How Working on Your Mental Health Can Help Fix Your Finances

We've all seen how Olympic gymnast extraordinaire Simone Biles has been struggling with mental health issues, causing her to drop out of events at the games and performing the work she loves. Financial therapist Joyce Marter, author of the intriguing new book "The Financial Mindset Fix," says our mental health is directly related to our financial health, too.

"They're like chicken and egg; they really impact one another," says Chicago-based Marter, who is an adjunct professor at Northwestern University and founder and CEO of the nationwide consulting practice Urban Balance. (Marter talked about this on the "Friends Talk Money" podcast I co-host; you can get that episode wherever you listen to podcasts or hear it at the end of this article.)

In fact, psychology was recently added to the educational curriculum required for financial advisers to become Certified Financial Planners (CFPs) by the CFP Board. And the COVID-19 pandemic has only intensified money anxiety for many people, according to a study by Dan Geller of Analyticom, a behavioral economics research firm in the San Francisco area.

I just had an opportunity to speak with Marter about the connection between mental health and financial health and how improving the former can also improve the latter. Her book's subtitle: "A Mental Fitness Program for an Abundant Life." Here are highlights from our conversation, with advice based on Marter's personal and professional experience:

Next Avenue: How did you first connect the idea of mental health with financial wellbeing?

Joyce Marter: I noticed in my practice as a psychotherapist that as my clients made progress in therapy, they started earning more money. They were getting raises and promotions and starting their own businesses and side hustles.

And I was like, 'Why is this happening?' Because we actually weren't talking about those issues.

But I realized it's because we were always working on underlying self-esteem and when we feel better about ourselves, we're more confident and we put ourselves out in the world more positively, we're more assertive and proactive, and that shapes our financial reality.

And as an entrepreneur, I noticed how my own psychology of money — my thoughts, my belief systems, the way I handled my emotions around money  and my behaviors — impacted my business and my financial reality.

In the book, you're very candid about your personal issues. You say that when you were in your thirties, you had 'crippling financial anxiety,' but then you went from what you call having a financial life persona of 'Penny" to the one you call 'Prosperity.' Can you talk about the Penny days and the Prosperity days?

Yes, those Penny days were not happy. They happened early on in my business, a large counseling practice headquartered in Chicago called Urban Balance. I got into cashflow hell. I was having difficulty paying my rent and my staff and it was paralyzing.

I learned some important lessons. I realized that ego and shame were preventing me from accessing financial advice and consultation; I was really afraid that somebody would tell me that my business model didn't work. And when I finally went and talked to a CPA, that's when I started to make some really important shifts and taking better care of my financial self.

So, Penny resulted from me having some co-dependent behaviors where I put other people's needs before my own. I wasn't making sure that my business was profitable in a way that would take care of myself. By shifting my financial boundaries and accessing support, I was able to now refer to my financial life as Prosperity and really turned my business around.

I was able to successfully sell it seven years later for a multi-million dollar offer.

How can being happier, less depressed and less anxious help people financially? And what do you think is the reason behind that connection?

I think it's an enormous connection. Our mental health impacts how we view the world; it impacts our belief systems; it impacts how we manage our emotions and our behaviors.

And when we promote positive mental health, we have higher emotional intelligence, which improves our relationships. We have better coping skills. We have better risk tolerance, if we're starting businesses or making investments.

And we're able to apply mindfulness presence to our financial life and be conscious financially about our spending, instead of being in denial or being reactive.

What's the connection between mental health and risk tolerance for investing?

Something really interesting. As human beings, we have fears and anxieties about money and about risk. And there needs to be some kind of an emotional, healthy detachment from risk.

You may know people who look at their investments daily and they get very fear-based and reactive. And they think about maybe selling stocks because they've gone down temporarily, instead of kind of zooming out and looking at the big picture and being able to ride those ebbs and flows and trust in the process.

How does stress connect to personal finances?

Enormously. Stress can impact our spending. We can have more impulsive and compulsive spending behaviors. We might spend more money on food and alcohol and even drugs and other forms of self-medication.

It can also impact our relationships and our choices in our relationships. We might not set healthy financial boundaries with our kids or with our partners. And so, it's really important to manage our stress positively so we can make good financial decisions.

Can you give me an example of somebody over fifty who adjusted their financial mindset and how that was helpful for them?

Many of my therapy clients and attendees at my talks are in their fifties, sixties and seventies. At one of my talks, an attendee came up to me who was sixty-five and she said, 'Man, I wish I heard your talk thirty years ago. It would have changed my life, but now it's too late.' And at that same presentation, another woman came up to me and said, 'I'm sixty-seven and I'm retiring and I'm so glad that I heard your presentation because I'm going to use it to create the next chapter of my life.'

Now, who do you think is going to have a more successful outcome?

Our attitude shapes our realities. I'm a strong believer in self-fulfilling prophecies.

It's about really empowering yourself at any chapter you're in in your life to create an abundant life that includes financial wellness and holistic success.

I think sometimes people in their fifties and sixties delay their happiness and gratification until retirement. They say: 'When I am done working, I'll spend more time with my kids, or I'll practice my hobbies.' When really doing some of those things now is going to give you more energy to think more positively about new income streams, new investment opportunities and always growing and developing financially and personally.

How can people fix their financial mindset?

There are so many ways.

Cognitive behavioral therapy asserts that our thoughts precede our emotions and our behaviors. So, if a person has a thought like 'It's too late for me' or 'That's not possible' or 'That's not going to work,' then that's how things go. But if you can cultivate what I call an abundant mindset, where you start to expand those self-limiting beliefs and explore what's possible and think through challenges and try and trust that change and prosperity are available to you, that's going to shift your reality.

Also, accessing support is so important. Making sure that you have good financial advisers and consultants and accountability partners to help you stay on track.

Another piece is setting healthy financial boundaries. The research is showing that a lot of adults have young-adult children who are unemployed now and living at home and that's really impacting these people in their fifties, sixties and seventies — their finances and their ability to retire. So, we need to set some healthy limits and boundaries with our adult children and promote them and becoming financially independent.

In some cases, the parent can help the child with their financial mindset, so that both parent and child actually get a win-win out of it, right?

Exactly. Instead of enabling the child and fostering dependency, learning how to set healthy limits and boundaries through assertive communication is so important. Otherwise, the parent isn't taking financial self-care of themselves, and that can be detrimental not only to them economically, but also to their relationship with their child. And it can negatively impact the child's financial future.

So, you want to support them, give them financial literacy, make sure that they know how to budget, how to invest, how to plan for the future and that they have support and resources for that as well.

You've got an interesting analogy in the book where you say: Think of the TV show, 'Antiques Roadshow,' where people discover trinkets that are sometimes treasures. You say people should identify their own personal, overlooked treasures. What do you mean?

One of my favorite things as a therapist is mirroring back people's strengths. So many people have these gifts that they haven't utilized and put out in the world. They might have a business idea or a book idea or a screenplay that they've written. So, you're sitting on a huge resource that you haven't cashed in yet.

Maybe you have a property that could be Airbnb or maybe your hobby is something you can turn into a side hustle. It's about shifting your thinking and tapping into those resources.

A lot of the times, what prevents people from putting it out in the world is fear of inadequacy and judgment or fear of failure.

Another F word in the book is forgiveness. What does forgiveness have to do with money management?

It's interesting. I've noticed in my practice that if we have feelings about relationships that we haven't resolved, that hardened anger can sometimes lead to a victim narrative and the victim narrative is not one that feels very empowered.

Maybe you've gone through a divorce that negatively impacted you financially or some other relationship issue or a business partnership that fell through.

By practicing forgiveness, you can let go of some of those feelings that are tethering you to the past and move forward with more empowerment and positivity by taking responsibility for your financial future.

In my own life, I had to work on some forgiveness for a business partner who left when we were in that cashflow hell. I felt abandoned and we had some other issues. I had to work at letting go of that and really taking responsibility so I could move forward.

How does your Financial Mindset program work and how can people get into it?

My book is based on twelve mindsets I've identified in my practice that can lead to holistic success. Each chapter is one of these mindsets, with practical tools and tips and exercises to help you recognize how you're doing with each of these skills and improve upon them.

How much time are we talking about? Should people be devoting X minutes a day every day or week or month or year?

In the book, I like to think about working on one chapter a week; that's twelve weeks. If that doesn't work for you, you could take twelve months. Really, whatever works for you. As things change in your life, you might need to work on one of the skills again.

If somebody thinks that they might want to work with a financial therapist, how should they go about finding the right one?

The 'Psychology Today' site is like Match.com for finding a therapist. So, you can search and find a therapist there that would be a good fit for you and perhaps specializes in that area. There's also the Financial Therapy Association site, which has a list of therapists you can work with.

Many therapists offer a free consultation.

How has the pandemic affected the financial mindset of people?

The pandemic is a global mental health and financial health trauma. Even prior to the pandemic, up to a quarter of adults suffered from financially triggered, Post-Traumatic Stress Disorder. A financial trauma is something like unemployment or a foreclosure or a business closing or an extreme financial loss due to a fire or divorce.

And it has implications of perhaps muscle tension or insomnia and emotional symptoms like fear and anxiety.

So, yes, the pandemic has created a lot of financial anxiety for folks — with unemployment and people taking care of dependent loved ones and uncertainty about the future.

Definitely, this is a time where we need to tend to the mental health aspect of how our finances are impacting our mental wellness. And we need to practice some self-care and mindfulness strategies so we can cope as best as possible and take action financially to recover and move forward.

Richard Eisenberg is the former Senior Web Editor of the Money & Security and Work & Purpose channels of Next Avenue and former Managing Editor for the site. He is the author of "How to Avoid a Mid-Life Financial Crisis" and has been a personal finance editor at Money, Yahoo, Good Housekeeping, and CBS MoneyWatch. Read More