Unhealthy Money Behaviors Financial Therapy Can Treat
Some people are not aware that therapy can help you with financial problems, but it can help treat a number of unhealthy financial behaviors! The field of financial therapy is concerned with the emotional, behavioral, cognitive, and relational pieces of financial health. Because the field is relatively new, not many people are familiar with what this kind of therapy can do for you. Financial therapy can address everything from couples struggling with how to manage their money to disorders like gambling to everyday issues like overspending. In this blog, I will outline a number of problematic money behaviors that therapy can help you change; for further reading on these behaviors, please consult Facilitating Financial Health: Tools for Financial Planners, Coaches, & Therapists (authors Brad Klontz, Ted Klontz, and Rich Kahler), a great resource for financial and mental health professionals. If any of these issues resonate with you, contact me today to learn more about my financial therapy services.
Denial
Our first problematic money behavior is denial - as in, avoiding money issues. Avoiding looking at your bank statements or bills, pretending like the debt you have does not exist, turning the other way when your partner wants to discuss spending and savings with you, etc. all fall under this category. We think that if we just ignore our money problems, they will go away and we will not have to face the uncomfortable feelings that they bring up in us. Unfortunately, the longer you avoid something that stresses you out, the more your anxiety can increase, making it hard to take positive action.
Underspending
Many people do not realize that underspending is a disordered money behavior, but it is - being a miser is not a healthy thing. People who underspend forgo getting their needs met in the present due to fear around not having enough money or resources in the future. For example, imagine an elderly person who has saved during their entire adult working life and now has accumulated millions in the bank. While it is normal and smart to be thinking about end-of-life expenses like healthcare and nursing home costs (a common concern for this population), it is unhealthy to not properly feed, clothe, and house yourself out of fear that you will spend those several million dollars you have left.
Overspending
Overspending is perhaps the one of the most common unhealthy money behaviors on this list alongside denial - Americans have struggled with overspending due to changes in our economic culture since World War II. A brief history lesson for some context around overspending: at the end of WWII, we had a bunch of soldiers return home who needed homes and jobs, and our country was primed to take advantage of the cool inventions we had created during the Great Depression and the war but had not yet popularized due to the state of the world. As we set up those veterans and families for postwar success, an atmosphere of borrowing money and spending on exciting new consumer products was created. Borrowing money became a part of our economic culture over decades as incomes and GDP grew, but once economic inequality started to grow at the latter end of the century, our penchant for borrowing money and holding debt became less sustainable for financial health. So, if you are thinking, “Yeah, this is me - I spend beyond my means,” know two things: first, there is a systemic explanation for how large debts have become normalized in American culture. Second, this is a behavior that can be changed! Financial therapists and planners can help you develop a realistic plan you can stick to to reduce your debt and spend within your means.
Vow of Poverty Mindset
The vow of poverty mindset is prevalent within the helping professions - teachers, mental health therapists and social workers, first responders, healthcare workers, etc. The idea that you “did not get into this line of work for the money” is a heavily reinforced financial attitude for workers in these fields, and it can be incredibly harmful to them. As a therapist, I have experienced this myself - many therapists think that we should not be concerned about making money and that things will just work out in the end because we are doing good work that helps people. However, it is important for helpers to be properly compensated and have healthy financial lives, too. This disordered money behavior is tricky because it is reinforced by our peers (similar to how overspending is reinforced by our entire culture), and it can feel hard to work on this when you are not making a lot of money. Working with a financial therapist can really benefit the helping professionals with managing their money and saving for retirement.
Inability to Manage Windfalls
Picture this: you have won the lottery - let’s say, after taxes, you take home 5 million dollars. You are ecstatic. You cannot wait to buy a bigger house, buy a newer car, take your family on a nice vacation, and maybe buy your parents something they need, too. You are going to be much happier, and all of your problems will go away, right? No! Research has shown that if you have unhealthy money behaviors, it does not matter if you have more money - your problems with money will not magically go away. You also do not feel happier when you receive a financial windfall, beyond a brief uptick in happiness immediately after learning about it. Many people believe that they are set for life with a windfall without considering how they already manage, feel, and think about money, and thus they often find themselves back at where they started within a few years of receiving a chunk of money. For most people, it is imperative that they find a good team of financial professionals - a planner, accountant, and therapist that they trust - to help them protect and grow their money versus squandering it away.
Enabling
Enabling is a money behavior that is often seen between adult parents or grandparents and their children or grandchildren (though there are other examples). Enabling involves providing financial assistance to your loved ones when it actually may be more beneficial to them to NOT give them some cash. For example, if your adult child keeps coming to you for money to maintain a standard of living, but your child has a gambling problem, you are not actually helping them craft a healthy life: instead, you are enabling their gambling and helping them stay stuck without resolving their mental health issues. It can be quite hard to determine if providing money to someone is in their best interest or not, so a therapist may be the best person to help you talk you through this situation.
Enmeshment
The last item in this post is financial enmeshment, which may be unfamiliar to you - if so, this involves a parent or adult figure inappropriately involving a child or teen in family money matters. If you ever feel like you shared the burden of keeping your family financially afloat or had to listen to your divorced parents fight about child custody payments with you as a go-between, you experienced financial enmeshment. This is not a burden minors should have to bear, so if you recognize that you have led your child to take on a critical role in worrying or managing the family’s finances, know that it is possible to change this behavior, and a therapist can help you in a non-judgmental, non-shaming way.