Not many people seem to feel 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 went up to 82%. In the UK, a November 2023 poll found that a third of adults had felt anxious in the past month because of their personal financial situation, and 9% reported feeling “hopeless”.cdxnmgh
There are concrete reasons for this anxiety. In the US, high inflation has given consumers a grim outlook on the economy, and a cost of living crisis has seized the UK.
But there is something else at play, too. For how central money is to our lives, many of us were never explicitly taught about it; some of us were expressly forbidden from discussing it. Instead, we learned about finances by watching how our family and friends handled it. We drew conclusions – often incomplete – and then brought those with us into adulthood. Is it any wonder, then, that so many people have a fraught relationship with money?
Enter financial therapy.
Still a relatively young field, financial therapy was born in 2008 when a small group of therapists and financial experts gathered in Garden Grove, California, to discuss how to bridge their two areas of study. A year later, they formed 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 talked to five CFTs to learn how to build a healthier, happier relationship with money.
Know the basics
“Many people don’t know how much they make. They don’t know what their actual paycheck is, and what deductions are coming out of it,” Williams says.
Take stock of your current financial situation, experts say. At the very least, figure out 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 don’t discuss financial issues, there’s no route to solving them. There is a sense of “if we don’t talk about it, it will disappear.”
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 – like budgeting apps – but can’t bring themselves to use them, she says. “That 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 this, though, you have to figure out why you carry so much financial baggage in the first place.
“Getting to the root of why you do what you do can help you detach from feelings of ‘I’m not good enough,’” she explains.
Figure out your money script …
Just as people fall into certain patterns in their romantic relationships, they can fall into financial patterns as well. Traditionally, in the field of financial planning, there are four so-called “money scripts” 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 worshippers may believe 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, in reality, there are far more than four money scripts, and that people may fall into multiple different buckets. But in most cases, he says, our personal money scripts are “incomplete or partial truths” that are capable of being changed.
“Everybody has these underlying principles that we can uncover with some digging and reflecting. Then the question is: which of those money beliefs are problematic, and which are the ones that are driving the financial outcomes we’re looking to change?”
… And your partner’s money script
When couples fight about money, often it is the 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 in every conversation that couple has, those scripts are going to be fighting,” she says.
Don’t try to do too much too fast
Staley says that she has some clients who, when they want to understand and improve their finances, can sometimes take on too much at once. They make spreadsheets, download personal finance apps, read books and listen to podcasts. While that may be helpful for some people, it can be too much for others.
“It doesn’t have to be that complicated,” she says. “You can do something simple and take some of the anxiety away and still be very successful.”
To start, she often encourages her clients to make a Google spreadsheet of their income and expenses, and to spend five to 10 minutes a day recording the money they have coming in and going out. “I find the commitment to a smaller chunk of time helps folks feel like it’s doable,” she says.
Make a realistic plan
This can be as small as a weekly or monthly budget, or as big as a five-year plan, says Williams.
“One of the things that 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 chooses,” 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’s important to them. For example, is their goal to stay debt-free, or to invest in a growing business? Is traveling a priority, or is it more important to save for their children’s college education?
“When you have that clarity around who you are and where you’re looking to go, it can make some of the more difficult financial decisions – particularly the emotional financial decisions – feel a bit easier,” he says.
Stick to it – but be flexible
To paraphrase the famous poem, the best laid financial plans often go awry when, say, your car’s engine stops working, or your dog swallows a toy and needs emergency surgery.
One of the biggest challenges with a budget is that expenses vary from month to month, says Kelly Reddy-Heffner, a CFT and financial planner. While surprise costs are unavoidable, Reddy-Heffner says it’s important to try to stick to your budget, even if that means making small tweaks.
“You might not always be able to follow your plan to the letter, but can you go back to it?” she says. “Can you make a minor adjustment? How can you pivot and also continue the good work that you’re motivated to do?”
Figure out what money means to you
In addition to identifying their financial scripts, Nelson says it’s helpful for people to reflect on their relationship to money. Ask yourself what your first memory is of money, Nelson says. When did you first realize that money was a thing?
Nelson says his favorite question to ask is: Why is money important to you?
Often, he says, people will either say “freedom” or “security.” But he encourages people to go deeper. What does freedom or security really mean? 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 would like your life to look like in five years,” she says. “If you tie 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 like your money is helping you accomplish your goals, but it’s not taking up too much of your brain space.
“It’s using your money as the sail in your sailboat,” says Nelson. It’s not the end destination, nor is it the boat itself, he explains, but it’s a tool to get you where you want to go. “You want to have a plan for how you’re going to use it – are you going to let the sail out or take it in?”
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