Financial therapy may be answer for debt problems
By Monitor Staff
Friday, December 19, 2008 11:38 AM CST
FAYETTEVILLE — The level of financial distress being experienced by individuals and couples may lead to a new profession called “financial therapy” that combines training in both therapy and personal finance, says William C. Bailey, associate professor of human and family development at the University of Arkansas and the U of A System’s Division of Agriculture.
In simple terms, Bailey said, “a financial therapist would help people work on their relationship with money.”
Bailey, whose research interests include money issues in couples’ relationships, was one of six academics in a group of 30 invited to the Financial Therapy Forum Nov. 22 in Orange, Calif., sponsored by the Institute of Personal Financial Planning at Kansas State University.
The forum met to consider the need for financial therapy as a new discipline with support structures such as accreditation for degree programs, professional certification and a professional organization, Bailey said.
Bailey said his research in the School of Human Environmental Sciences, which is part of Dale Bumpers College of Agricultural, Food and Life Sciences, suggests that money is the number one topic of arguments between couples and the leading root cause of divorce.
Unemployment and other factors in the economy are contributing to the money problems of many individuals and couples, but their problems are often made worse by their money management behavior, Bailey said.
Most counselors currently available to help individuals and couples deal with financial distress are not trained to deal with what Bailey sees as the fundamental reasons for money management problems: “attitudes, opinions and beliefs.” Helping a person change their behavior with money requires helping them come to terms with how their attitudes, opinions and beliefs have contributed, he said.
A founding member of the board of directors for Credit Counseling of Arkansas, which was started in 1995, Bailey said demand for CCOA services has increased dramatically. The non-profit corporation works with financially distressed persons to negotiate with creditors and create a debt-management plan.
“CCOA’s role is to get people out of debt and help them do a better job of managing their money,” Bailey said.
“The first step is to determine how much debt they have. If they only need some budgeting help, we will do that. If it appears the family could benefit from our debt-management plan program, we will create one for them. The goal of a debt-management plan is to assist them in getting out of debt within five years. If their financial situation is grave, we will discuss bankruptcy with them.”
Bankruptcy is a legal process in which CCOA does not participate. However, CCOA does provide financial management training, which is required before the courts will grant a bankruptcy decree, Bailey said. All of the CCOA financial counselors are certified by the National Foundation for Credit Counseling.
NFCC certification is based on passing an examination after completing a home study course. “They are qualified to counsel people who have trouble paying their bills,” Bailey said, “but not to help them work on their relationship with money.”
Professionally certified financial planners typically help persons with estate plans and investments. Their clients are rarely in financial distress, Bailey said.
Some businesses and individuals claim to offer “financial therapy” for their clients, but there is currently no system for certifying their credentials, Bailey said. “It’s really a ‘buyer-beware’ situation.”
Academic leadership to develop financial therapy as a possible new discipline is being provided by the human sciences programs at Kansas State University and Texas Tech University, Bailey said.
