As explained by the Financial Therapy Association, Financial Therapy is a process informed by both therapeutic and financial competencies that helps people think, feel, communicate, and behave differently with money to improve overall well-being through evidence-based practices and interventions.
Key Aspects of Financial Therapy:
Exploring Money Stories: Financial therapy begins with understanding each client’s unique money story. This involves asking deeper questions about their past experiences with money.
Identifying Underlying Motivations: The approach goes beyond traditional financial questions to uncover the psychological and emotional factors influencing financial decisions. This shift from a transactional to a relational approach helps clients understand their money behaviors and the generational influences at play.
Facilitating Open Communication: Financial therapy encourages open-ended dialogue and the use of techniques from nonviolent communication and motivational interviewing. This helps clients articulate their financial hopes and fears more clearly, reducing anxiety and improving their ability to discuss financial matters effectively.
Enhancing Emotional Preparedness: The process also addresses emotional challenges related to financial transitions, such as retirement. For instance, helping clients reframe retirement as a journey of self-discovery and personal fulfillment rather than a mere end to their professional identity.
Promoting Holistic Well-being: At its core, financial therapy recognizes that money is deeply connected to our feelings of safety, self-worth, and belonging. It aims to guide clients not only toward financial security but also toward emotional well-being and a fulfilling life.
By integrating these elements, financial therapy offers a profound and transformative approach to managing money, aligning clients' financial plans with their emotional and psychological needs.
