In this interview, Dr. Traci Williams, a clinical psychologist and certified financial therapist, helps clients address complex issues involving their finances.
What is financial therapy?
Financial therapy helps people have a healthier relationship with their money by tailoring how they think about and behave with money. Common reasons to seek financial therapy include experiencing financial abuse, trauma or fraud; over- or under-spending; and recovery from debt, gambling addiction or divorce. People also often seek financial therapy for prenup guidance, estate planning, navigating wealth acquisition and to become empowered with financial decisions.
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How did you get involved?
I have been a clinical psychologist for 10 years, but I was a stranger to the world of finance. I was never good at math. I thought I would never be good at money and wasn’t really interested in money. But during the pandemic, when people were making banana bread and candles, I was learning about money.
At the time, I had patients across the socioeconomic spectrum. I was helping people who were trying to figure out rent assistance and finding food for their families, as well as patients who were at their vacation homes. I realized that there is more to money than just dollars and cents, that there are human emotions behind money and what we do with money. In the course of learning more, I discovered the field of financial therapy. I became engrossed in it, did my studies and got certified.
What personal finance education did you receive?
To become a financial therapist, you have to have a background either in finance or in mental health. I am a psychologist first and foremost, so my course of study included the basics of personal finance, as well as financial planning and estate planning. The Financial Therapy Association has a self-study curriculum. They say it usually takes about six to nine months to prepare for the exam.
How does financial advising help people as they seek out mental health counseling?
It depends on what people show up for. For instance, if you have a couple who have recently received a windfall — an inheritance or whatever the case might be — they might seek out a financial therapist because they’re also dealing with whatever caused the windfall. If they have grief, they may need to process that, as well as the emotional consequences of having a windfall. A lot of people experience guilt around windfalls, so we talk through the emotional experience and offer guidance around what to do with their money.
Does financial therapy help people to make financial decisions that align with their values?
Yes, absolutely. We can definitely help you better understand what is important and how to use assets to make changes in your life.
What advice do you have for people who want to seek out a financial therapist?
Ensure that you’re working with someone who is certified and licensed in their area in addition to being a certified financial therapist — whether that is in the financial world or in the mental health world. And aside from financial therapists, there are similar professions that might be helpful. For instance, there are financial social workers and accredited financial counselors who do some similar things to what we do.
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FAQs
With all this in mind, financial therapy is a relatively recent, specialized type of therapy that combines psychotherapy and financial counseling. The idea is to help individuals and couples improve their financial well-being by addressing many underlying issues related to money.
How does financial therapy work? ›
Financial therapy is a specialized type of therapy that exists at the intersection of the therapeutic and financial fields. The goals of financial therapy include aiding people in thinking, feeling, and behaving differently with regard to money in an effort to improve overall well-being.
How I developed a healthy relationship with money? ›
Prioritize and cultivate a positive and mindful approach to money. Build smart financial habits: Learn to budget, save, and invest wisely. Understand the emotional side of financial decisions. Seek help from a trusted financial advisor and surround yourself with others who have good relationships with money.
What is the goal of financial counseling? ›
Financial counselors strive to gain rapport and empathize with clients' current financial circ*mstances and attitudes. They help clients perceive and understand their own strengths and challenges related to managing money and identify any changes they would like to make.
What is the difference between financial counseling and financial therapy? ›
While financial counseling primarily focuses on practical strategies for managing finances and achieving financial goals, financial therapy delves deeper into the emotional and psychological aspects of money, exploring how our beliefs, attitudes, and behaviors surrounding money impact our lives and relationships.
What are the 3 basic forms of financial counseling? ›
Financial counseling involves fundamental money management assistance to help consumers solve or avoid financial problems and improve their financial status. Financial Counseling can include many types of counseling including budget counseling, credit counseling, debt counseling, and financial planning.
Is financial counseling worth it? ›
A financial advisor is worth paying for if they provide help you need, whether because you don't have the time or financial acumen or you simply don't want to deal with your finances. An advisor may be especially valuable if you have complicated finances that would benefit from professional help.
What are the emotional benefits of financial advice? ›
Research shows that investors who work with an adviser experience a range of emotional benefits from their advisory relationships, including peace of mind and confidence in their long-term financial wellbeing.
What's the difference between a financial advisor and a financial counselor? ›
While other types of advisors may focus on broader financial areas such as wealth management or narrower areas such as estate planning, a financial counselor generally sticks to fundamental areas of personal finance.
What to look for in a financial counselor? ›
Credentials, licenses, and areas of expertise are all factors that determine the services a financial professional can offer. Financial counselors and coaches do not sell insurance or securities products, such as mutual funds or stocks.
In a nutshell, financial counselling helps you manage your debts and get your finances back under control. Financial counsellors are skilled professionals who provide advice and support to people struggling with bills and debt. A financial counsellor can: Assess your financial situation.
What are the duties of a financial counselor? ›
The Financial Counselor is responsible for providing patients with a positive financial experience by helping patients navigate and understand insurance benefits and potential financial liability. Financial Counselors are the patient's point of contact for financial assistance questions.
What is another name for a financial counselor? ›
“Financial advisor” and “financial planner” are both specialists who help consumers manage their money. There is a wide range of financial professionals, from insurance agents and accountants to investment advisors, brokers, and financial planners.
Is therapy worth it financially? ›
Is Therapy Worth The Money: Worthy's Take. Yes, therapy is always worth the cost if you think you need it – and even sometimes when you do not think you need it (but actually still do). Therapy is an investment in yourself and in your own personal well-being. And you are always worth the investment.
How does financial services work? ›
Providers of financial services, then, help channel cash from savers to borrowers and redistribute risk. They can add value for the investor by aggregating savers' money, monitoring investments, and pooling risk to keep it manageable for individual members. In many cases the intermediation includes both risk and money.
Are financial services worth it? ›
For many, the cost of hiring a financial advisor is a worthwhile investment in their financial health and future security. Whether you're just starting out or looking to optimize your financial strategy, a financial advisor can be a valuable asset in navigating the complex world of finance.
What is the difference between a financial advisor and a financial counselor? ›
While other types of advisors may focus on broader financial areas such as wealth management or narrower areas such as estate planning, a financial counselor generally sticks to fundamental areas of personal finance.
