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Combining Financial Planning With Psychology For Less Money Anxiety

Too often our emotions can get in the way of our financial decisions. Although someone may have worked to create the perfect financial plan, if none of the recommendations are implemented, the time and effort were ill-spent.

Matt Greco recently wrote an article for the Financial Advisor Magazine discussing the Financial Therapy Association (FTA), a new association working to publish empirical research backing what most holistic planners have known for years: many of us can benefit from understanding the emotional aspect of how we make money decisions.  Contrary to economic therory, very few people make rational money decisions in their best interest.  That extends to people who have money!  You can read the entire article here.

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2 Responses to Combining Financial Planning With Psychology For Less Money Anxiety

  1. Russell May 12, 2011 at 9:58 am #

    Rick,

    I think it sounds like a great idea. I’ve been slow to adopt some of what you’ve talked about mostly out of lack of education. The FTA might be just what I (and thousands of others) need to really help motivate clients to action.

  2. Richard Trachtman, Ph.D. May 12, 2011 at 11:18 am #

    Just to set the record straight, the client that I told Matt Grecko about was not a financial advisor or analyst or whatever he claimed. I told him about an MBA student who was about to graduate at a time when many MBA students were getting jobs as stock traders, where they could make lots of money but also were subject to high stress. He felt he would be foolish to pass up the opportunity to make all that money but also desired a “lifestyle” kind of job. We explored the pros and cons of both options and it soon became clear that there were many underlying issues. He was ashamed of his father who made very little money. Part of him wanted to show his father up but, since his father denigrated people who were interested in money as being morally inferior, he feared his father would disapprove of him if he showed he was interested in money and, since he partly believed his father’s money script, he might disapprove of himself. Since his mother was the one who was the breadwinner but that role was usually that of the men in his neighborhood, he wasn’t sure about how making money related to masculinity. He eventually chose a line of work that was less stressful than that of a stock trader but still remunerated him very well – a job that suited his temperament.