Why Financial Therapy Matters—and Why It’s Not the Same as Financial Planning

Money is not merely a number in a bank account; it profoundly influences almost every aspect of human life. It affects individuals’ ability to meet basic needs, impacts interpersonal relationships, and plays a crucial role in overall well-being. Nevertheless, when individuals face financial difficulties, the advice they frequently receive tends to be simplistic: develop a budget, save more, and spend less.

If financial decisions were purely based on logic, one might question why more individuals do not adhere to this advice.

As a financial psychotherapist, I assist clients who possess an understanding of what they “should” do with their finances yet remain ensnared in cycles of stress, avoidance, overspending, or interpersonal conflict. Financial difficulties are seldom solely about numerical values; they are intricately linked to emotions, past experiences, family dynamics, and even trauma.

Traditional financial planning and coaching primarily focus on external solutions, such as budgets, debt repayment strategies, and investment guidance. While these aspects are significant, they do not address the underlying reasons individuals struggle to implement financial plans. Financial therapy serves to bridge the divide between financial knowledge and behavior by examining the emotional and relational barriers that influence monetary decisions.

### The Lack of Insurance Coverage for Financial Therapy

Unlike conventional mental health therapy, financial therapy is not universally covered by insurance. Insurance companies typically mandate a mental health diagnosis for coverage approval. Although financial stress may contribute to conditions such as anxiety or depression, financial difficulties are not classified as a mental disorder.

This situation raises an ethical dilemma: Should a financial therapist diagnose a client with a mental health disorder solely for insurance billing purposes? Furthermore, how might such a diagnosis affect the client in the long term? For instance, labeling a client as having an anxiety disorder solely due to financial stress could lead to inappropriate stigmatization. Moreover, insurance-focused therapy models tend to emphasize short-term symptom alleviation rather than fostering long-term behavioral change. In contrast, financial therapy seeks profound, enduring transformation by unraveling emotional monetary patterns, shifting behaviors, and enhancing relationships with money over time.

### Distinction Between Financial Psychotherapy and Other Financial Services

The landscape of financial assistance can be bewildering, as various professionals offer distinct types of support. Below is a comparison of financial therapy with other financial services:

- **Financial Psychotherapist**: A licensed clinical social worker who integrates mental health expertise with financial therapy and financial social work principles. This practice may include exploring financial trauma, money disorders (such as compulsive spending or hoarding), and conflicts related to relationships with money.

- **Financial Planner or Advisor**: A professional who delivers technical financial guidance concerning budgeting, saving, investing, and retirement planning. While they aid clients in managing their financial resources, they usually do not address emotional or behavioral issues.

- **Financial Coach**: An individual who provides accountability and motivation for achieving financial goals. Coaches may assist clients in adhering to budgets, repaying debts, or establishing healthier financial practices, but they do not offer licensed therapy or financial advising.

Each of these roles holds considerable value but serves distinct purposes. A financial planner may develop a comprehensive investment strategy, yet an individual plagued by profound anxiety regarding money and who avoids monitoring their accounts may struggle to implement that strategy. This is where financial therapy plays a pivotal role, helping clients identify and address the psychological and relational impediments that hinder their economic advancement.

### The Importance of Financial Therapy

Money is a leading source of stress for numerous individuals in the United States. It is also a frequent catalyst for relationship conflict and a significant factor contributing to premature divorce. Despite this, formal education rarely includes instruction on cultivating a healthy relationship with money. Financial therapy enables individuals to transcend financial stress—not merely by imparting superior money management techniques but by transforming their cognitive, emotional, and behavioral responses to financial matters.

For those seeking more than standard financial guidance—individuals desiring to comprehend and amend their financial behaviors on a deeper level—financial therapy represents an essential and often overlooked aspect of the solution.