How Money Psychology Affects Your Finances—and the Benefits of Financial Therapy


Historically, the financial industry has focused solely on financial literacy, says Haylie Castillo, MSW, LSWAIC, CFT-I™, owner of Castillo Financial Therapy. While financial literacy is absolutely necessary, it’s just part of achieving financial success. “The psychology and emotions around money have been the missing piece of the puzzle,” she says. 

Castillo says she was raised in a very patriarchal household, where the message was that girls don’t do money. The goal for girls in her family was to grow up, find a man and marry him because he’ll take care of the finances. But she married a feminist.

“So all of that kind of started to shift in a very good way. I discovered financial education, financial literacy and, in my own personal financial education journey, realized that there was this missing piece,” she says. “This very important piece of having to explore my own psychological beliefs and money.”

That experience was what drove Castillo to specialize in money psychology and become a financial therapy provider.

What are money psychology and financial therapy?

While money psychology and financial therapy are intertwined, they are two distinct things. Money psychology is the thoughts and behaviors you have around money, according to Traci Williams, Psy.D., CFT-I™, founder of Healthy Wealthy Roots. And “understanding your psychology and emotions around money is essential for sustainable financial success,” Castillo adds. 

Financial therapy “is that intersection of money and mental health—being able to guide and support people, being able to unpack the root causes behind their negative money mindsets and negative financial behavior,” Castillo says.

You may also see the terms “wealth psychology” or “wealth therapy,” which are slightly different from money psychology and financial therapy. Williams says that anyone of any socioeconomic background can benefit from financial therapy. Wealth therapy, on the other hand, pertains to concerns specific to high net-worth individuals, such as the feelings of guilt sometimes associated with inherited generational wealth. 

Our psychology affects how we treat money

“Morgan Housel wrote the book The Psychology of Money, and he said that money is influenced more by your psychology than finance,” Williams says. Williams and Castillo point to three main influences on our relationship with money: our lived experiences, emotional health and mental health. 

Perhaps you grew up in poverty and now you hoard money to give yourself some semblance of financial security. Maybe, like Castillo, you’re a woman who grew up in a house where only the men handled the finances, and now you don’t know how to manage your own money. Or perhaps money was of no concern growing up, but now you’re in debt because your current income doesn’t allow for the kind of spending you saw as a child. Whatever your situation, these are all examples of your money psychology being influenced by your parents and caregivers—your lived experiences. 


In terms of emotion, does retail therapy ring a bell? Individuals who have difficulty regulating their emotions may turn to shopping as a way to cope or feel better, Williams says. In fact, research from Daniel Kahneman, Ph.D., shows that many of our decisions are based on emotion and automatic reactions rather than logic.  

And, when it comes to mental health, Williams says individuals who have depression, ADHD or another diagnosis may struggle with their money as well. 

“Having the understanding that money is inherently emotional and psychological, I believe, is key to being able to unlock and access those root causes behind our financial behaviors and therefore create the financial success that we are wanting in our lives,” Castillo says. One way to unlock those root causes? Money scripts.

What are money scripts?

Money scripts “shape the way in which we use money, what we do with money, how we view money,” Williams says. Just as the Enneagram can provide insights into your personality, knowing your money script can help you really understand your relationship with money and how you can work toward making that relationship healthier. “Typically, these are formed in childhood. They’re handed to us by our parents or caretakers. They’re given to us by society,” Castillo explains. 

While Williams says there are a few trains of thought around money scripts, she specifically points to research done by Brad Klontz, Psy.D., CFP®, and Ted Klontz, Ph.D. They’re a father-and-son team who are considered pioneers in financial psychology and who founded the Financial Psychology Institute. Brad and Ted’s research identified four distinct money scripts, which can manifest in numerous thoughts that influence your behavior:

Money Avoidance: “I do not deserve money…. Money corrupts people…. It is hard to accept financial gifts from others.”

Money Worship: “Things would get better if I had more money…. You can never have enough money…. Money is power…. Money buys freedom….

Money Status: “Money is what gives life meaning…. Your self-worth equals your net worth…. People are only as successful as the amount of money they earn….”

Money Vigilance: “You should not tell others how much money you have or make…. It is wrong to ask others how much money they have or make…. Money should be saved not spent….”

Castillo, on the other hand, points to Tori Dunlap, founder of Her First $100K and author of Financial Feminist. “She has a few money narratives that specifically speak to women and people who have historically been marginalized by the patriarchy,” Castillo says.

How to determine your money script

Both Williams and Castillo say it’s important to check in with yourself and answer the following questions to suss out your money script:

How did you grow up around money?

How did your parents or caregivers relate to money?

How does money make you feel?

Why do you buy the things you do?

Over the course of your working life, where has your money gone?

If you had a magic wand, what would you change about your financial situation?

What do you believe about money?

How financial therapy helps your money psychology

In short, “financial therapy helps people to make better use of their money to have a healthier relationship with their money,” Williams says. 

For example, Williams mentions a client who grew up with financial insecurity. As a result, he had money anxiety and hoarded his money, even though he had a six-figure income. Williams says she helped that client recognize how much money he actually had, how much he needed to save to avoid the trauma of financial insecurity again and how much was left over to enjoy. They also worked together to understand what that enjoyment would look like and figure out baby steps to take to practice that enjoyment.  

Financial therapy may help you reframe negative money scripts and replace them with a better mindset. That reframing and replacing “enables you to then be able to make sound financial decisions and have the freedom to sustain those sound financial decisions, like having an emergency savings [or] starting to invest,” Castillo says.

She shares a story of a client who was two years postdivorce. The client had recently started dating and was spending more on going out. She was also starting to feel out of control around money. Castillo worked with her to figure out her money values and align her financial goals with those values. After working together for about a year, Castillo was able to help the client get to a place where she now has a spending plan, automated investments and is saving for a down payment on a house. The client also got a new job along the way—because she wasn’t investing so much time and energy worrying about money, she was free to pursue a better career opportunity.  

Signs financial therapy might be right for you

Wondering if you would benefit from financial therapy? Some signs it might help you are:

You’re having a hard time handling money on your own, whether it’s putting together your own financial picture or recovering from your financial stressors.

You have a hard time communicating with others about money.

You’re experiencing financial anxiety. This can manifest in various ways, potentially including avoiding bills or pretending to be blissfully ignorant of your financial situation.

You self-sabotage when trying to take steps toward correcting bad behaviors because you don’t believe you deserve financial stability or because you feel uncomfortable with having money.

How to find a financial therapy provider

Ready to find a financial therapist to help with your money psychology? The Financial Therapy Association is a great place to start. The website has a directory of providers, and you can search based on location, race, sexuality, your specific needs and issues, the providers’ qualifications and more. 

Castillo stresses the importance of finding someone who is a licensed mental health professional. They will be able to use evidence-based techniques that are backed by research and science and are effective in dealing with the psychological and emotional patterns related to money. “Whereas a financial counselor or financial coach might be able to speak to money mindset in general, a licensed therapist or mental health professional is going to have specialized training to be able to help with deeper things like trauma, ADHD behaviors, other forms of narrative burdens and how that affects your behavior,” she says.

Once you’ve narrowed down your list of potential financial therapy providers, set up a consultation phone call. Providers may offer free consultations or trial periods to help you see if they’re the right fit for you.

How to know if a financial therapy provider is the right fit for you

Because financial therapy deals with two very vulnerable areas of your life—your money and your mental health—Castillo says it’s important to find a financial therapy provider who makes you feel safe and validates your lived experiences. “I want people to know that you deserve—and you can have a relationship with—a therapist or financial therapist who makes you feel safe,” she says. “The relationship that you have with your therapist is the primary factor in the effectiveness of that therapeutic relationship.”

To really figure out if a certain provider is the right fit, Castillo and Williams suggest talking about the following:

Be upfront about your goals or problem areas you want to work through. Then ask if they have experience in those specific issues.

Ask if there’s anything you need to bring to sessions.

Ask about the process of working with them and what it will look like.

If it’s important that they have experience working with folks of your specific intersectional identities, then ask about it.

Sure, finding a financial therapy provider might feel like a daunting process, especially when you’re already spending so much time and energy on negative thoughts and emotions around money. But the effort is worth it in the long run. After all, “dealing with your psychology and your emotions around money are essential for you to be able to experience sustainable change,” Castillo says. “Working with a financial therapist will help you be able to not only create a road map for your financial plan, but be able to sustain it to the end goal, whatever that looks like for you.” 

Photo by GaudiLab/Shutterstock

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