When it comes to money, young people are often given familiar advice: to budget better, save more, and spend less.

But for many young adults, financial decisions are shaped as much by economic realities such as housing costs and job insecurity as they are by things like anxiety, family history and, perhaps most importantly, how they feel.

That is where financial therapy comes in.

This emerging field looks at the emotional and psychological factors that shape how people earn, spend and think about wealth.

Matt Lundquist, a psychotherapist and founder of Tribeca Therapy in New York, specialises in helping people understand their relationship with money and has worked with many young adults, as well as parents navigating their children’s transition into adulthood.

Speaking with Reuters from New York City, Lundquist discusses what financial therapy is, why Gen Z is more money-focused than previous generations, and how young people are rethinking work and traditional milestones.

What is financial therapy, and how does it differ from financial planning?

I would lean heavily on the word therapy in the concept of financial therapy.

Our emotional lives are not discrete, meaning our relationship with money affects our needs, our relationship with anxiety, and our career choices, which affects our relational lives and our work lives.

One important reality of therapy is to recognise the ways that things are interrelated more than we perhaps realise.

What you’re not getting with a financial therapist is somebody who’s offering you money advice about saving versus spending.

Financial therapy creates a space to reflect on those values and look at the financial aspects of what creates the good life.

A lot of young people know the basics of personal finance — save more, spend less, invest — but still struggle to put those principles into practice. Why is that?

There are dozens of potential reasons. The most important thing to say is that it’s not particular to the individual person.

The historical relationship with money is an important part of that. Looking at the emotionality of money as something that, like all aspects of ourselves and our emotional life, has history — that’s one big category.

The other big category is looking at and understanding culture.

What’s happening in the immediate culture around someone? What are their friends, parents, coworkers, and romantic partners’ relationships with money?

Young people are forecasting not just a few years out, but even decades out. Will I ever be able to aspire? Will I ever be able to develop wealth? Those kinds of expectations impact young people’s minds, and often rightly so.

How do family history, childhood experiences or inherited money beliefs shape the way people handle money as adults?

For the most part, it’s similar to other kinds of conditions that people bring to (traditional) therapy.

We typically work with people who are fairly money savvy and fairly therapy savvy.

They have often tried a lot themselves. They’ve used the internet, they’ve used ChatGPT to reason through these issues and yet have still come up against limits.

The limit is not one strategy, but deeper emotionality.

The work — unpacking what that looks like historically — is always challenging.

Often, there’s a lot to do in terms of talking through and recollecting early experiences with money, looking at how that lived in and how families operated.

Understanding how the work of identifying that can help someone as an adult make new kinds of choices. I think it’s quite hard work. It’s also very doable.

What kind of money problems are triggered by emotions?

People are so creative in how they organise their neurotic lives, and I would include myself in that, with no judgment. It’s a really existent human phenomenon.

People tell me, “My spending is out of control since my breakup.”

And they’ve already identified a kind of causal relationship there.

A very common thing that we’re hearing in the practice from young people is: “The rent is highly out of control, and gas prices are high. AI is taking over the future. My firm is in a hiring freeze. What does the future hold?”

Or “I’m going to just go out and spend money and ignore the consequences, because who knows what’s going to be the future anyway.” It becomes a kind of meta solution.

When you look at Gen Z and millennials’ relationship with money, what stands out compared to older generations?

It’s a generation that seems to be talking about the economy more than previous generations of young people.

It seems to be in their mind, in the conversations, and how they’re organising their lives quite a bit more.

There is much more of an idea — some of it comes from necessity — that my path is not going to be going and working for somebody.

My path is going to be running my own thing, my own business, my own brand. You certainly see this with Instagram influencers and that kind of thing.

Many young adults are delaying milestones like buying homes, getting married or having children. What psychological factors do you think shape those decisions?

You’re reminding me of another really significant one that I’ve noticed only more recently, which is feelings about having kids.

Marriage, I think, is related to that, but maybe more significantly, the question of having children.

What I’m seeing is not just people that age not having children. They’re declaring at 28, 32, “I’m never going to have children.”

That very definitive declaration is really quite striking. I think that is not only driven by concerns in the economy.

People are understanding differently the economics of child rearing. One lesson point in that was COVID, particularly a lot of women seeing the work that was put on moms where they were both working from home and managing childcare; seeing the intense strain on them.

I think a lot of men in that cohort aren’t declaring a desire not to have children in the same way.

We’re seeing an increase, relatively speaking, of people reaching out for therapy, couples therapy in particular, to grapple with whether having kids is something they want to do and learn about their relative priorities.

What are your young clients teaching you about financial well-being?

I spend my time with these folks hearing an awful lot of criticism of “work is everything” and the fulfilment mindset.

The choices that they make and how they organise their lives are welcoming and challenging. It’s a reminder of the way that even (for) someone self-aware — (which) I try to think of myself as — money and work can take over relative to other priorities.

What would a healthier relationship with money, work and success look like for someone in their twenties or thirties today?

There’s a difference between recognising that money is not the most important thing in the world and organising a life where earning and wealth don’t overtake other priorities, like joy and connections and relationships.

At the same time, the path towards that, in my view, is through understanding money and through making informed choices about money.

What’s one piece of advice you’d give to a young person who feels overwhelmed by financial decisions right now?

The finance industry benefits from creating this idea that understanding money is incredibly difficult and complicated.

One consequence of that is that young people feel more daunted than they need to.

I would really encourage young people to begin to learn that they can have less anxiety. Knowledge is power. People want to learn; it’s not as complicated.