the letter, but can you go back to it?” she says. “Could you make a minor adjustment? How can you turn around and also continue with the good work for which you are motivated?”
Find out what money means to you
In addition to identifying their financial scripts, Nelson says it’s helpful for people to think about their relationship with money. Ask yourself what your first memory of money is, says Nelson. When did you first realize that money is a thing?
Nelson says his favorite question to ask is: Why is money important to you?
Often, he says, people will say either “freedom” or “security.” But he encourages people to go deeper. What does freedom or security really mean? Like what does it look like? Get as detailed as possible, he says.
Williams says she also encourages her clients to dream. “Stop and think about what you want your life to look like in five years,” she says. “If you link your goals to something you actually care about, you’re more motivated to achieve them.”
Think about what a healthy relationship with money looks like
While there is no one-size-fits-all approach to money, experts agree that a healthy relationship with money is one where you feel your money helps you achieve your goals, but doesn’t take too much from you brain space.
“It uses your money as the sail in your sailboat,” says Nelson. It’s not the final destination, and neither is the boat itself, he explains, but it’s a tool to get you where you want to go. “You want a plan for how you’re going to use it – are you going to leave the sail out or take it in?”
