Basic Definitions Flashcards
What is Financial Therapy?
A process informed by both therapeutic and financial competencies that helps people think, feel, and behave differently with money to improve overall well-being through evidence-based practices and interventions.
Financial therapy aims to resolve underlying issues limiting self-growth, happiness, and financial wellness.
Who is a Financial Therapist?
A professional who helps clients think, feel, and behave differently with money to improve overall well-being through evidence-based practices and interventions.
The role focuses on resolving underlying issues affecting financial wellness.
What does CFT-I™ stand for?
Certified Financial Therapist Level 1.
It is a foundational certification broadening knowledge across financial, therapeutic, and financial therapy-specific topics.
Define Scope of Practice.
The actions a practitioner is permitted to take while staying within the boundaries of their education, licensure, certification, or training.
What is the Fiduciary Standard?
An ethical standard requiring professionals to act in the client’s best interest at all times, putting the client’s interests above their own.
What is the Suitability Standard?
A practice standard requiring financial professionals to believe recommendations are suitable for clients, but not necessarily requiring them to place clients’ interests above their own.
What are Money Scripts?
Unconscious beliefs about money developed through financial socialization that shape financial behaviors and decisions.
List the Types of Money Scripts.
- Money avoidance
- Money worship
- Money status
- Money vigilance
What are Financial Flashpoints?
Emotionally charged or traumatic experiences that shape money scripts and financial behaviors.
Define Transference.
When clients redirect emotions and feelings from past relationships onto the financial therapist.
Example:
As Jane shares her feelings of inadequacy in therapy, she suddenly bursts into tears and accuses her therapist of not believing in her, mirroring the criticism she felt from her father during childhood.
What is Countertransference?
When financial therapists project their own unresolved personal issues or emotions onto clients.
What does Self-of-the-Financial Therapist (SOTFT) refer to?
The process of exploring one’s own relationship with money by attending to emotional, psychological, behavioral, and relational experiences that have shaped a person throughout their lives.
Define Financial Abuse.
When one person interferes with another’s ability to acquire, use, or maintain financial resources through various means.
What is Financial Infidelity?
Secretive acts related to money such as hidden spending, secret accounts, undisclosed debt, or stashes of money unknown to one’s partner.
What is meant by Home Discipline?
The primary field in which a professional is trained, licensed, or certified (e.g., mental health or financial services) before pursuing CFT certification.
Define Evidence-Based Practice.
The integration of the best available research with clinical expertise and client values in making decisions about interventions and treatment.
What is Confidentiality in a therapeutic context?
The ethical obligation to keep client information private unless disclosure is required for client welfare or by law.
What are Red Flag Issues?
Serious indicators that may affect the security or well-being of individuals and must be addressed promptly according to ethical and legal standards.
What is the Three-Level Certification Program?
FTA’s certification structure (Levels I, II, and III) designed to accommodate professionals from diverse backgrounds and support different ways of integrating financial therapy knowledge and skills.
What is financial trauma?
Any event or experience that is financially and psychologically overwhelming to an individual.
What is financial abuse?
When someone commits Theft, fraud, exploitation, pressure related to financial transactions, or misuse/misappropriation of property, possessions, or benefits against another.
What is ‘Big T’ trauma?
Overwhelming events that most people would agree are painful and traumatic (like robbery at gunpoint).
What is ‘Little t’ trauma?
Contextual and personally experienced events, often a series of small incidents that have a large cumulative impact over time.
What is financial infidelity?
The act of hiding or lying about financial information to a partner or spouse.
What is impersonal trauma?
Trauma resulting from being in the wrong place at the wrong time, or from an ‘act of God.’
What is interpersonal trauma?
Trauma committed between two people, where one person is the victim and another is the victimizer.
What is identity trauma?
Trauma related to PERSON-INHERENT and mostly unchangeable characteristics (gender, age, race, ethnicity, sexual orientation, socioeconomic status).
What is community trauma?
Trauma from being associated with a people GROUP that is under attack due to ethnicity, religious ideals, political orientations, or gender orientation.
What is cumulative/lifelong/complex trauma?
Multiple forms of trauma that are repeated and layered throughout one’s life.
What are the two primary levels where financial trauma originates?
1) Interpersonal/Relational level
2) Systemic/Organizational level
What are financial flashpoints?
Significant money-related experiences, often from childhood, that shape one’s financial beliefs and behaviors. They are typically unconscious and passed down through generations.
What is relational abuse?
A pattern of behaviors used to gain or maintain power and control over another person in a RELATIONSHIP.
What is psychological/emotional abuse?
Verbal abuse, constant criticism, or subtle tactics like intimidation, manipulation, and refusal to ever be pleased. Can include refusing to listen or communicate.
What is elder financial abuse?
The illegal or improper use of an elderly person’s funds, property, or assets.
What are physical signs of financial trauma?
Increased heart rate, tension in various parts of the body, distress in the GI system when dealing with financial matters.
What are behavioral signs of financial trauma?
Hoarding or avoiding money, control/manipulation of money, unopened financial statements, or hypervigilance about financial matters.
What are emotional signs of financial trauma?
Anxiety, fear, shame, or anger around money and financial topics.
What is financial strain?
Perceived economic pressure that creates a potentially harmful, threatening, or challenging situation. It is a neutral stressor until interpreted by the individual.
What is financial stress?
The negative emotional reaction to financial strain.
What is a CFT-I™?
Certified Financial Therapist-Level I; a professional trained to help clients address the cognitive, emotional, behavioral, relational, and financial aspects of well-being.
What is the role of a CFT-I™ regarding financial trauma?
To recognize signs of financial trauma, understand its potential impact on financial behavior, and make appropriate referrals when necessary.
What is the Financial Therapy Association (FTA)?
An organization of professionals dedicated to the integration of cognitive, emotional, behavioral, relational, and financial aspects of well-being.
What is the difference between financial therapy and financial planning?
Financial therapy addresses the psychological, emotional, behavioral, and relational aspects of money, while financial planning focuses primarily on strategies for managing financial resources.
What is the Adverse Childhood Experiences (ACE) study?
A large study examining childhood adverse experiences and their impact on later-life health and well-being. It found that 87% of participants had experienced at least one adverse childhood experience.
What is a financial identity?
A person’s relationship with money, including ideas about what money means to them, how it should be used, and what one must do to obtain it.
What is financial self-efficacy?
A person’s belief in their ability to successfully manage their finances and accomplish financial goals.
What is the Scale of Economic Abuse?
A 28-item assessment tool that identifies various forms of economic control, exploitation, and sabotage in relationships.
What are some basic examples of financial abuse?
Stealing money, controlling how money is spent, preventing someone from working, hiding money, building up debt in someone else’s name.
How does money function in society?
Money serves as: 1) a necessary tool to sustain major life activities, 2) a source of social connection and disconnection, and 3) an influence on participation in life at individual, family, community, national, and global levels.
What is financial therapy?
The integration of cognitive, emotional, behavioral, relational, and financial aspects of well-being. It unites professionals to foster financial health through addressing both psychological and financial aspects of money management.
What is the role of a Certified Financial Therapist Level 1 (CFT-I)?
A CFT-I supplements their home discipline with foundational knowledge across therapeutic, financial, and financial therapy domains. They should practice within their scope of expertise and refer when issues exceed their competence level.
What is a money script?
Unconscious beliefs about money developed in childhood that drive financial behaviors. They are often partly true but become problematic when held rigidly or extremely.
What is financial socialization?
The process by which people acquire standards, values, norms, skills, knowledge, and attitudes about finances. This happens through direct instruction and indirect observation, primarily from parents but also from other sources.
What is financial enmeshment?
When family financial structures become so intertwined that traditional roles become blurred, often with children fulfilling adult roles in financial situations. It involves unclear or inappropriate boundaries around money matters.
What is financial infidelity?
The intentional withholding of information about finances from an intimate partner where disclosure would likely create emotional distress or a sense of threat. It involves secrecy rather than privacy.
What is financial abuse?
Using money or financial resources to exert power and control over another person. Examples include theft, fraud, exploitation, pressure regarding financial transactions, or misuse of property or benefits.
What is financial trauma?
Overwhelming financial experiences that impact a person’s thoughts, feelings, and behaviors around money. .
What is money avoidance?
A money script where people avoid dealing with finances while rejecting personal responsibility for financial health. They may associate negative feelings with money, label the wealthy as greedy, or believe they’re better off with less money.
What is money worship?
A money script where people believe more money will solve all problems. They often feel they must work excessively to make money, and may spend to show love or engage in compulsive buying.
What is money status?
A money script where people equate self-worth with net worth and focus on outward displays of wealth. They’re often concerned with buying the newest and best things to demonstrate status.
What is money vigilance?
A money script involving watchfulness and concern about finances. Generally considered positive and associated with higher net worth, though it can lead to anxiety about money and difficulty enjoying it.
What is systems theory in financial therapy?
A view that looks at family/relationship dynamics as interconnected systems where the whole is greater than the sum of parts. Changes in one area affect other areas, and focus is on interactions rather than individuals.
What are open versus closed systems?
Open systems continuously interact with their environment through exchange of resources and can adapt over time (like families). Closed systems operate in isolation with no exchange (like machines). Families can sometimes function as closed systems.
What is homeostasis in systems theory?
The tendency of systems to maintain balance or status quo. Families often resist change to maintain security, which can sometimes prevent necessary growth or adaptation.
What is intergenerational wealth transmission?
The process through which tangible and intangible assets are distributed from one generation to another, including preparation, the transfer event, and aftermath.
What is the multigenerational transmission process?
Communication patterns and emotional styles related to money that are passed from one generation to the next, often referred to as ‘family baggage.’
What is an ethical will?
A document that passes on knowledge, beliefs, values, and wisdom about how to live a worthwhile life, rather than material assets. It expresses feelings, hopes, and personal lessons for heirs.
What is the ‘no-talk rule’ regarding finances?
The tendency in families to avoid discussing money matters, creating secrecy and misconceptions. Common excuses include ‘it’s none of their business,’ ‘they’ll take advantage,’ or ‘it will hurt relationships.’
What is the difference between treating heirs fairly versus equally?
Equal means dividing assets into identical portions. Fair takes into account different needs, contributions, or past support, and may not result in equal distributions but addresses what is perceived as equitable.
What is financial trauma?
Any event or experience related to money or financial matters that is physically and/or psychologically overwhelming to the exposed individual.
What is the difference between Big T trauma and Little t trauma in financial contexts?
Big T trauma is universally recognized as painful and overwhelming, while Little t trauma is contextual and driven by personal experience, consisting of a series of small events or setbacks.
What is financial abuse?
Includes theft, fraud, exploitation, pressure regarding financial transactions, or the misuse of property and benefits.
What are financial flashpoints?
Significant money-related experiences that are typically developed in childhood and can drive much of one’s financial behavior.
What are the 5 types of trauma that can apply to financial situations?
- Impersonal Trauma
- Interpersonal Trauma
- Identity Trauma
- Community Trauma
- Cumulative/Lifelong/Complex Trauma
What are two primary levels where financial trauma can originate?
- Interpersonal/Relational
- Systemic/Organizational
What are common signs of financial trauma?
- Hoarding and/or avoiding money
- Anxiety, fear, shame, or anger around money
- Physical symptoms like increased heart rate
- Control/manipulation of money
- Unopened financial statements
- Hypervigilance about financial statements
How can financial trauma affect the body physiologically?
It can affect the Autonomic Nervous System, impacting affect management and manifesting as physical symptoms during financial discussions.
How does developmental stage affect financial trauma?
The impact varies based on when it occurs in life; earlier traumas generally have more profound effects unless significant intervention occurs.
What are common ways financial trauma forms?
- Cross-class experiences
- Financial crimes by non-intimate connections
- Theft by family members
- Money replacing emotional connection
- Divorce with adverse financial arrangements
How can money replace emotional connection in a family?
Different attachment styles influence how money is used to fill emotional voids, especially in families with insecure attachment styles.
What is financial infidelity?
Deception between partners regarding money matters, including hidden accounts and secret spending.
What is the Scale of Economic Abuse? (SOEA)
A 28-item assessment tool to identify various forms of financial abuse in relationships.
What should a CFT Level 1 practitioner do when they identify financial trauma?
- Recognize potential historical or current trauma
- Talk with clients about seeking mental health care
- Help clients manage resources safely
- Make appropriate referrals to qualified professionals
What is financial infidelity?
Financial infidelity is a breach in relational trust based on both implicit and explicit intimate relationship expectations regarding finances. It involves the keeping of financial secrets in an intimate relationship that, if disclosed, would evoke high emotions in the intimate partner.
What is the difference between privacy and secrecy in financial contexts?
Privacy allows for the freedom to make decisions and have personal thoughts without them being called into question. Secrecy is the intentional withholding of information that, if disclosed, would evoke high or low emotions in the intimate partner and create a sense of threat to the relationship.
What is money conflict?
Money conflict occurs when two or more parties express differences in their ideas, interests, and needs specifically related to financial resources. It can range from mild friction to intense and persistent arguments about any type of financial resource.
What is financial intimacy?
Financial intimacy is marked by trust, open dialogue about both positive and negative experiences related to money, willingness to acknowledge violations of financial trust, vulnerability about fears and anxieties connected to money, direct communication between parties, and proactive discussions about financial decisions.
What is alimony?
Alimony is a court-ordered provision for a spouse after separation or divorce, typically in the form of payments to the former spouse.
What is child support?
Child support refers to court-ordered payments, typically made by a noncustodial divorced parent, to support one’s minor child or children.
What is a Qualified Domestic Relations Order (QDRO)?
A QDRO is a judicial order in the United States, entered as part of a property division in a divorce or legal separation, that splits a retirement plan or pension plan by recognizing joint marital ownership interests in the plan.
How prevalent is financial infidelity?
Research indicates that about 40% of women and 37% of men keep secret savings accounts from their partners, and approximately one-third of Americans have committed some form of financial infidelity.
What percentage of marital satisfaction is predicted by financial factors?
Approximately 15% of marital satisfaction is predicted by financial factors, such as financial management quality and financial problems.
How does money conflict affect divorce rates?
Couples who argue about finances more than once a week increase their risk of divorce by approximately 69% compared to those who do not argue about finances.
What are common forms of financial infidelity?
Common forms include:
* small indiscretions (hiding cash, minor purchases, unpaid bills, hiding income/bonuses)
* secret accounts (credit cards, checking/savings accounts, investments)
* using money to benefit another person without the partner’s knowledge
* criminal activity like tax evasion.
What are the five conflict management styles according to Thomas and Kilmann?
The five styles are:
* Competing (high assertiveness, low cooperativeness)
* Avoiding (low assertiveness, low cooperativeness)
* Accommodating (low assertiveness, high cooperativeness)
* Compromising (moderate assertiveness and cooperativeness)
* Collaborating (high assertiveness and high cooperativeness).
What is the collaborative approach to conflict resolution?
The collaborative approach involves high levels of both assertiveness and cooperativeness, where parties work together to find solutions that fully satisfy the concerns of both sides, often by identifying underlying interests rather than focusing on positions.
What principle is illustrated by ‘The Orange Story’ in conflict resolution?
The Orange Story illustrates the principle of focusing on interests (the why) rather than positions (the what). By discovering that one child wanted the orange peel for a recipe while the other wanted the fruit for juice, both needs could be met completely instead of compromising with half an orange each.
What are the four key principles of conflict resolution for money arguments?
1) Separate the people from the problem, 2) Focus on interests, not positions, 3) Generate options for mutual gain, 4) Establish objective criteria.
What is the average decrease in household income for a parent who gains child custody after divorce?
Following a divorce, the parent who gains child custody will on average experience a 52% decrease in their household income.
How does divorce affect women financially compared to men?
Women, on average, tend to experience more severe and longer-lasting financial losses than men after a divorce. Divorced or separated mothers are 2.83 times more likely to be living in poverty than those who remain married.
What are the psychological impacts of divorce?
Divorce and partner separation are linked to increased levels of depression, anxiety, and risk of alcohol abuse. Individuals often report significant declines in levels of fulfillment and happiness following divorce.
How does parental conflict affect children?
Children exposed to high levels of parental conflict have negatively impacted internalized and externalized behaviors, social skills, shame, and distress. Exposure to parental conflict increases the likelihood of post-divorce depression and alcohol abuse in early adulthood.
What is the role of a CFT-I™ (Certified Financial Therapist-Level I) regarding financial infidelity?
The CFT-I™ should create a safe and empathic place, know the limits of confidentiality, recognize the range of definitions of infidelity, be aware that multiple expressions of infidelity may occur simultaneously, and stay within their scope of practice, making appropriate referrals when necessary.
What complementary professionals might work with a CFT-I™ on divorce cases?
Mental Health and Relational Professionals (Marriage and Family Therapists, Social Workers, Clinical Psychologists, Licensed Professional Counselors), Financial Professionals (Certified Divorce Financial Analysts, Financial Advisors, Certified Financial Planners), and Legal Professionals (Mediators, Divorce Attorneys).
What should financial therapists be aware of when working with clients experiencing money conflict?
They should be aware that money conflicts are often more problematic, pervasive, and recurrent than other issues, are rated as more intense and significant by couples, and are more likely to be mishandled and remain unresolved compared to other marital issues.
What are key financial preparations that a CFT-I™ should help clients with before divorce?
Gather all financial documentation, track income and expenses, prepare for future expenses, be conservative with spending and saving, refrain from big financial decisions, be cautious with advice from family/friends, prepare for possible resistance, and seek appropriate professional help.
How is conflict different for families according to Conflict Theory?
Families are unique in that they have different resource needs than other groups, and membership is not chosen (except for the initial spousal relationship). Events occurring within a family can have a greater impact on members than in voluntary groups, and families tend to withstand more conflict due to the desire to avoid family breakdown.
How does financial strain affect parenting?
Financial strain often leads to more harsh, ineffective, and inconsistent parenting, which can negatively impact children’s well-being and development.
What is the impact of relationship conflict on family businesses?
Relationship conflict within the family can negatively affect the financial performance of family-owned businesses.
What are signs of financial infidelity in relationships?
Signs include:
* controlling access to household money
* requiring detailed accounting of expenditures
* obsession with partner’s spending
* lying about financial income
* hiding purchases
* unexpected communications from financial institutions
* avoidance of discussions about current financial situations.
