Imagine this: a therapy session with a client is going smoothly, maybe they’re telling you about a painful childhood memory or an ongoing conflict with their partner.
But as you try to pay attention, you find yourself distracted.
I’m only getting paid 60% of my cash rate by insurance. How am I going to afford my expenses? I’ll have to see more clients. But I don’t have money to spend on marketing. How will I ever reach my goals while living a decent lifestyle? This isn’t a sustainable way to live! How do other therapists manage? And my licensing renewal is almost here, too! Wait, I need to pay attention.
You come back to the present moment and feel guilty.
Was I really that distracted about money during a session with a client?
Trying harder to focus isn’t going to solve this. And seeing more clients isn’t a sustainable solution for financial woes.
Enter the complete guide to financial wellness for therapists, tailored to you as a mental health professional and private practice business owner.
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Defining financial wellness for therapists
How do you define financial wellness as a therapist? And what are some signs that will tell you you’re there or on track?
Ryan Derousseau, CFP, a financial advisor for therapists based in New York, said it depends on the person’s goals, but in essence, it’s being “in a position where all their needs are met and they're also embracing the wants they have in life.”
It sounds simple enough. For a therapist, your “needs” include any expenses in your practice such as EHR, billing support, telehealth platform, practice management software, and rent for your physical office space, if you have one.
Jillian Knight, LMFT, a financial therapist based in North Carolina, said financial wellness means therapists “are earning, spending, saving, and investing money personally and professionally in a way that feels good to them and that allows them to achieve their short and long-term financial, business, and life goals.”
Planning for financial wellness includes thinking about immediate as well as long term wants and needs. Additionally, therapists must consider their personal goals for their life, and take their professional goals into account.
To achieve financial wellness, you need to earn enough to pay your rent or mortgage, buy healthy groceries, have access to a gym, and pay for your utilities.
You’ll also need to earn enough to get your “wants” in life, such as tea or coffee for clients, wall art, and on the personal side, vacations, a car upgrade, and whatever else you may want.
According to Ryan, you’ll know you’re approaching financial wellness if you:
- Have an emergency fund in place
- Are making space to pay for taxes
- Are saving for retirement
- Have room for vacations and other personal desires
The above are near-universal goals that any therapist can strive for and achieve.
Signs your financial wellness needs some work
The signs that a therapist is not financially well are just the opposite of the above.
“They don't have an emergency fund, they have high credit card debt, tax time is a source of major stress and they can never take a break from the practice because they have to keep cash flow coming in to get by,” Derousseau added.
There’s no shame in finding yourself in financial difficulty. After all, we don’t have widespread financial literacy in schools, and financial wellness is almost an afterthought in graduate school.
Plus, a lot of therapists hear messages like “we’re not in it for the money” which can cause feelings of guilt around financial wellness.
However, if this is where you’re at, you’ll want to do the work to reverse this. You deserve a financially healthy lifestyle where needs, wants, taxes, retirement, and fun are all accounted for.
Why financial wellness is important for therapists
Financial wellness affects your mental health. And financial wellness has added importance for therapists, who are trusted to be there for their clients.
Preventing distress and being attuned
As you may know from experience, it’s a lot harder to be there for clients when your mind is elsewhere. Namely, thinking about money woes.
One study concluded that “higher financial worries were significantly associated with higher psychological distress.”
By taking care of your financial health and wellness, you’ll have less distress and thus be more attuned to your therapy clients.
Win-win.
Ensuring a successful practice
Next, financial wellness is important for therapists because you’ll need to have your finances in a healthy state to run a successful, impactful practice.
We’ve all heard stories of therapists who are earning $30,000 per year while working with a full caseload. This is a recipe for burnout and dissatisfaction. In fact, according to the 2024 Financial State of Private Practice Report, nearly one-third of therapists surveyed said they made less than $25,000 in profit in 2023.
In working towards financial wellness, you’ll have the resources to build and maintain a thriving practice and better serve your community.
Support your personal well-being
As a therapist, it’s important to do self-care, including financial self-care.
Getting your own financial wellness taken care of will allow you to lead by example and better support your clients.
As you know, financial wellness contributes to overall well-being. Further, it can be the one thing that enables growth in other areas of your life, such as education, fitness, and personal goals.
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Common financial struggles for therapists
What are the most common financial struggles for therapists?
Paying yourself
Derousseau often helps his therapist clients pay themselves appropriately.
“Figuring out how much to pay themselves is a big one, since the cash flow in the business can fluctuate so much,” he said.
Paying yourself is a common struggle among all first-time business owners. You want to make sure you don’t take too much out, but too little can also be a problem.
Adding to the difficulty for therapists is, like any service-based worker, you’re only paid for work performed. When your caseload has empty slots, you don’t get paid, and the number of empty slots fluctuates every week.
Saving for retirement
Another issue is how to effectively save for retirement.
“While there are optimal ways to manage retirement, it's better to do something than nothing at all. And the faster you get started, the better,” Derousseau advised.
Personal goals
A third financial wellness issue for a lot of therapists is looking out for their personal goals. You have big goals in life, and it’s important to align your finances with them.
Do you want to travel the world? Start a nonprofit? Have an extravagant wedding in Italy?
These are all possibilities, provided your financial house is in order.
Student debt
Student debt is another common issue. And with high interest rates, it can take years or even decades to pay these off. According to the 2024 Financial State of Private Practice Report, more 25% of therapists have more than six figures in student loan debt.
Getting out of debt, especially high-interest debt like student debt, will free you to make your personal and practice dreams a reality.
High overhead
Office space rent, practice management software, billing support, malpractice insurance, and other recurring bills.
These all add to your overhead and add complexity to your financial wellness journey.
Seeing how you can reduce this overhead can help you reach your practice goals and financial wellness much faster.
Assessing your current financial trajectory as a therapist
We’ve covered some reasons why financial wellness is important for therapists and a few common problem areas.
Now let’s assess your financial trajectory and see what improvements you can make.
David Frank, CFP, a financial planner for therapists based in California and founder of Turning Point Planning, said “it’s more important to consider if you’re on a solid, sustainable path, rather than focus on where you’re at today.”
No matter your starting point, you can create a realistic, actionable plan for getting out of debt and into a state of financial wellness.
“You can’t change the past, so just make the best decisions moving forward. Focus on progress rather than perfection,” David added.
First, calculate how much you should be earning
The start of financial wellness is defining your income goals.
Follow this 7-step process to see how much you need to earn to be financially well.
In the following sections, we’ll build off of these answers.
Step 1: Decide how much take-home pay you need for your financial wellness.
This includes office rent, practice management software, and other practice-supporting needs and wants.
It also includes personal rent/mortgage, groceries, bills, hobbies, and other guilt-free spending within reason. Remember, financial wellness is about meeting your needs and wants, while not overdoing it.
To look at a concrete example, if you:
- Live in a Greenwich Village studio apartment ($3,500)
- Provide therapy online and don’t have a therapy office ($0)
- Cook most meals at home ($500)
- Buy coffee and a bagel from a cafe each morning ($250)
- Pay your utilities ($500)
- Take lessons for a hobby you enjoy ($250)
Then you’ll need about $5,000 per month for basic financial wellness.
Step 2: Add 20% to this number as your debt payment, savings, and investing money.
You want to save money for your personal and business emergency funds, travel, continuing education, investing, and anything else that’s important to you.
Continuing the above example, you need to earn another $1,000 per month (20%) to do this. Your overall goal for financial wellness is now $6,000 in take-home pay.
Step 3: Calculate how much money you need to generate in your practice to hit your financial wellness goal from Step 2.
For example, let’s say you pay yourself 50% of each session fee, and save the other 50% for business expenses and to have some extra financial cushion.
To earn $6,000 to fund your financial wellness goals, you’ll need to bring $12,000 into your therapy practice. That equals $6,000 for you and $6,000 for your business.
Of course, adjust the percentages to fit your situation, relying on real-world feedback and help from a financial planner. Our goal here is to help you get a realistic if imperfect estimate.
Step 4: Calculate your average session fee.
Calculating your average session fee is advantageous because your rates may differ for different clients. Some may pay your full fee, some may use insurance, and still others may be on a sliding scale.
Also, your rate may be different across individual, couple, group, family, and other service offerings. To find your average session fee, divide your total revenue for the previous four weeks by the number of sessions in that same period.
For example, let’s say you generated $10,805.20 in revenue and completed 70 sessions in the previous four weeks. Divide the revenue total by the number of sessions to find your average session fee, in this case, $154.36 per session.
Step 5: Calculate how many sessions you need at your average rate to hit your revenue goal.
Divide your revenue goals by your average session fee from Step 4. In this example, you’d divide your goal of $12,000 by $154.36. This shows you need to complete 78 sessions at your average rate in four weeks to hit your revenue goal of $12,000.
That’s eight more sessions than in the previous four week period, a good piece of information to have, and something you can build off of. Reaching this revenue goal will ensure you achieve your financial wellness goal in take-home pay.
You may want to consider raising your rates if you can’t achieve your goals with a reasonable, sustainable number of sessions.
Use our Fee-Setting Calculator for Therapists to see what your income could look like with different rates and number of sessions.
Step 6: Make sure you have enough for expenses and taxes.
In Step 3, we used the example of setting aside 50% of revenue for business expenses. If you save 50% of revenue for business expenses, do some quick calculations to ensure this covers your business expenses.
Don’t forget to also set aside 25-30% of your gross revenue for taxes.
Step 7: There may be some money left over.
You now know how much you should pay yourself, how much to set aside for taxes, and you have some percentage left over.
With the extra money that’s left over, you can fund your CEUs, attend conferences, pay for business expenses like your Psychology Today profile, or fuel any other goal you have for your practice.
Following the above process will clarify your financial wellness goals (giving you a concrete take-home pay goal), your revenue goals, and how many sessions you need to realistically achieve them.
As you work to make your goals a reality, it’s equally important to rid yourself of debt.
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Erasing debts and laying a foundation for success
A lot of financial gurus would recommend that you cut out any unnecessary expenses (lattes being a common example).
But there are higher-impact ways to revitalize your financial health.
That’s why we recommend these high-impact strategies for you and your practice:
- Eliminate high-interest debt
- Increase your credit score
- Build an emergency fund while reducing debts
- Spend with your values
- Earn more money as a therapist
Let’s talk about each in turn.
Eliminate high-interest debt
Why is high-interest debt elimination the first thing you should do as a therapist?
Because the money you spend paying off interest is money that you’re not investing in your skills and therapy practice.
To clarify through an example, if you have $80,000 in student loan debt and an interest rate of 6% per year, you’ll end up paying a whopping $26,579.68 in interest.
Don’t you want to reduce that $26,000 as much as possible, and use the amount you saved to pay for something for you or your practice?
Like David Frank, CFP, said above, you can’t go back and change the past, nor your student debt. So let’s talk about strategies for paying off debt that work.
Standard method
When it comes to paying off debts, you can choose from one of two methods.
The first method is called the “Standard Method.” The idea is to pay off the debt with the highest interest rate first. For example, if you have student loan debt at 6% and credit card debt at 21%, you’d choose to pay off the credit card debt first.
This method makes sense because the debt that accrues the most interest gets reduced first.
Snowball method
The other method is called the “Snowball Method.” Here, you start with the lowest balance first.
So if you have $35,000 on your car payment and $24,000 on your credit card, you’ll pay the car off first, regardless of the interest rate. This method makes sense because you’ll pay off the lower amount faster, and this will give you a sense of momentum and confidence to keep going.
Choose a strategy that makes sense for you and stick with it.
Extra payments toward debt
If you want to pay off your debt sooner and save even more money, pay an extra $100 to $200 to your debt each month.
This will help you pay off debt years sooner, and save thousands of dollars on interest. Then put those savings towards building your ideal practice.
Increase your credit score
By increasing your credit score, you’ll be able to save interest on future large expenses. If you want to buy a home, car, or other large expense in the future, you should work to improve your credit now.
This way, you’ll be approved for a lower interest rate, which will save you tens of thousands of dollars on the life of these future loans.
And as long as you don’t carry an interest-accruing balance each month, your credit cards can even enhance your financial wellness with perks like flight miles, hotel stays, and cash back on business purchases.
Here’s how to increase your credit score.
Make on-time payments every month.
This will ensure you’re never getting penalties for missing payments. Having a good payment history is 35% of a good credit score, the biggest factor and one that you should get working in your favor.
Keep your account balances low.
To improve your credit score, look like a responsible user of credit. Keep your balances low, and like point one above, always pay them off on time.
Increase your credit limits over time.
To aid in keeping your account balance low (as a percentage of your total credit limit), increase your limit. For example, $500 of a $2,000 limit is 25%. But if you call and ask for an increase to $5,000, that same $500 becomes 10% of your full limit, and you’re in a great place. Ask for a limit increase every year or so.
Keep old accounts open and active.
Credit history is a big factor in improving your credit score and saving money on future interest payments. So keep your old accounts open, even if you don’t need to. Some people like to have a recurring subscription on these cards like Netflix.
Automate payments.
Making on-time payments and improving your credit score over time can be simple. All you need to do is set your payments up to occur automatically. You’ll have to think about your credit card payments less often if you do this. Automated payments are a safeguard against forgetting.
Build an emergency fund while paying off debts
Though paying off debts and increasing your credit score is helpful, it’s important for you to feel safe in the process. That’s why it’s recommended to build your emergency fund at the same time that you pay off debts.
Paying off debts is necessary, but isn’t always inspiring. In contrast, setting money aside in savings feels more like progress and thus is motivating.
Start by setting aside a sustainable amount each month. Even $10 a month will go a long way for your motivation and peace of mind. The aim when starting your emergency fund isn’t to be perfect, but just to get started.
You can always ramp up these savings over time, and increase the amount you save once all of your debts are paid off.
How much should you save for emergencies?
Most financial experts recommend three to six months of expenses for your personal life and three to six months of expenses for your therapy practice.
You never know when your car tire will pop or a family member will need assistance. Start saving today and watch your emergency fund grow over time.
Align spending with your values
We all spend money on things that don’t necessarily bring us joy. The key is to identify what these things are and eliminate them.
Why? Because they don’t bring you joy!
And because that money can go towards the things that do bring you joy. For example, as a therapist, you may not like some of your subscriptions or some of the continuing education workshops you’ve been to.
It’s 100% okay to stop spending your money on these and find alternatives that light you up inside. You can stop certain spending and save it. Or use it in an entirely different way, like taking your family out to eat at a new restaurant instead of getting high-end professional attire that feels stifling for your personality.
It all depends on you, your values, and what brings you joy.
Start by identifying three spending areas that you don’t enjoy, and three that you love. Then shift your spending accordingly. This will light you up inside and show you that money can be used to live a life of joy, abundance, and alignment.
Earn more as a therapist
Paying off debt, building an emergency fund, and aligning your spending with your values are great pieces of advice. But something essential would be missing if we didn’t invite you to think big about how you can increase your income as a therapist.
For starters, there are readily apparent ways to do this, such as seeing more clients and increasing your session fees. And then there are other creative ways, such as coaching, case consultation, consulting for businesses, writing, speaking, and creating programs with your expertise.
For an exhaustive list of income ideas you can try, check out our Complete List of Income Streams for Therapists.
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Best financial wellness habits for therapists
Now that you’ve learned how to manage your debts and lay a solid foundation for financial wellness, let’s look at what habits you can use to support your journey.
James Childress, CPA is a financial advisor for therapists based in Wyoming who has helped many practices grow their impact, beginning with financial wellness.
According to Childress, if a practice owner “believes in the work they are doing as a practice, then the sky's the limit for them. The service and the sessions are the tide that raises all boats and everyone truly can be well served if it is done right.”
Below are some of Childress’s recommended financial wellness habits for therapists.
Manage your money feelings
It’s interesting (if unsurprising) that a lot of therapists Childress works with start with a lot of shame-based feelings and avoidance around money.
For this, he recommended therapists “build a window of tolerance and most importantly, not let any feelings of embarrassment or anxiety prevent them from reviewing these things.”
Over time, as financial skills are learned and mastered, therapists can stop feeling so down about their finances and even start to enjoy them.
Read more about understanding your relationship with money as a therapist.
Listen to money podcasts for therapists
Did you know that there are money podcasts specifically for therapists? There’s a growing industry of professionally made podcasts that cater to therapists just like you.
“Consider listening to money-positive therapy podcasts like Money Nuts and Bolts or the Private Practice Startup,” Childress added.
These podcasts will at least show you that you’re not alone in your financial wellness journey. And they may even be a catalyst for some positive change in your financial habits.
Conduct a monthly financial review
If you’re having trouble getting on track, why not start a monthly financial review?
Looking at all of your numbers and goals once a month in a 45-minute session can help you stay on track to reaching your goals.
If this appeals to you, start by setting a 45-minute timer. If you finish before the timer is up, double-check your work or simply celebrate taking a step forward.
If you haven’t finished by the end of the timer, congratulate yourself on taking a positive step forward nonetheless. You can also jot a few notes or questions down for next time.
And if you happen to be enjoying the experience, you can always continue.
“Just by looking, gaining awareness, and asking questions you can learn so much and it will do so much good for your future,” Childress said.
Check in with a financial planner
Being self-reliant can take you a long way, but if you’re looking for more support, consider hiring a financial planner.
They’ll be able to help you make sense of your finances, understand key financial terms, and develop a plan for moving forward that works for you.
Try financial therapy
What if you’ve tried the above in the past and change has been short-lived?
In this case, you can reach out to an organization like the Financial Therapy Association. There, you’ll find a therapist who can help you with money and finances specifically.
“They have a lot to offer in that realm, and they are your peers,” Childress added, so reaching out shouldn’t be too intimidating.
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Financial therapy for therapists
Sometimes we continue to make financial missteps, despite our desire to change and grow in this area. When we continue to repeat patterns despite a conscious desire to change, there’s often more to the story.
Financial therapy can help you find the missing pieces of the story, and help you bust negative money patterns that keep you stuck and feeling powerless with money.
A great book for therapists (and anyone trying to be better with money) is The Financial Anxiety Solution by Lindsay Bryan-Podvin, LMSW of Mind Money Balance.
This workbook is largely based on Cognitive Behavioral Therapy and will help you uncover the hidden money patterns that may cause you to self-sabotage, quit good financial habits, and generally feel stressed about money.
After completing it myself, I was able to stop overspending, be more focused at work, and not worry about a $5 latte. If my experience is any indicator, this book will help you do a 180 in your relationship with money.
Another option is to work with a financial therapist directly. The Financial Therapy Association and the Money Coaching Institute are two organizations that come to mind.
Whatever you choose, know that with some deep work, you can remake your relationship with money entirely, and release any negative lessons you may have absorbed in the past.
Financial wellness is possible with the right plan
You now have the answers you need to achieve financial wellness in your life and your therapy practice.
Throughout this guide, you’ve learned how to define financial wellness for therapists, why it’s important to achieve it, and how to overcome common struggles therapists face on their path to financial wellness.
Additionally, you’ve received guidance for setting your financial wellness goals in the context of your therapy practice and erasing debts that hold you back.
Lastly, you’ve learned financial wellness habits you can start using today, and saw what financial therapy for therapists can do for you if you continue to struggle or would like extra support and guidance.
This is your call to take care of your financial wellness. Future you (and your clients) will thank you for it.
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This post is to be used for informational purposes only and does not constitute legal, business, or tax advice. Each person should consult their own attorney, business advisor, or tax advisor with respect to matters referenced in this post.
Brandon Grill is a mental health copywriter and marketer based in Las Vegas, NV. He loves helping therapy practices attract more perfect-fit clients through SEO. On weekdays, you can find Brandon taking his adorable nephews on a walk around Grandma’s neighborhood.
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