South African’s need financial therapy

06 July 2022 Old Mutual

Our hope of a better year this year keeps getting dashed by the persistent bad news in relation to the cost of living if you consider the preposterously high petrol price and the related item price increases which come with it such as food prices.

This means that the financial well-being of consumers across the board is being severely impacted and if not properly attended to, this impact could find its way to other areas of one’s life, such as the general health and well-being.

Sharon Moller, Financial Coach at Old Mutual Wealth, says that financial therapy, not just financial advice, could be just what one needs to deal with the money curse that comes with the current financial difficulties so that we can improve our relationship with money, maintain our general health and wellbeing, while putting ourselves in a better position to achieve lasting financial freedom.

“Financial therapy is one of the most significant tools one can use to improve their relationship with money and their financial habits. It will also improve your approach to investing, which is key to achieving the financial freedom so many of us have listed as new-year resolutions”, Moller.

According to the Financial Therapy Association, financial therapy is “a process informed by both therapeutic and financial competencies that helps people think, feel, communicate and behave differently with money to improve overall well-being through evidence-based practices and interventions”.

Further to this, research has shown that there is a link between emotional health and financial health.

“If the two are not in alignment, or are not speaking to each other coherently, it becomes very difficult to pursue and attain financial freedom,” says Moller.

Moller goes on to say that this is especially true for those who have fears about investing. Rather than allowing the fear of the unknown to, hamper your financial well-being, she recommends facing your financial fears, your behavioural biases and complicated relationship dynamics when it comes to money, head-on through financial therapy.

The past two years has probably been the most difficult in recent history as evidenced by the Old Mutual Savings and Investment Monitor’s recent finding that 56% of South Africans were experiencing severe financial stress which is having a major impact on their health and mental wellbeing.

While South Africa does not yet have a noteworthy financial therapist industry, although growing exponentially globally, especially in the USA, some local financial services providers do indeed have financial coaches who can suitably conduct financial therapy exercises with clients.

“We all have financial fears, although sometimes we are just not aware that they are fears. Like all other fears, financial fears need to be explored, unpacked, and dealt with so that they do not cripple us from reaching our financial goals and truly creating the lives we dream of,” Moller cites unexpected financial emergencies or losses, debt, and unemployment as financial fears that many South Africans can relate to.

She adds that investing is an important way to deal with and mitigate such fears. Moller says new investors should consider opening a unit trust or a tax-free investment account and work towards growing an emergency fund which would come in handy in the event of any unexpected financial emergencies.

“No matter the kind of 2021 you experienced or the festive season splurge that you had, it is never too late to get your money matters right and start investing for real, long-term, and even generational financial strength,” says Moller.

To make the financial gains that most of us desire, 2022 must be the year in which we each tackle the unhealthy mindsets, attitudes, and behaviours that hinder our financial health, hence the need for financial therapy. “I can’t think of a better act of self-love,” Moller concludes.

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