Financial Therapy: De‐Biasing and Client Behaviors

• Published in: Investor Behavior pp. 227 - 244
• Main Authors: Goetz, Joseph W, Gale, Jerry E
• Format: Book Chapter
• Language: English
• Published: Hoboken, NJ, USA John Wiley & Sons, Inc 31-01-2014
• Subjects: financial coaching; financial planning; financial psychology; financial therapy; financial well‐being; money psychology
• ISBN: 1118492986; 9781118492987
• DOI: 10.1002/9781118813454.ch13

This chapter introduces an emerging field of study and practice called financial therapy. Financial therapy has applications in furthering the knowledge base around money psychology and addressing maladaptive financial beliefs and decisions of individuals and families. In contrast to traditional finance, financial therapy assumes individuals and couples often fail to make the rational financial decisions that lead to expected utility maximization. It also assumes that individuals' financial choices are strongly influenced by their financial socialization, cognitive biases, emotional factors, and their past experiences with money within various social systems. Foundational topics in financial therapy covered in this chapter include the concept and history of financial therapy, theoretical and conceptual frameworks that provide a basis for financial therapy practice and research, and the need for evidence‐based financial therapy interventions.