northMany people seem to be happy with their financial lives right now. In the US, 63% of Americans cited money as a “major stressor” in their lives, according to the American Psychological Association’s Stress in America 2023 report. report. Among those ages 18 to 34, that figure increased to 82%. In the United Kingdom, a November 2023 Survey found that a third of adults had felt anxious in the past month due to their personal financial situation, and 9% reported feeling “hopeless.”cdxnmgh
There are concrete reasons for this anxiety. In the USA, high inflation has given consumers a gloomy outlook about the economy and cost of living crisis has taken over the United Kingdom.
But there is also something else at play. As for how central money is to our lives, many of us were never explicitly taught about it; Some of us were expressly prohibited from discussing it. Instead, we learned about finances by watching how our family and friends handled them. We draw conclusions (often incomplete) and then carry them with us into adulthood. Is it any wonder, then, that so many people have a strained relationship with money?
Enter financial therapy.
Financial therapy, still a relatively young field, was born in 2008 when a small group of therapists and financial experts gathered in Garden Grove, California, to discuss how to bring their two areas of study together. A year later, they formed the Financial Therapy Association (FTA) to help shape and standardize 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, 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
“Many people don’t know how much they earn. They don’t know what their real salary is or what deductions come from it,” says Williams.
Take stock of your current financial situation, experts say. At a minimum, calculate 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 between couples, says Lauren Staley, CFT and marriage and family therapist. If couples do not discuss financial problems, there is no way to resolve them. There is a feeling of “if we don’t talk about it, it will go away.”
Don’t be discouraged
Staley says the financial issue her clients struggle with 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 they are hesitant to use them, he says. “That creates a lot of embarrassment and shame.”
Letting go of shame can help you move forward, she says. However, in order to do this, you must first figure out why you are carrying so much financial baggage.
“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.
Discover 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 and that shape their financial behavior, says Bill Nelson, CFT and certified financial planner: money avoidance, money worship, money surveillance and money control. state.
Money avoiders may try to avoid thinking about it at all costs, while money worshipers may believe that financial wealth is the key to happiness. Those with monetary vigilance may obsessively track every penny that comes and goes, while those with monetary status may feel that their self-worth is inextricably linked to how much they earn.
Nelson argues that there are actually more than four monetary scripts and that people can fall into multiple different groups. But in most cases, he says, our personal monetary scripts are “incomplete or partial truths” that can be changed.
“Everyone has these underlying principles that we can discover with a little research and reflection. So the question is: which of those monetary beliefs are problematic and which are driving the financial outcomes we seek to change?
…And your partner’s money script
When couples fight about money, it’s often a result of not understanding each other’s “internal wiring,” says Elana Feinsmith, financial advisor and CFT.
“If one person has a very strong money script that says you’re supposed to spend money, and the other person has a very strong money script that says you’re supposed to save money, then in every conversation you have that Couple, those scripts are going to change. be fighting,” she says.
Don’t try to do too much too fast
Staley says he has some clients who, when they want to understand and improve their finances, can sometimes take on too many things 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 that complicated,” he says. “You can do something simple and take away some of the anxiety and still be very successful.”
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To start, he often encourages his clients to make a Google spreadsheet of their income and expenses, and spend five to ten minutes a day recording the money coming in and going out. “I think the commitment to spending less time helps people feel like it’s doable,” she says.
Make a realistic plan
This can be as small as a weekly or monthly budget, or as large as a five-year plan, Williams says.
“One of the things I repeat at least once a week at my job is that if you don’t tell your money where to go, it will go wherever it wants,” he 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 the couples he works with to craft a family mission statement that defines who they are and what is important to them. For example, is your goal to stay debt-free or invest in a growing business? Is traveling a priority or is it more important to save for your children’s college education?
“When you have that clarity about who you are and where you want to go, some of the most difficult financial decisions, particularly emotional financial decisions, can seem a little easier,” he says.
stick to it – but be flexible
To paraphrase the famous poem, the best financial plans often go awry when, say, your car 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, CFT and financial planner. While surprise costs are inevitable, Reddy-Heffner says it’s important to try to stick to your budget, even if that means making small adjustments.
“You may not always be able to follow your plan to the letter, but can you get back to it?” she says. “Can you make a small adjustment? How can you pivot and continue the good work you’re motivated to do?
Find 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 with money. Ask yourself what your first memory of money is, Nelson says. When did you first realize that money existed?
Nelson says his favorite question is: Why is money important to you?
Often, he says, people say “freedom” or “security.” But it encourages people to dig deeper. What does freedom or security really mean? How does it look? Be as detailed as possible, she says.
Williams says he also encourages his clients to dream. “Stop and think about what you would like your life to be like in five years,” she says. “If you tie your goals to something you really care about, you’ll be 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 helps you achieve your goals, but doesn’t take up too much space in your brain.
“It’s about using your money as a sail on your sailboat,” Nelson says. It is not the final destination, nor the ship itself, he explains, but it is 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 leave the candle out or pick it up?”
