Financial Wellness Center
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May 05, 2025

Understanding Money Behavior

 

Many financial advisors are starting to work jointly with mental health counselors to help clients who are having difficulty making financial decisions or changing financial behavior.  The reason? Behavior with money stems from the subconscious.  

 

Self-sabotaging decisions, like wasting your wealth on iffy investments, accumulating credit card debt on unnecessary spending, and more, are sometimes not rational. Fixing that can require special expertise from financial and mental health professionals.

 

Financial Therapy

 

Financial therapy addresses the unconscious and unspoken thoughts, beliefs, and feelings around money.  

 

For example, your money goals may be greatly influenced by your parents, even if they are not appropriate for you. Maybe your parents taught you that people with a lot of money are evil and greedy, so you don’t save enough or ask to be paid sufficiently. You may hoard cash when you should invest it for the future. You may recklessly waste money, believing that more will always turn up.

 

All these behaviors may make it more difficult for you to reach your financial goals.

 

It’s Not About Money

 

This behavior usually isn’t about the money per se. Simply giving people more information about how money, investing, or financial planning works isn't enough.  

 

Typically, financial therapy involves a client-centered financial advisor together with a therapist or psychologist. And this process can help those who are in some way financially stuck make significant progress.  

 

The Nazrudin Project

 

The exploration of financial psychology or emotion and money isn’t new. Dr. Jacob Needleman and Olivia Mellan were among the mental health pioneers who raised questions around the psychological side of money in the 1990s. About the same time, two financial advisors, George Kinder and Dick Wagner, co-founded a leaderless group of advisors, coaches and therapists called the Nazrudin Project to explore the area.  

 

The Nazrudin Project spawned scores of books, courses, and organizations and raised the awareness and skill level of financial professionals and therapists. The first financial therapy workshop took place in Nashville, Tennessee in 2003. Since then, organizations have emerged like the Financial Therapy Association to promote the benefits of financial therapy.

 

The Financial Therapy Association

 

The Financial Therapy Association defines financial therapy as follows: “Financial therapy is a process informed by both therapeutic and financial competencies that helps people think, feel, and behave differently with money to improve overall well-being through evidence-based practices and interventions.”

 

The FTA furthers states that: “With this combined approach informed by both therapeutic and financial competencies, financial therapists are equipped to help people reach their financial goals by thoughtfully addressing financial challenges, while at the same time, attending to the emotional, psychological, behavioral, and relational hurdles that are intertwined.”

 

Identifying and understanding your personal approach to money is an essential step on your path to financial well-being. If you have financial goals that you find difficult to put into action, talk with your financial advisor about financial therapy and how it might fit with your financial plan. 

 

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