What is financial therapy?

Financial therapy is therapy that combines behavioral therapy and financial coaching to help improve your thoughts, feelings, and behaviors around money.

Celia Hughes, a certified financial therapist based in Los Angeles, says financial therapy marries the two disciplines.

“There’s this real gap between emotional health and financial health and money,” she says.

If you’ve never heard of financial therapy before, that could be because it's a very new!

What is a financial therapist?

A certified financial therapist is an individual who meets specific requirements in the areas of financial therapy, financial planning and financial counseling, and therapeutic competencies. The certification, from the Financial Therapy Association, is one that both financial and mental health professionals can pursue.

Financial therapists can help investors understand their worries and fears around money, guiding them to that lightbulb moment.

The difference between a financial therapist and a financial advisor is that a financial therapist explores the feelings and beliefs behind your financial habits, while financial advisors focus on helping you reach your financial goals.

For example, if you have $50,000 saved in cash and fear of going broke is keeping you from investing some of that money in the stock market, you might speak to a financial therapist. However, if you have $50,000 and want to know the best strategies for investing the money, a financial advisor would probably be a better fit.

It’s important to note that not everyone who calls themselves a financial therapist is a certified financial therapist. Some behavioral therapists focus on finance and don’t have financial qualifications. Likewise, Hughes says, some financial professionals aren’t credentialed therapists, but they can help you explore the emotions behind money.

What financial therapists can help you with

Financial therapists can help with any negative feelings and limiting beliefs you have around your finances. For instance, you might be carrying some generational financial trauma, and you're terrified of starting your investing journey. Or, despite being a high earner, you might not invest much because you don't believe you'll be fortunate enough to see positive returns.

Hughes says she starts with self-reflections when working with clients struggling to kick-start their investing journey.

“We would do some digging and see if we could get to the root cause of that fear. Is it a lack of belief in your own worth and belief that you’re worthy of having a financially stable future? Is it fear of the unknown? Or you don't understand investment and how it works so you’re afraid to give your money to something you don’t understand? So, we would try to get into some of that root work and then work on setting small goals,” she says.

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