Do You Need to Invest in Financial Counseling?

As a long-time advocate of blending financial planning with counseling, I’ve had years of seeing the benefit for clients. I have come to see financial counseling as an investment: one that can pay greater dividends than investments in a home, retirement account, or college education. How can this be the case? Mostly because making good financial decisions is the foundation of financial and emotional well-being. Most financial and many emotional problems result from disordered and dysfunctional money beliefs and behaviors. Money disorders can impair people’s functioning and disrupt their well-being just as significantly as disorders like alcoholism or other addictions.

Some common disordered money behaviors include the following:

• Compulsive Spending is a consuming focus on buying. It can include buying things you can’t afford as well as “retail therapy” shopping where no money is actually spent. It can mean you underfund emergency reserves and don’t adequately set aside enough for retirement.
• Financial Enabling is an attempt to meet your emotional needs by “helping” others, which usually does more harm than good. A pattern of bailing kids out financially is a good example. Enabling can financially harm the parent by diverting resources from other needs and sabotage the child by rewarding dependency and entitlement thinking.
• Hoarding is compulsively buying and storing things that you don’t need or will never use.
• Financial Infidelity is keeping money secrets (such as spending, saving, or investment mistakes) from your partner because you would be ashamed to have them find out.
• Inappropriate Financial Boundaries is sharing of worries or financial details in ways that violate the boundaries between children and adults.
• Workaholism is a consuming focus on work or earning to a point of damaging your relationships.
• Underspending is frugality taken to extremes, such as inadequate spending on health care, nutrition, shelter, or clothing even when you can afford them.

All these disordered financial behaviors have one thing in common: fundamentally, they aren’t about the money. They are often an unconscious response to emotional pain, in the same way addiction or anger might be. The disordered financial behavior may be a medicator that works to deaden deep emotional stress and painful emotions. While one person may find relief in alcohol or drugs and another may find it in work, someone else might use shopping, saving, or financial enabling as a way to feel better and function in the world. Just like addictions, however, disordered financial behaviors only relieve pain for a short time. Eventually, the pain returns, sometimes even stronger. The result is an escalating cycle of destructive behavior that has many negative consequences, including financial. To see the link between emotional health and financial health, just read a celebrity magazine or observe people you know. I’ve seen high-earning professionals who have a negative net worth because they can’t control their spending. You probably know people who bounce from one financial mess to another, never seeming to learn from their money mistakes. Some very capable and intelligent people struggle financially and in their careers because of emotional issues. For most people experiencing financial problems, financial counseling to resolve emotional issues is a low-priority expense that comes far down the list after basic needs like housing, food, and transportation. Yet for anyone who struggles to overcome destructive patterns of behavior—even those that aren’t directly about money—counseling can pay off in very real monetary ways. Emotionally healthy and confident people make better choices about relationships, careers, and other major aspects of their lives. They also make better choices about money. This is why financial counseling is more than an investment in your emotional health. It can also make a measurable difference in your financial wealth. Related: Is Faster Financial Therapy in Our Future?