Financial Social Work

Rationale, contributing factors, mental health impact, socio-economic groups, social workers’ financial literacy, financial social work, practice approach

Three sections follow:

1. Background Material that provides the context for the topic

2. A suggested Practice Approach

3. A list of Supporting Material / References

4. Appendix 1: Understanding Money Trauma and Financial Anxiety

Feedback welcome!

Background Material

Rationale

Money skills are as fundamental to life as reading and, often through no fault of their own, many people find themselves in either permanent or temporary financial stress. Those most at risk of financial insecurity include the unemployed, lower-income households, renters, those in contact with criminal justice systems, ethnic and racial minorities, children and youth, older adults, and people living with disabilities (Guan et al., 2022; McHenry & Pacheco, 2021; Ryu & Fan, 2023; Sherraden et al., 2016). These groups are the people social workers come across in their everyday work. They are more likely to fall into debt, lack basic financial skills and are vulnerable to sudden economic shocks such as health emergencies.

Given financial insecurity is significantly associated with higher psychological distress, financial stress is a possible contributing factor to a range of health issues among these populations. Because social workers often deal with people from these groups on a daily basis, social workers are ideally placed to help people better manage their financial needs, be more financially secure and feel less mentally stressed and worried about financial matters. This approach will have a positive impact on both mental and physical health. Financial social work is therefore an effective complement to traditional welfare, providing welfare recipients (and other vulnerable people) with knowledge, skills and values needed to make sound financial decisions and eventually achieve financial security (Despard & Chowa, 2010; Engelbrecht, 2008; McHenry & Pacheco, 2021; Ryu & Fan, 2023).

Definitions

When exploring financial security one meets the terms financial stress, financial literacy, financial capability and financial wellbeing; financial wellbeing is the ultimate aim. Financial wellbeing is when a person can:

• Meet expenses and have some money left over: including having an adequate income to meet basic needs, pay off debts, and cover unexpected expenses.

• Feel and act in control of one’s finances.

• Feel financially secure: including not having to worry much about money and having a sense of satisfaction with one’s financial institution (Brown & Noone, 2021; CSI, 2021; Sherraden et al., 2016).

Financial wellbeing is a key determinant of overall wellbeing. A person’s financial position shapes everything the person can do. It impacts on a person’s accommodation, food, and activities both now and into the future (Brown & Noone, 2021).

Financial wellbeing is closely related to financial literacy and financial capability. Obtaining financial literacy education is the first step to becoming financially capable. Financial literacy entails having knowledge of personal finances, an understanding of debt, the ability to not overspend, investing in retirement, asset building, and the capability to develop and uphold a household budget. Financial capability allows individuals to incorporate financial literacy education to the appropriate financial circumstances which ultimately will result in financial well-being. It is not just individual functioning, but the opportunity to act in one’s economic self-interest, which is shaped by environmental conditions, such as incentives and opportunities to save (Despard & Chowa, 2010; Engelbrecht, 2008; McHenry & Pacheco, 2021).

When we lack control over our financial lives, it can cause stress and anxiety, undermine our sense of self, and can force us to make decisions that are harmful to our health and wellbeing. People can be forced to trade-off between the essentials, and it can also impact decisions we make about our physical health, like seeking medical care or using medication (Brown & Noone (2021). Naragon-Gainey (2023) suggests financial stress has two components:

• objective financial difficulty, where people don’t have enough funds to cover necessary expenses or debts, and

• subjective perceptions about current or future finances, leading to worry and distress.

However, someone can have trouble meeting their expenses, view this as acceptable, and not be overly worried. Alternatively, someone may be reasonably financially secure but still feel quite stressed about their finances.

Factors contributing to financial wellbeing

There are three key dimensions to the financial wellbeing environment.

1. People Low household income is a driver of low financial wellbeing. Some groups of people are more likely to experience low financial wellbeing because of the difficulty of finding and remaining in employment. In Australia these include Aboriginal and Torres Strait Island peoples, single parent families, people with disabilities, the unemployed and the underemployed, women, those from low socioeconomic backgrounds, young people, and ethnic minorities—all these groups face specific challenges that can lead to them having lower levels of financial wellbeing. Furthermore, low financial wellbeing can drive disadvantage in other areas, e.g. anxiety and stress, chronic health conditions and adverse health outcomes overall.

2. Policy Government policy plays a role as a key driver of financial wellbeing.

3. Programs These can provide a crucial role in shaping financial wellbeing outcomes. To effectively improve financial wellbeing for the population, there needs to be a more thorough understanding of how programs fit together to reduce the barriers to financial wellbeing (Brown & Noone, 2021; Despard & Chowa, 2010; Naragon-Gainey, 2023).

Brown and Noone (2021) expand on the above by listing the micro-, meso- and macro-level factors impacting on financial wellbeing. Their analysis is similar to that provided in the table below (CSE, 2021).

CSI (2021) summarises these relationships in the diagram below. They suggest that macro-level and meso-level factors, essentially outside the control of any one individual, influence the financial wellbeing of individuals at both the personal and group level. In other words, all three levels (not just the micro-level) impact on the money going into and coming out of the household, and this drives household financial wellbeing. This diagram illustrates the limited control that the groups, with whom social workers often support, have over their financial wellbeing. Furthermore, it brings into focus the role of social workers as advocates for the rights of people to have their basic needs met by the meso- and macro-levels of society.

Financial wellbeing and mental health

In 2022 Guan et al. reported findings of a systematic review examining the relationship between financial stress and depression:

• Seven of eleven studies found a statistically significant association between low income and a higher risk of depressive symptoms for both high-income countries and low-and middle-income countries. The relationship occurred in younger adults, middle-aged adults, and older adults. However it was more pronounced among lower-income groups.

• Two studies showed that having few or no assets was a significant predictor of depression.

• Three studies suggested a low wealth rank (rather than absolute wealth) within a social group could result in depression among middle-aged and older adults.

• There was a clear link between debt and depressive symptoms caused by a poor debt:asset or debt:income ratio, unsecured debt (e.g. consumer debt such as credit card debt), and short-term debt.

Other authors draw attention to the link between low financial wellbeing and overall mental health:

• The financial capabilities or shortcomings of an individual affect interpersonal relationships, physical and mental health, and communities as a whole (Engelbrecht, 2008; McHenry & Pacheco, 2021).

• Young adults, children, college students and older adults who experience adverse financial experiences can develop reduced mental health (Ryu & Fan, 2023).

• Targeted interventions are required to break the cycle of financial stress and depression. For example, instead of a one-for-all intervention focusing on the general population, interventions targeted at lower socioeconomic groups might be more effective since the association between financial stress and depression is more pronounced in these groups (Guan et al., 2022).

Socio-economic characteristics and financial wellbeing

Ryu and Fan (2023) examined the impact of gender, marital status, education, employment status and home ownership on financial wellbeing. They found:

• Women are more likely to experience financial worries and therefore are at higher risk of psychological distress, depression, anxiety and mood orders than men.

• Marriage is correlated with financial wellbeing and beneficial mental health outcomes; conversely people separated, divorced, widowed or not married tend to have more financial worries.

• Education can buffer the negative effects of financial worries and lower psychological distress.

• Unemployment leading to financial worries has significantly adverse effects on mental health as it can result in unhealthy food choices and restricted access to health care.

• Home ownership generally results in people earning a higher income and ability to access to healthcare corresponding to less financial worries.

Practice Approach

Many social workers lack financial literacy education and the confidence to provide financial literacy education to their clients. Typically they learn on the job and through continuing education (Gillen et al., 2012; McHenry & Pacheco, 2021; Sherraden et al., 2016). They do however possess skills that are useful in building financial capability, e.g. their ability to build trust with clients, use empathy and non-judgment, and problem solve by breaking down tasks into manageable actions—all these approaches can help clients improve their financial capability (Despard & Chowa, 2010).

Although extensively researched over the last twenty years, financial literacy is yet to make its way into mainstream social work curricula. It is crucial for low-income populations to obtain financial education since small financial mistakes can compromise the entire household’s finances. Additionally, financial issues are often the root source behind people seeking help of professionals through counselling, courts, shelters, and clinics giving professionals in these fields an opportunity to address personal finances with the clients (McHenry & Pacheco, 2021).

Financial social work practice takes place at both the micro-level (work with individuals, families, and small groups) and the meso- and macro-levels (work with organizations, communities, and policy). Micro-level practice assists individuals, families, and small groups to locate financial and in-kind benefits, solve financial problems and crises, improve household financial decision-making and financial management, and address financial issues in relationships. Employing a strengths-based perspective, social workers partner with clients to set goals, while building resilience and potential for improving financial wellbeing. It takes place in diverse settings and varies from one setting to another depending on the mission of the organisation and target population (Sherraden et al., 2016).

Social workers usually engage in financial social work while providing other social services including counselling, case management and providing therapy. While engaging in daily practice, social workers are ideally placed to engage in:

• Financial education—increasing clients’ financial knowledge and skills in planning, managing financial risk, and saving and investing.

• Financial coaching—helping people reach their short-term financial goals through goal-directed behaviour.

• Financial therapy—integrating cognitive, emotional, behavioral, relational, and economic aspects that promote financial health (Sherraden et al., 2016).

Financial counsellors, case management and therapists use a variety of therapeutic approaches, including acceptance and commitment therapy (ACT), cognitive behavioral therapy, experiential therapy, motivational interviewing, narrative therapy, psychodynamic therapy, and solution-focused interventions. A distinguishing feature of financial social work is use of the person-in-environment framework, which underscores the importance of taking into the account—and often directly intervening in—clients’ social, political, economic, and physical environment (Sherraden et al., 2016).

Macro-level financial social workers intervene at organizational, community, and policy levels to improve financial wellbeing for financially vulnerable groups. Macro-level intervention methods include organizational management, planning, community organizing, policy and program design, advocacy, lobbying, and coalition building (Sherraden et al., 2016).

Suggestions to reduce financial stress and improve financial wellbeing

The following material is practical in nature, offering a number of strategies that social workers can use with clients.  MHA (2026) offers another perspective where financial behaviours are linked to deeper emotional and relational dynamics.  Financial beliefs can often to linked to childhood experiences with money.  The article, summarised in Appendix 1, suggests integrating CBT, schema therapy and systemic approaches is an effective way to support those in financial distress.

While people can’t change the broader financial landscape or some aspects of their financial situation, there are some simple ways to help reduce financial stress and its impacts.

1. Take small steps Identify areas where improvement can be made and act on some of them, even if they are small steps, e.g. create and follow a budget, cut some extra costs, apply for available financial assistance, get quotes for more affordable utilities or insurance, or contemplate a career change.

2. Don’t be too hard personally One’s financial state does not reflect value as a person, and over-identifying with financial status can lead to further stress. Financial difficulties are the result of many factors, only some of which are under one’s control. Finances do not define the person.

3. Focus on self-care It’s draining dealing with ongoing financial stress. So focus on self-care and coping strategies that have helped with past stressors, e.g. taking some time out to relax, deep breathing or meditation, talking with others, regular exercise, and doing some things for fun.

4. Ask for help Help may take the form of financial advice or assistance to reduce financial difficulties. When feeling persistently down, anxious, or hopeless, reach out to friends or family or seek professional help.

Money Smart (https://moneysmart.gov.au/) offers tips, tools and guidance to help people take control of money and build a better life (Naragon-Gainey, 2023).

Taking these general ideas further, Colasimone and Jones (2023) suggest the following:

• Food: shop online to avoid temptation presented by shopping in store; make a shopping list and stick to it; plan meals; buy generic; eat less meat; quit takeaways.

• Utilities and insurance: compare providers and move companies if a better deal is available elsewhere.

• Fuel: use apps that list cheap prices in an area; buy on the ‘cheap’ days.

• Mortgage: get a broker to find a better loan.

• Manage cashflow: set up a bills account, a savings account and a set amount to spend each fortnight; use debit cards, not credit cards; evaluate streaming services and discontinue where possible; exercise at home, not the gym; delete apps on the phone that tempt purchasing; eliminate bad habits (e.g. smoking, lotteries, drinking, gambling).

• Get more money: ask for a pay rise;

• DIY—do it yourself when possible.

• Declutter: Sell things around the home that are not needed.

• Freeze spending: Don’t buy any non-essential items for a week or month to eliminate ‘want-itis’.

References / Supporting Material

(available on request)

Brown, J.T., & Noone, J. (.2021). Amplify insights: Financial wellbeing. Centre for Social Impact, UNSW Sydney. https://assets.csi.edu.au/assets/research/Amplify-Insights-Financial-Wellbeing-Report.pdf

Colasimone, D., & Jones, C. (2023, June 20). As the cost-of-living crisis squeezes more Australians we got one family to test out some tips for saving money. ABC News. https://www.abc.net.au/news/2023-06-19/qld-cost-of-living-save-money-tips-family-mortgage-shopping/102396472

CSI: Centre for Social Impact. (2021). Amplify insights: Financial wellbeing. https://www.csi.edu.au/media/CSI-Financial-Wellbeing_report.pdf

Despard, M. R., & Chowa, G. A. (2010). Social workers’ interest in building individuals’ financial capabilities. Journal of Financial Therapy, 1 (1) 23-41. https://doi.org/10.4148/jft.v1i1.257

Engelbrecht, L. (2008). The scope of financial literacy education: A poverty alleviation tool in social work? Social Work/Maatskaplike Werk, 44(3), 252-262. http://dx.doi.org/10.15270/44-3-239

Gillen, M., & Loeffler, D. N. (2012). Financial literacy and social work students: Knowledge is power. Journal of Financial Therapy, 3 (2) 28-38. https://doi.org/10.4148/jft.v3i2.1692

Guan, N., Guariglia, A,. Moore, P., Xu, F., Al-Janabi, H. (2022) Financial stress and depression in adults: A systematic review. PLoS ONE 17(2): e0264041. https://doi.org/10.1371/journal. pone.0264041

McHenry, T., & Pacheco, B. (2021). The need for financial literacy in social work education: A descriptive study. Electronic Theses, Projects, and Dissertations. 1250. https://scholarworks.lib.csusb.edu/etd/1250

MHA: Mental Health Academy. (2026, June 8).  Understanding money trauma and financial anxiety.  https://www.mentalhealthacademy.com.au/blog/financial-therapy-understanding-money-trauma-and-financial-anxiety

Naragon-Gainey, K. (2023). How financial stress can affect your mental health and 5 things that can help. https://theconversation.com/how-financial-stress-can-affect-your-mental-health-and-5-things-that-can-help-201557

Ryu, S., & Fan, L. (2023). The relationship between financial worries and psychological distress among U.S. adults. Journal of Family and Economic Issues, 44, 16-33. https://doi.org/10.1007/s10834-022-09820-9

Sherraden, M. S., Frey, J. J., & Birkenmaier, J. (2016). Financial social work. In J. J. Xiao (Ed.), Handbook of consumer finance research (2nd ed.) (pp. 115-127). Springer. doi: 10.1007/978-3-319-28887-1_10

Appendix 1

Understanding Money Trauma and Financial Anxiety

MHA: Mental Health Academy. (2026, June 8).  Understanding money trauma and financial anxiety.  https://www.mentalhealthacademy.com.au/blog/financial-therapy-understanding-money-trauma-and-financial-anxiety 

Key takeaways

• Financial behaviours often reflect underlying attachment patterns and schemas rather than simple skill deficits.

• Early experiences of scarcity or instability can create enduring expectations of financial threat.

• Avoidance, overspending, and secrecy are common clinical presentations with distinct psychological functions.

• Integrating CBT, schema therapy, and systemic approaches enhances treatment effectiveness.

• Couples work benefits from reframing financial conflict as a relational dynamic rather than individual pathology.

• Practical tools such as trigger mapping and behavioural experiments support change.

• Cultural and systemic factors must be considered to avoid oversimplification.

Introduction

Increasingly, clinicians are recognising that financial behaviours such as avoidance, compulsive spending, or secrecy are not simply matters of discipline or knowledge, but expressions of deeper emotional and relational dynamics.  Research suggests that financial beliefs and behaviours are strongly influenced by internalised “money scripts,” often formed in childhood and reinforced over time. Clients may come to define themselves as “bad with money,” “not deserving of wealth,” or “only safe when in control.” These scripts shape not only behaviour but also self-concept, leading to rigid financial identities.

When money speaks: Clinical presentations in practice

Financial distress often manifests in patterned behaviours that reflect underlying emotional needs and beliefs. Three common presentations – avoidance, overspending, and financial secrecy – illustrate how money becomes a vehicle for psychological expression.

Financial avoidance         Avoidance may include ignoring bills, delaying financial decisions, or disengaging from financial planning. While often framed as procrastination, avoidance can function as an emotional regulation strategy, allowing clients to temporarily escape feelings of shame, fear, or inadequacy.  In CBT terms, avoidance reduces short-term distress but reinforces long-term anxiety. In schema terms, it may reflect coping modes such as the Detached Protector.

Compulsive or emotional spending          Overspending is frequently linked to attempts to regulate affect. Purchases may provide temporary relief from distress or serve as a means of identity construction – “If I buy this, I become someone who is successful, worthy, or in control”.

Financial secrecy in relationships             In couples work, financial secrecy – sometimes termed “financial infidelity” – can erode trust and intensify conflict. Secrecy is rarely about money alone; it often reflects fear of judgment, power imbalances, or unresolved attachment wounds.

Bridging models: Integrating CBT, schema therapy, and systemic approaches

Financial therapy is most effective when it moves fluidly between surface-level behaviours and deeper emotional structures. No single modality fully captures the complexity of financial distress; instead, an integrative approach allows clinicians to intervene at multiple levels – cognitive, emotional, behavioural, and relational.

CBT: Identifying and restructuring financial beliefs

Cognitive behavioural therapy offers a structured framework for addressing financial anxiety by targeting maladaptive cognitions and behaviours. Clients often present with automatic thoughts such as “I’ll never be financially secure,” “I can’t trust myself with money,” or “If I make one mistake, everything will collapse.” These distorted beliefs – such as catastrophising or overgeneralisation – are linked to lower financial well-being and increased anxiety.

CBT interventions involve identifying these automatic thoughts, evaluating their validity, and replacing them with more balanced alternatives. Behavioural experiments are particularly effective, e.g. a graded reduction of checking behaviours, paired with anxiety management strategies, to test the belief that constant monitoring is necessary for safety.

In addition, CBT supports the development of financial self-efficacy. By breaking down financial tasks into manageable steps – reviewing statements, creating simple budgets, or setting achievable goals – clients begin to replace avoidance with mastery experiences. Over time, this shifts both belief systems and emotional responses, with perceived financial capability emerging as a key predictor of financial wellbeing.

Schema therapy: Working with deep-rooted patterns

While CBT addresses present-focused cognitions, schema therapy allows clinicians to access the developmental origins of financial distress. Financial behaviours often make more sense when viewed as coping responses to unmet childhood needs.  For example, overspending may reflect a Self-Soother mode attempting to regulate emotional deprivation, while rigid financial control may represent an Overcompensator mode protecting against vulnerability. By identifying these modes, therapists can help clients develop greater awareness of the internal drivers behind their financial behaviours.

Experiential techniques such as imagery rescripting are particularly valuable in this context. Revisiting formative financial memories – such as witnessing parental conflict over money or experiencing deprivation – allows clients to update the emotional meaning of those events. This process can reduce the intensity of present-day triggers and create space for more flexible responses.

Equally important is the development of the Healthy Adult mode. In financial therapy, this involves fostering a balanced stance towards money – one that integrates planning and responsibility with self-compassion and emotional awareness. Clients learn not only to manage money differently, but to relate to themselves differently in the process.

Couples and systemic work

In couples therapy, financial conflict is rarely about numbers alone. Instead, money functions as a relational language through which partners express needs, fears, and expectations. One partner’s spending may represent autonomy, while the other experiences it as threat; one partner’s saving may signal responsibility, while the other experiences it as restriction. Financial disagreements are consistently associated with lower relationship satisfaction and increased conflict, often reflecting deeper differences in values, beliefs, and emotional needs.

Interventions aim to increasing emotional transparency and mutual understanding. Techniques may include:

• Facilitated dialogues that uncover each partner’s money narrative

• Reframing behaviours as protective rather than oppositional.

Over time, couples can begin to co-construct a shared financial meaning system. This does not require identical beliefs, but rather a capacity to understand and respond to each other’s emotional realities. Financial decisions then become collaborative rather than adversarial.

From insight to action: Practical interventions

Therapist reflection prompt: Normalise before you modify.

Clients are generally more willing to change financial behaviours when those behaviours are first understood as adaptive responses to past experiences. Excessive saving, compulsive spending, or financial avoidance often developed for understandable reasons, even if they are no longer serving the client well. Acknowledging the protective function of these behaviours helps reduce shame and creates a stronger foundation for change.

Effective financial therapy combines exploration with structured interventions that help clients recognise patterns, challenge assumptions, and practise new behaviours in manageable ways.

Mapping financial triggers

One useful exercise is financial trigger mapping. This process helps clients move beyond the immediate financial event and examine the thoughts, emotions, and historical experiences that shape their reactions. By slowing down the sequence of events, clients often discover that present-day financial distress is being amplified by older fears, beliefs, or expectations.  The exercise can be completed collaboratively in session or assigned as reflective homework between appointments:

1. Identify a recent financial stressor (e.g., receiving a bill, reviewing a bank balance, discussing money with a partner).

2. Record the associated thoughts and emotions that emerged in response to the situation.

3. Explore links to past experiences, attachment patterns, or schemas that may be influencing the reaction.

4. Generate alternative interpretations of the situation based on current evidence rather than historical expectations.

5. Develop a small behavioural experiment to test these alternative beliefs in practice.

Couples’ intervention: Developing a shared financial narrative

When working with couples, financial disagreements are often sustained by unspoken assumptions about what money represents. One partner may associate saving with security, while the other experiences it as restriction. Similarly, spending may symbolise freedom for one person and threat for another.

A useful intervention is to invite each partner to share their personal “money story.” This includes early experiences with money, messages received from family members, significant financial events, and the emotions or beliefs attached to financial decision-making. The aim is not to determine whose perspective is correct, but to develop a richer understanding of how each partner’s relationship with money was formed.  As partners begin to recognise the experiences underlying each other’s behaviours, financial conflict often becomes less personalised and more collaborative. Conversations shift from debating financial decisions to understanding the emotional needs those decisions are attempting to meet.

Cultural, developmental, and ethical considerations

Financial experiences are deeply embedded within cultural and systemic contexts. Socioeconomic conditions, intergenerational wealth patterns, and cultural norms around money all shape how individuals understand and engage with financial behaviour. What may appear as avoidance or rigidity in one context may, in another, reflect adaptive strategies developed in response to systemic instability or marginalisation.

Ethically, therapists must remain aware of the limits of their competence. Financial therapy does not replace financial advising, and clinicians should avoid providing technical financial guidance outside their scope of training. Where appropriate, collaboration with financial professionals can support integrated care.

At the same time, clinicians should be mindful not to over-pathologise financial distress that arises from genuine structural inequality. In such cases, therapy may involve supporting emotional coping and agency within constraints, rather than focusing solely on behavioural change.

Conclusion

Financial therapy invites us to look beyond numbers and into narratives. By understanding how money is woven into identity, attachment, and relational dynamics, clinicians can help clients move from reactive patterns towards intentional, values-driven financial behaviours.  Whether working with individuals or couples, the task is not to “fix” financial habits in isolation, but to address the emotional meanings that sustain them. When these meanings are brought into awareness and explored with care, financial anxiety can shift from a source of distress into an entry point for deeper insight, connection, and change.