Financial therapy: The emotional connection to achieving financial wellbeing

Leanne Kaufman:

Money can be a sensitive topic for Canadians and a source of stress and tension in our lives, particularly in these times of market volatility and cost of living concerns. But what if you could change your relationship with money and improve therefore your overall wellbeing? Well, enter financial therapy.

Hello, I’m Leanne Kaufman and welcome to Matters Beyond Wealth. With me today is Dr. Meghaan Lurtz, Professor of practice at Kansas State University teaching in the Advanced Financial Planning and Financial Therapy Certificate programs. She’s also a lecturer at Columbia University where she teaches Financial Psychology. Dr. Lurtz, welcome. I’m really looking forward to discussing the psychology of finances with you and why this matters beyond wealth.

Meghaan Lurtz:

Me too, me too. Thank you for having me.

Leanne Kaufman:

So I’m going to be honest, the phrase financial therapy is new to me. Can you start by telling us what it is?

Meghaan Lurtz:

Yes, to be fair, it’s new to many people. But it is the integration of cognitive, emotional, behavioural, relational, and financial aspects of well-being. So it’s kind of taking it all in and mixing it around a little bit. So not just the finance part and not just the psychology part, but the interplay of both.

Leanne Kaufman:

So it sounds like maybe this is a newer thing and definitely given the qualifications you’ve mentioned, maybe a bit of a niche, but can you tell us a bit about what the background of a financial therapist would look like?

Meghaan Lurtz:

Let me tell you a slight history of financial therapy. It’s not brand new. It’s been around for a little bit now. I want to say that it was established in maybe like 2009, 2010, right around there, right around the crash. And I remember that specifically. I was not yet in grad school, but I was taught. My professors were Dr. Brad Klontz, Dr. Sonia Luter, Dr. Christy Archuleta, which are three members of a founding, a larger founding team, but they were all at Kansas State University. And so what happened during that crash, the program at Kansas State, our financial planning program is actually in the school of humanities and our human services where the therapists are. And so like, it just happened to be that, you know, there were financial planners in the hallway talking about, you know, fears and stress, and there were therapists in the hallway that were like, well, yeah – no wonder people are acting like that because of this, this and this, you know, that comes from psychology. And so it was this really amazing moment, you know, where finance and psychology kind of came together. And that kind of brings us to your original question, what’s the background or expertise. To be a certified financial therapist, you have to have a bachelor’s in one of the following – it can be in finance or a finance-related field like financial planning, consumer economics, accounting, or it has to be in mental health, psychology, therapy, counseling. You can also have perhaps a degree in another field. Let’s say maybe it is in history or something like this. But you have taken the time to go get your CFP or your LMFT, which is a licensed marriage and family therapist. Or you have the CHFC or the CFP is worldwide.

So even in Canada, you guys have FP Canada and they take care of the CFP there through the Financial Planning Standards Board. There are other designations as well, but that’s a good cross one between the US and Canada. And what you are doing when you are getting the education for becoming a financial therapist is you’re probably in mental health or you are in finance and now you want to add the opposite discipline to your set of skills, to your background. My undergraduate and master’s work is all in psychology and my PhD is in personal financial planning. So it is a mix of both the mental health and finance field.

Leanne Kaufman:

It’s really fascinating, and I can understand, it makes perfect sense how the two interact. In the time that this has sort of been taught now at your university and perhaps others, have you and your colleagues been able to discern any sort of change in the financial industry or amongst personal finance generally?

Meghaan Lurtz:

I totally think so. So certainly my role as an educator at various universities wasn’t all that long ago that the CFP and also FPSB went and changed their practice standards to include something now that’s called either financial psychology or the psychology of financial planning. And this is opening that spectrum broader to just general financial professionals that they are not necessarily receiving education in financial therapy. There are special programs for that, such as the program at K-State, but we are opening the conversation much broader. And so my work at Shaping Wealth, where I am a partner, Shaping Wealth is an education platform and all we do is train advisors, many Canadian advisors, many US advisors, many advisors in South Africa and in the UK and in the EU, advisors from all over the world. We train them on communication techniques and emotional intelligence and how to hold presence in a meeting and about the psychological impacts of what they’re doing. I have a job outside of university doing that very thing, and we have many advisors that come to us. And then also, I am involved with another woman, her name is Ashley Quamme. She is a licensed marriage and family therapist. She is also a financial therapist and we have a company called Beyond the Plan where we actually offer as a fractional chief behavioural officer if you will so financial planning firms hire us to do financial therapy or have conversations with their clients. Sometimes we even have conversations with the advisors because everybody needs a little bit of financial therapy in their life. And we counsel, talk about, present on these ideas. I absolutely see it changing the financial industry. Consumers are interested in this. They are searching it out. There have been many articles published in the Wall Street Journal, the New York Times about this work and how it is changing how people approach their financial decisions.

Leanne Kaufman:

Well, like I said, it’s really fascinating and in the work we do at Royal Trust, which is my division of RBC, there’s a lot of, you know, it’s not financial therapy, but there’s certainly a lot of emotional work involved with people around executorship, grieving, incapacity. I can really understand how the dots can be connected here.

You mentioned earlier your former professor or your colleague, Dr. Brad Klontz, and we know he identified four categories of something he calls money scripts. They were money avoidance, money worship, money status, and money vigilance. Can you tell us what that phrase money scripts means and then how can they help when it comes to financial therapy?

Meghaan Lurtz:

Sure, sure. So a money script is a script, in the sense of an actor has a script. And why this is interesting or why this is important is that money scripts tend to be, sometimes they are taught to us from just how we are socialized about money. Other times, and many times, they are sort of unconscious.

Beliefs that are passed down generation to generation within a family and when these go unexamined because again, they usually come to us in an unconscious way, you know. We’re not typically walking up to our family member or walking up to our friend and saying, you know, I believe this about money, what do you believe?

We’re not typically doing that. So this is just watching how people behave or watching what they do or maybe watching what they say or how they treat money. That is what actually develops the script and so it’s important to remember that Brad is a clinical psychologist by training. So when Brad was developing the Money Scripts Inventory, he was looking for a way to diagnose money beliefs and being able to talk to those and speak to those. There are maybe ones that we would all recognize, such as a gambling disorder or a hoarding disorder. These absolutely relate to or can relate to money or do relate to money. But then there are also things like if someone is extremely money avoidant to the point that they will not open the bills or they won’t look at money or they won’t talk about money at all. Then this obviously causes problems in their life. And this takes us to, it’s sort of beyond, a little bit beyond the scope, but it’s important to think about what is called the four D’s of diagnosis. We’re trying to understand is this belief or set of beliefs causing deviance, distress, dysfunction, and danger?

And I bring that up because the way that this test of your money scripts is set up is that if you take the test, you will receive a diagnosis in the sense that you will be labeled as money avoidant, money worship, money status, or money vigilance. I myself have taken it many times, and I am both money vigilant and money avoidant. Now, does this mean that there is something wrong with me and that I am being deviant or I’m in distress or it’s causing dysfunction and danger in my life? It does not.

And for the vast majority of us, it doesn’t. And so I don’t want anybody to go find it and take it and think, you know, there’s something wrong with me. Likely you’re fine. And it may be great to ask yourself, you know, the following questions. Maybe it comes out, for example, money status and money status is, you like to use your money to demonstrate your status. So this is somebody who maybe has a nice bag they have the newest phone, they have a nice car. There is nothing wrong with having a beautiful bag, a nice phone, and a great car. There’s nothing wrong with this unless it’s causing deviance, does that like dysfunction, danger or distress. If you are paying for that car and that bag and you can’t eat, that becomes a problem. Or if you are unable to talk about, or you can’t separate your personal wealth or your personhood and how you feel about yourself, unless you have the latest bag or the latest gadget, then yeah, then that becomes a bit of a problem. Instead of going to the test and being super concerned that there’s something wrong. Instead, I would encourage you to ask yourself, what does this mean to me? What are examples in my life where I have seen this? Perhaps, where did I learn those? Or where do I think I learned those? How do I see this impacting my future? How did I see this play out in the past? What’s important about right now? And what I can do. What do I want to do differently? Or what do I want to be mindful of when making future financial decisions? So in many ways, the money scripts are just a very interesting way, or a simple way, really, to bring out some of those unconscious things that we believe about money.

And then we take the time, hopefully, to investigate them a little bit. Because sometimes, money avoidance, for example, someone could be money avoidant and they just don’t like to talk a lot about money to other people. Well, in some ways, in some situations, talking about money to other people could be dangerous. You don’t necessarily want to go around telling everybody how much is in your bank account. That may not be safe. So in some ways, being money avoidant is good. Being money avoidant and unable to talk to your partner, not good. So there’s a balance between the two. And so it’s less about what am I and what problems do I have and more about what does this mean to me and how has it impacted decisions and how do I want it to impact decisions moving forward.

Leanne Kaufman:

Yeah, that all makes a lot of sense and now I’m super curious to go and take the test. Is there an example that you could share of how that analysis and then the corresponding financial therapy that I assume might have gone along with it really like helped change a person in real life on an anonymous obviously, but you know, can you give us kind of a real-life example of it.

Meghaan Lurtz:

I would default to myself, you know, prior to going to grad school I didn’t know any of these things existed. And although I can’t speak specifically to finding out money avoidance and money vigilance are my money scripts, I will tell you a different story.

So at this time, we were talking about how money scripts are sort of passed down. And something that was passed down to me is that women should have their own money. And in a way, that doesn’t sound bad. We’re in the feminist movement, thankfully. And that doesn’t sound like a bad thing, but I want you to know that it always came to me as a warning.

And so what I was actually doing in my relationships course that I took as a part of my financial therapy training, relationships and money, I took it with Dr. Christy Archuleta, one of the things that you have to do is do your money history. And so I interviewed my grandmother, my mother, and a couple of my aunts about money in their life. And we’ll come to find out my great-grandfather was a drunk. At one point, he sold the dog to be able to have money. And so my grandmother was always hiding money in the house to be able to take care of her own children. Flash forward to my grandfather. He divorced my grandmother. In the divorce, she had to sell many of her things, again, trying to take care of my mother and her brother and sisters. Now flash forward to my mother, even though it was not the same extreme traumatic experiences that my grandmother and great-grandmother experienced. My mother also went through a divorce and just thinking then about that script it doesn’t necessarily fall quite into money avoidance, money worship, money status, money vigilance super cleanly, but it was something that was taught to me that if you are a woman, you have to have your own money because there was this underlying current of ‘because men will take it’.

And then flash forward now to my own life. I am 25, 26, living with my now husband. But at that time, we were just living in an apartment in San Diego, and we were going to buy a different apartment. And we did, but we weren’t married. At this point, we weren’t even engaged. And he said to me, well, we’re going to get engaged. We’re going to get married. We have this house. We should combine our finances. And I remember being on the other side of that kitchen of this 800 square-foot apartment, so not very big, and feeling fear, feeling anger and feeling like, and I remember I said to him, you will never control my money. And he looked at me like totally weird, like, okay, crazy, no problem, keep your money over there and we’ll just open another account and we can both put money in it. I don’t care if you don’t care, but clearly you have big feelings about this. I did not know the impact of what I had been taught, how many different currents it had in my life. I, throughout many times in my early 20s, was broke all the time. And I internalized that with a lot of guilt because I wasn’t being safe. And so there are things that we can learn about ourselves by simply learning or thinking about with greater detail about what was taught to us. And so, you know, even to this day, my husband and I do not share a bank account. Our financial planner is probably the only person who ever sees all of our accounts together. But can my husband call me at any time and say, hey, what’s in this account or what’s in that account? And we do that. We talk about money all the time, probably because we don’t have any way to see each other’s money. So we actually do talk about it more often.

But there is this and probably will forever be this part of me that’s like, if I have to cut and run to Mexico, I’m going to cut and run to Mexico. And if that’s what makes me feel safe, that’s what makes me feel safe.

But being able to articulate that to my now husband, that I just have this weird thing and that this is how it feels in my body, he can be more patient with that. He can still think it’s strange. But at least I can articulate it instead of saying no and being so angry with him over something that he hasn’t even done. So I think that there are likely many examples. I mean, that’s just one that I have that has a very interesting one, just given so many generations of it. But there are things like this all the time for everybody.

Leanne Kaufman:

We think about financial literacy quite a bit for children, but what advice would you give to an adult who may be receiving some sort of a financial windfall or an inheritance if they aren’t used to managing finances in such large amounts, let alone in their day-to-day?

Meghaan Lurtz:

Yeah, one, I would say you’re normal and that you should talk to someone. None of us are good at it. None of us. Because it’s not something that’s taught. There are very few programs that teach people how to think about their money, talk about their money, let alone manage vastly different amounts from one day to another. There’s a great researcher and another well-known gentleman in financial therapy. His name is Dr. Jim Grubman. He’s a leader in our space. And he often talks about wealth through the lens of natives and immigrants, people that grow up with wealth. They are natives to it. So nothing is necessarily foreign to them.

But what you have just explained, like a windfall or an inheritance, this is an immigrant. And so you can even imagine somebody being an immigrant to Canada. And maybe they’re coming from China. And maybe they don’t know the language. And they don’t know the customs. And they don’t know the practices. It is very hard. And moving from maybe, regular means to what feels like totally irregular means which can mean many things for many people. This is difficult to do and not something that we should feel the need to do on our own.

There is this very strange idea that has taken over. It seems like you have to be able to do everything on your own, but I can tell you that there is no legit model of behaviour change that doesn’t involve other people.

Like we need, as a human species, we need other people in our corner. Knowing what to do is not a prerequisite for deserving help, being deserving of help. And the way that we help each other is by talking to someone. So if this happens to you where you have a financial windfall or an inheritance, if it’s an inheritance, I’m sorry you lost someone. If it’s a windfall, good for you. And now go find a financial professional. Go find a certified financial planner. And go find a financial therapist. And talk to both of them.

There is nothing about this where you should feel like this is something that you need to do on your own. There is a lot of technical stuff, there’s a lot of emotional stuff, there’s a lot of psychological stuff, there’s a lot of relational stuff that’s going to come up and it’s going to be so helpful to have those types of professionals in your corner.

Leanne Kaufman:

What about a couple who has vastly different relationships with money? What kinds of conversations would you have with them? Is couples’ financial therapy a thing?

Meghaan Lurtz:

It’s totally a thing. I mean, again, in the definition of what do financial therapists do, it’s relational. And so, yes, and again, you are normal. It would be so, I mean, we grow up in separate households. We believe totally different things, are raised on totally different ideas. Again, some of these even subconscious. So unless you’ve taken the time to really investigate it, it may be even hard for you to recognize or surface on your own, which kind of sounds weird. But again, I went through a lot of school and learned a lot of things about myself and I could not have done that without the support of my professors, without the support of my peers and colleagues. I continue to learn stuff every day from my friend Ashley Quamme, to just being a member, a long time member of the Financial Therapy Association and the different educational things that they provide. But I think the bigger thing here is that you also have two people that love each other and that care about each other. And usually, in these conversations where maybe you do take the money scripts inventory, or maybe you do choose to go work with a financial therapist, and simply having a sacred space, I do believe it is a sacred space, to talk about what you believe, why you believe it, and who taught you that.

Sometimes that alone, your partner will see you differently because they will understand what this behaviour is stemming from. There is also simply because we have different ways of getting there doesn’t mean we don’t want some of the same goals.

And so instead of focusing solely on how we differ, to perhaps focus on what you do the same or what you think is important, or you both agree that is important, financial planners probably know this or might want to know this, but certainly financial therapists are trained in this, that we are there to serve the coupleship.

So there are many times where I’ve been talking to two people and one of them very much wants me to take their side. But as a financial therapist, even as a financial planner, you want to resist that. We don’t want to gang up on that other person. That doesn’t feel good to anybody. And so to remain that open and non-committed to either side, you want to remain that for your clients in terms of just getting them to talk openly about what their differences are, but also then what they see the value in each other’s differences. That can be another beneficial conversation to have that even though they’re different, there may still be things that we appreciate about that person.

The example is always one person is a spender and one person is a saver. Well, the spender may appreciate about the saver that they’re organized and that they are thoughtful and that they do think long term, whereas the saver might like the spender and that sometimes they help them to enjoy the moment. And so even with our differences, there can be beautiful things that come out of that that we can appreciate with one another, but it’s usually what’s most helpful in the same way that I explain in the story about me and my husband, just learning where some of these beliefs come from and is that something that we want to continue to carry or is it something that we want to change? Once it comes to light, once it comes from being subconscious to conscious, now we get to make that choice.

Leanne Kaufman:

Well, thank you so much. I’ve learned a great deal and I know we could probably go deeper on a few of these topics, but to wrap things up for today, if you hope listeners remember just one thing from this conversation, what would that be?

Meghaan Lurtz:

Don’t do it alone. Find a financial therapist. Find a financial planner. Financial planners these days, again, do receive training in financial psychology and so they will know something about this even if they don’t quite know everything about this and they can help you to have those conversations and they can certainly help you to find a financial therapist. You know, there is no need to feel bad that you don’t know these things or feel confused. These are not, again, prerequisites for help. It is better to reach out to somebody and begin having that dialogue and learn something about yourself, learn something about your partner. And if you want to make change, that makes it a lot easier moving forward.

Leanne Kaufman:

Thank you so much, Dr. Lurtz, for joining me today to understand the fascinating world of financial therapy and how it is beyond just managing money, but also understanding the emotional and psychological factors that drive our financial decisions and, of course, why this matters beyond wealth.

Meghaan Lurtz:

Thank you.

Leanne Kaufman:

You can find out more about Dr. Megan Lurtz on LinkedIn. If you enjoyed this episode and you’d like to help support the podcast, please share it with others, post about it on social media, or leave a rating and review. Until next time, I’m Leanne Kaufman. Thank you for joining us.

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