It was my junior year in college when I received a heartbreaking call from my mother. Her precise words, “We’re filing for bankruptcy. I just wanted you to know,” felt like little knives stabbing me in the back.
You see, I grew up with what I thought was a financially comfortable childhood. My sisters and I were each given our own cars at 16. And my parents generously helped us pay our way through college. They were strict with expenses—we didn’t have cable, weren’t allowed to go out much and we never had an allowance—but I can’t recall my parents ever saying no if we asked for $5 to go on a school field trip.
The problem was, while we felt like we didn’t have to worry about money, we never actually talked about money. Ever. Which is why my mother’s news on that ironically cold and rainy day made me feel like I didn’t know my parents, or my childhood, at all.
It has been nearly 8 years since, and the process for healing has been slow yet steady thanks to time, support from loved ones, self-empowerment and…therapy.
A recent Cambridge study suggests that most young children grasp all the main aspects of how money works and form "core behaviours which they will take into adulthood and which will affect financial decisions they make during the rest of their lives."
Whether we ever come to realize it or not, how we were raised has a remarkable impact on how we make decisions as adults. We walk away with our parents’ good habits. But we may also share their habits that can be harmful to our wellbeing, including regarding financial health. Since blaming mom and dad for the problem won’t solve anything, it’s important to take the time to understand our money attitudes and where they come from—most especially our bad habits—so we can take the necessary and effective steps to change them.
Anyone who's argued with someone over credit-card bills or wrestled with their own spending habits knows that money and emotions are often inextricably linked. Yet, until recently, most therapists focused on the emotional side of the equation without talking numbers, while financial planners stuck to retirement plans or investment strategies without considering their client's preconceptions or emotions toward money.
The good news is a new practice called financial therapy is bridging the gap between those two worlds. Experienced financial planners are going back to school to complete coursework on the psychology of personal finance and behavioral finance.
Because these programs are so new, there isn’t yet an official certification for financial therapists. However, networks like the Financial Therapy Association are working to provide a growing list of practitioners, including a forum to share and practice methods and models of financial therapy.
Financial therapy is a new step toward helping financial planners understand their clients’ attitudes toward money that developed in childhood, but a method that is more effective than simply forcing a person to change her bad money habits cold turkey—a tactic that typically fails to break any bad habit.
How do you know if a financial therapist is right for you?
Rick Kahler, president-elect of the Financial Therapy Association, suggests asking yourself, “How do I stop doing something that I really don’t want to be doing?”
That something could be as simple as not having a financial plan in place, overspending or even underspending. Kahler approximates that 1/3 of his clients probably fall into the latter category “where you’re driving a car that’s almost not safe, or you’re not taking care of your health because you don’t want to spend the money.”
It’s a creative new field that promises to help people avoid a double-whammy in their own Great Depressions.