What is financial therapy and how can it help small businesses succeed?

Being a new or small business owner comes with a lot of financial burden. Chances are, you’re operating under extremely tight margins — leaving little room for money mishaps. Things like sky-high inflation, a 3-year-long global pandemic resulting in a significant economic downturn, and a banking crisis certainly don’t diminish your financial fears. What’s more, talking openly about finances can be a bit of a taboo subject — which leads to small business owners feeling alone and unsupported along their business journey. 

If you’re feeling stressed about understanding your business finances, you’re not alone. According to recent QuickBooks data, many entrepreneurs fall into business ownership through a side hustle or hobby. While the majority of these new business owners (71%) are educated to a degree level or higher, only 1 in 5 have financial management training — and over half admit they feel out of their depth.

You might be working with an accountant or financial advisor to relieve some of that financial pressure. But there’s another financial expert you could be tapping into to relieve your money anxieties: a financial therapist. 

Never heard of it? That’s because this is a relatively new option in the field of financial assistance. “There’s not that many of us!” says Wendy Wright, LMFT, financial therapist, and founder of Financial Therapy Solutions, LLC. Financial therapy offers to help small business owners (and individuals) repair and improve their relationship with money — so they can move forward with clarity and confidence. To learn more, we asked Wright what exactly small business owners can expect from a financial therapist and how financial therapy can help them succeed. 

What is financial therapy?

Financial therapy is an emerging field that sits somewhere between financial advisement and talk therapy. “It’s the intersection between money and emotions,” says Wright. “We have enough research to know that 80%, probably more, of our financial decisions are emotionally driven. Having an awareness of what those emotions are can be life-changing.”

Financial therapy exists to help individuals and business owners alike develop a healthy money attitude and build financial confidence. A financial therapist drills down to the root of your financial difficulties and decisions, bringing clarity to your finances and breaking down subconscious barriers that could be holding you back. 

How is a financial therapist different from a financial advisor or planner?

A financial advisor is going to dive headfirst into your finances. They want to see and understand your numbers. It’s their job to offer advice and guidance on financial issues and decisions. And they’re a great resource to help you create and meet your financial goals. 

A financial therapist is going to spend more time working through the mental barriers that are driving your financial decisions or holding you back from financial freedom. “We don’t want to give advice,” she says. “We talk about the numbers, but we talk about the thoughts and feelings behind the numbers first.” 

Wright says it’s important for a financial therapist to maintain a super-neutral relationship with your numbers. For example, “If someone says, ‘I’m in so much debt,’ I can’t say, ‘Oh, that’s not very much.’ Because then I’ve discounted what that debt feels like to them,” she explains.

What a financial therapist can do, she says, is talk through some tactics the client has already tried or wants to try. “Usually, by the time they come to me, they’ve tried a few different solutions,” she says, “and they’ve failed. So now they feel like a failure.” When that happens, she spends her time delving into why the plan failed — usually, a case of cold financial feet. “We look at the trends and the patterns and where things get gummed up,” she says. “And that’s how we approach it therapeutically.” 

Finally, “We meet regularly!” says Wright. “You might meet with your advisor quarterly, but we’re going to talk pretty regularly — because money is part of our everyday lives.” 

How is a financial therapist different from a talk therapist?

Talking about thoughts and feelings sounds a lot like meeting with a talk therapist. And there’s definitely some crossover. But Wright says financial therapy has a few key differences. 

Any therapist can talk about financial anxieties or money woes, but financial therapy goes beyond basic phrases like “I’m stressed about money,” or, “I can’t afford that.” In Wright’s experience, these sentiments say much more about the client’s mindset than their bank account. “We explore what that really means by looking at the actual numbers,” she says. 

Wright starts every session by asking, “What have you noticed in money this week?” The question is intentionally broad. The client might spend some time talking about specific transactions, their net worth, or a financial decision they have to make. “We just see what comes up,” she says. 

You can expect a financial therapist to focus on your relationship with money. “That means your relationship with saving, spending, and earning money,” she says. In other words, you may want to save discussing your relationship with your parents for your regular therapist. But a financial therapist can dig a little deeper into your financial feelings than a talk therapist can. “I have therapists refer their clients to come to me just to talk about money,” she says. 

Financial therapy may be billed as a therapeutic consultation or money coaching session. A financial therapist might or might not accept medical insurance, but won’t issue any kind of diagnosis (financial or otherwise). 

How can financial therapy benefit small business owners?

Wright helps individuals and small business owners alike build healthier relationships with money. But she says financial therapy can be especially impactful for business owners. “Not just for them, but for their whole business,” she says. “For small businesses in particular, there’s so much that goes into the decision to start a small business — and it can be very emotional. That emotional aspect is often overlooked.”

There are a few ways financial therapy can help:

1. Understand the real reason why you’re starting a business

If you tell a financial advisor that you want to start a new business, they’re going to ask how much capital you have or how much you need. They’re going to ask about a business plan. They’re going to ask if you’ve done your market research and competitive analysis. 

Those are important questions — but ones you might not be prepared to answer as a new business owner. When Wright meets with new or aspiring business owners, the first thing she asks is, “What do you want this business to bring to your life?”

“Often they’re thinking, ‘I just need to go into business,’” she says, “They don’t have clarity as to why they feel that way.” Lots of aspiring entrepreneurs feel trapped in their current jobs, they’re mad at their boss, or they feel like they need to make more money — and starting their own business seems like a logical next step. 

Wright says those might not be the best reasons to jump into starting a business — draining your savings in the process. “They’re really good reasons to understand,” she says, “and to think about what you can do differently in the situation you’re in.” 

2. Ride the emotional roller coaster that is starting a business 

The second thing Wright might ask a new business owner is, “Do you have a business plan?” Lots of times, the answer is no. And lots of times, it’s an emotional thing to admit. “They might be really ashamed or embarrassed that they don’t have a basic business plan in place,” Wright says. “To them, they’re admitting they don’t really know what they’re doing.” 

Financial therapy gives new business owners a safe space to explore the emotions that come up when asked about things like cash flow, revenue, or a business plan — “because these things are very much about the numbers,” she says.

3. Overcome financial overwhelm 

Wright says it’s never too early or too late to seek the help of a financial therapist. Lots of times, business owners come to her when they find themselves overwhelmed. “People might come to me because they’re a few years behind on their taxes,” she says, “or they’ve drained their savings, or accrued too much debt, and now they just don’t know what to do.” 

But they’ve come to the right place. “I’m thrilled they’ve come to talk about it!” she says. “Because there’s always a path out.”

Wright says the first principle of financial therapy is approaching every client with “abundant, compassionate curiosity and zero judgment.” A financial therapist isn’t there to judge or chastise you for your lack of savings or late tax payments — “we want to really explore what was going on,” she says. “We want to find out where things went astray and why.” Maybe they felt like they didn’t have anyone they could turn to for help. Maybe they didn’t understand how to move money around. Or maybe they have a toxic relationship with savings. Whatever the case, financial therapy can help empower business owners to make a healthy change. 

4. Overcome financial anxieties using therapeutic tactics

Business owners have a lot to worry about, including rising labor costs, supply chain disruptions, and negative cash flow. Recent headlines about sky-high inflation, the economy, and the banking crisis only add to that already heavy load. Financial therapy can help alleviate some of that stress using tried and true therapeutic tactics. 

Wright often uses a scale of one to ten to gauge anxiety. “I’ll ask, ‘How hard did this headline about the banking crisis hit you?’ And if they say eight or nine, that tells me there’s more to this anxiety than just the headline, so we explore a little deeper.” 

“We look at the intensity of the anxiety, what behavior it’s eliciting in them, and whether that anxiety is really serving them,” she explains. Just like any good therapist would, Wright works with her clients to equip them with tools and a game plan to overcome those financial anxieties when they hit. “I’ve had clients who’ve said they went through a really scary news cycle, but they stayed level because they knew they had a solid plan in place,” she says. “And that’s really exciting to hear.” 

Where can you find a financial therapist and what should you look for?

Ready to add a financial therapist to your small business support system? Wright says the Financial Therapy Association (FTA) is a good place to start. There, you’ll find a network of credible financial therapy practitioners who have been certified by the FTA. This means they meet educational and experience requirements in the fields of financial therapy, financial counseling, and therapeutic competencies.

Choosing a financial therapist, like any other therapist, is a big decision. Wright recommends starting with an interview or discovery call with at least two financial therapists. “You want to do a gut check,” she says. “Ask yourself, ‘Is this someone I feel comfortable talking to? Do they have the approach I’m looking for?’” The right person will specialize in your industry or issue, and allow you to be vulnerable. 

When is the best time to tap into a financial therapist?

In a word, “Yesterday!” says Wright. 

“There’s always going to be value in talking to someone about the financial side of your business,” she says. Whether you’re just starting out, or you’re in the C-suite, “it’s important to know your money story. It’s important to tell your story, and to talk through it.” It’s never too late to work on improving your relationship with money, to dig yourself out of a hole, or to achieve the financial freedom you’ve always dreamed of. Your financial therapist is here to help. 

“There’s always hope,” Wright says, in closing. “If you’re feeling overwhelmed by the financial part of your business, I want you to know that there is hope. Things can and will get better.”