What is “Financial Baggage”? And How Can a Financial Therapist Help?

Money isn’t just about numbers. It can sometimes be all about emotions. A recent survey reported that 74 percent of respondents feel their debt has a negative impact on their mental health. Another study found a 300 percent increase in mental health problems among people who are in debt.

Money is a very personal issue. We each see it differently and we each hold different values towards our finances. What those values are may depend on, for example:

  • Cultural background

  • Upbringing

  • Educational level

  • Career choices

If our financial values do not match up with our current financial situation, it becomes a struggle. Most likely, no one has taught us how to cope with this struggle. This creates “financial baggage.”


What is “Financial Baggage”?

In a way, financial baggage exposes our relationship with money. In financial-based situations, we may feel certain emotions and/or memories rising to the surface. More generally, we may recognize patterns developing around economic issues. These patterns develop into what we call financial baggage and may include variations on themes like:

  • Spending as a form of self-soothing

  • Spending impulsively and spending money as soon as you get it

  • Hoarding money

  • Fixation and regret related to past financial decisions

  • Continuing to make the same decisions despite your regret

  • Ignoring bills

  • Relationship fights surround different money values

As you can plainly see, financial baggage can get us stuck in ever-repeating cycles. Also, of course, it can land us deep in debt without the skills needed to turn things around. Thankfully, we have the emerging field of financial therapy — a blend of economics and mental health.


What is a Financial Therapist?

We’re not talking about a financial advisor here. A financial therapist is not giving financial advice but rather, helping us discover why we make the money-based choice we do. After all, before we can create a new budget, we must create a new mindset.

Sessions with a financial therapist provide us with a safe space. While money topics may typically lead us into despair, anxiety, or denial, financial therapy helps us understand these reactions and emotions.


How Can a Financial Therapist Help?

Financial therapy is there to help us develop a new plan — consistent with our values — for our financial life. We learn how to implement such a plan to help pursue goals and create a more stable lifestyle. Some of the tools and techniques you develop may include:

1. Journaling and Documenting

It is essential that we identify our patterns. Without doing so, we cannot make the changes we need to make. By documenting both our financial and emotional lives, we get better at understanding the connection between the two. This may involve recognizing when memories are stirred by money-related decisions. The connections exist but without the help of an experienced guide, such connections can remain invisible to us.

2. Trace Your Spending Habits — and Replace Them

If the emotion-money connections don’t become clear, we can start using our journals to focus more purposefully on spending. When do we spend and why? What do we spend the most money on? What was going on in our lives in times of over-spending? This information empowers both us and our financial therapists to reveal old habits and develop new ones.

3. Explore the Possibility of Under-Earning

Under-earning is a common syndrome that is not commonly explored. Symptoms include:

  • Underestimating our worth

  • Willingness to work for free

  • Viewing poverty as noble

  • Codependency

  • Self-sabotaging behavior


Take-Home Message

To repeat, money is far more than numbers. Our relationship with money may constitute financial baggage that is holding us back. Fortunately, financial therapy is an option for discovery, growth, and prosperity. Please contact our office for a consultation. Together, we can help you unpack your finances and experience the freedom a healthy relationship with money can offer.