Can financial therapy untangle our relationship with money? (2024)

When Anna Davies reached her thirties, she noticed a shift in her attitude toward money.

“In my twenties, I was able to pay for everything with my pay cheques,” says New Jersey, US-based, Davies. “Once I had a child, I needed to factor in childcare [and] saving for the future.”

As a freelance personal-finance writer, Davies says she knew the financial stresses of being a single parent were daunting. But as someone who understood saving and investing in theory, Davies found herself embarrassed by how disconnected she was from her savings goals. “​​I understood it from an intellectual perspective, and I could tell you exactly how you're supposed to save money, and how you're supposed to invest, but I couldn't do it for myself.”

Davies stumbled upon the burgeoning field of financial therapy, a form of therapy that addresses both personal finance and mental health. Financial therapists use their training as psychologists to help clients untangle their relationship to money, specifically treating the emotional root of money stress, rather than the behaviour itself, as some existing methods do.

Davies was terrified during her first session with a financial therapist. “It’s easier to talk about sex and romantic relationships than it is about money,” she says. “Even inside the confines of a therapy room, I think being able [say] ‘Okay, here's my bank statement, here's how much money I actually have’ – I think that that’s scary.”

Matters of money are – and always have been – stressful. This is especially the case for some people, whose financial trepidation can even manifest as a type of fear. To help quell this phobia, an increasing number of people, like Davies, are turning to financial therapists for help. Could this hyper-targeted treatment help mend troubled relationships with money?

A real phobia

Money decisions are deeply connected to emotions. Research confirms this; in 2000, Daniel Kahneman was awarded the Nobel Prize in economics for his work applying psychological insights to economic theory, especially in the areas of judgment and decision-making under uncertainty. His work was confirmation that money decisions are emotional.

According to a 2019 survey from employee-experience platform Perk Box, money is the biggest cause of stress in the UK, with 61% of 1,139 people surveyed stating that money caused them more stress than their work (51%) and their family (24%).

Financial phobia is real, say some experts, who liken fear around money to other types of well-known phobias (Credit: Getty Images)

Brendan Burchell, professor of the social sciences at the University of Cambridge, who researches stress around money, says financial phobia is very much a real phenomenon. Although there’s not a wealth of research around the phenomenon specifically, we do know it can manifest differently in different people – for instance, some may find themselves avoiding engaging with issues around money, while others may spend excessively as a response to anxiety.

Regardless of the behaviour, emotional stressors tied to money can be a significant problem. “It really does seem to resemble a phobia, in many ways,” says Burchell, in that we have is a deeply emotional response to money. In some ways, he adds, a phobia of, say, checking our account statements is not that different from an extreme fear of spiders and clowns.

For this reason, Burchell does not believe conventional counselling would be of much help in treating financial phobias. “In the same way that, for instance, having somebody who's a good listener doesn't particularly help you. You can explain endlessly why you don't like spiders, [but] the phobia is not going to go away.”

Burchell believes professionals specialising in treating phobias is a promising approach to quelling financial phobia. “It’s important to get the right therapy,” he says. “If [the financial phobia] is genuine, as all our laboratory-based [work] and some of our other studies suggested, then something like CBT seems to work well.”

CBT, or cognitive behavioural therapy, is a form of talk therapy that focuses on making changes by examining underlying issues, and one of the structured methods financial therapists use to help clients.

Carrie Rattle, a former Wall Street-executive-turned-financial-therapist, agrees CBT is a practical approach to untangling people's emotions with regards to money. During her former career, New York-City-based Rattle says she realised “telling people logically what they ‘should’ do was failing, even though there are hundreds of financial literacy organisations out there, and thousands of budget books”. This gap between literacy and emotion drove Rattle to her second career as a financial therapist.

Lindsay Bryan-Podvin, a licensed financial therapist and social worker based in Michigan, US, approaches her clients’ money issues with “values-based work”, an aspect of CBT that involves re-examining what is important to the individual, and restructuring decisions based on those values. This means instead of giving her clients blanket statements like, ‘stop spending on dining out’, Bryan-Podvin encourages them to think about what type of spending brings them the most value.

“For some, dining out gives them stress-free time to reconnect with loved ones, fulfilling a personal value of connectedness,” she says. “Others might value spending on refurnishing or redecorating their home, tied to a value of safety and security.” Bryan-Podvin believes that when people’s spending habits are aligned with their values – and people spend on what they value the most and save on what they value the least – they'll get a better emotional return on their spending.

Rattle, who works to help compulsive shoppers get out of debt, implements tools from the CBT including psychodynamics and money dialogue as well as identifying behavioural patterns. “​​Identifying emotional triggers is key to self-managing,” says Rattle. “When you are triggered, you need to be prepared to pause during the emotion so you can re-approach the reaction from a calmer place.”

This ‘place of calm’ is especially important for couples who struggle with finances, since data shows money stress is a significant driver of divorce. This is even the case in couples who don’t struggle with financial solvency.

Financial phobia can manifest in many ways, and new approaches targeting emotions instead of just behaviours may help address them (Credit: Getty Images)

Not a ‘cure’

Financial therapy is still a relatively new field, and its practices are still largely limited to the US. There’s still a great deal to learn about what financial therapy can – and can’t – do. The potential upside is big, but some experts still believe properly addressing stress around money may go deeper than hyper-targeted financial therapy.

Although Burchell does believe in treating financial phobias, he doesn’t necessarily support treating finances as a standalone issue. Often, he says, they’re interwoven with other psychological issues that need to be addressed. For example, he says, “[Maybe] retail therapy is one of the things that they've been using to [stay in] control," he suggests. “The idea of finding a simple solution [where] you have a small number of sessions and you're ‘cured’ isn't going to work.”

Burchell stresses we're simply not at a stage where we know how such approaches play out in the long-term, owing to how little we still know about how our finances and emotions are related.

And as interesting as an idea as financial therapy is, some may not find it easy to embrace – at least not right away. That was the certainly the case for Davies.

Regardless, once Davies did open up, she found the pursuit beneficial. From her own experience, she says recognising patterns from childhood, and how they shifted and changed when she became a parent, was helpful. “[I’m] more mindful of how I spend money, and how I talk about money to my daughter,” she says. “I want her to feel in control of her money, to not feel overwhelmed as she gets older – I'm hoping that I can lay the groundwork for some good money skills for her.”