Families and Financial Stress in HBFT

Module Sections:


Welcome to the Course


The purpose of this module is to help therapists learn more about how to address financial concerns of families they serve. The module will provide a brief look at the different facets of financial hardship and provide basic tools and interventions that can be useful to home based family therapists. It is important to remember that while you are able to address the effects of financial hardship and provide some basic financial tools to clients, it may, in many cases, be necessary to refer your clients to a financial planner in your area. It is important that you familiarize yourself with these resources so that you are able to provide referrals when in the home.

As the U.S. endures the current economic downturn, families across all demographic and socioeconomic statuses are directly impacted. Although more research has emerged on how family finances impact marital relationships and parenting (Dankin & Wampler, 2008; Vinokur, Price & Caplan, 1996), this has had little impact on how couple and family therapy is conducted. Knowing the financial situation of clients can be helpful data in assessing for psychological, behavioral and relational problems as well as developing and implementing interventions.

As we work with families in their home environment we are more likely to see, firsthand, how the economy has affected their daily lives. This module will help you understand how children and families are affected by financial distress and what you can do as a home-based family therapist to help address some of these issues.

Module Objectives

Through this module you will be able to:

  • Learn about the relationship between family financial stress, couple distress and child behavior outcomes
  • Understand basic finance terminology, concepts and financial management strategies
  • Become familiar with a web-based finance program that can be utilized in home-based settings

Scope of the Issue

The U. S. economy is undergoing the worst economic conditions since the Great Depression (Moseley, 2009).  Many have lost jobs, health care, and even their homes. These adverse conditions can contribute to anxiety, depression, marital conflict, and adverse effects on children (Ministry, Biesanz, Taylor, Burchinal, & Cox, 2004).

For couples, money has been found to be the most commonly reported argument starter (Storaasli & Markman, 1990). Disagreements over finance have been found to be strongly associated with marital dissatisfaction and psychological distress (Dankin & Wampler, 2008).

For couples, money has been found to be the most commonly reported argument starter (Storaasli & Markman, 1990). Disagreements over finance have been found to be strongly associated with marital dissatisfaction and psychological distress (Dankin & Wampler, 2008). Couples who are dissatisfied with their financial situation often consider their relationship to be a failure.

For those couples with children, financial strain negatively impacts parent/child relationships, parenting practices, and parenting satisfaction (Mistry, Vandewater, Huston & McLoyd, 2002) as well as child and adolescent behavior, academics, and mental, social, and physical development and health (Mistry et al., 2002; Gutman & Eccles, 1999; Duncan, Yeung, & Brooks-Gunn, 1998). Financial hardship has been found to contribute to turmoil in families by increasing stress levels and discord between parents. Children who experience interparental conflict have a higher disposition toward displaying antisocial behaviors. Interparental discord increases the risk that parents are likely to utilize harsh and inconsistent disciplinary strategies and show lower tolerance of child misbehavior (Paat, 2011).

Serious financial problems generally have more to do with the strain of low income than poor financial management skills (Kerkmann et al., 2000). Children from low-income families are at increased risk for academic problems, juvenile delinquency, and teenage pregnancy (Brody et al., 1994) and are more likely to suffer from anxiety, depression, peer conflict and conduct disorders.

Given the significant impact on families, clinicians who make time for finances in session will find that money is likely a significant contributor to the problems that clients face.


Click the link to respond to the following survey:

Journal- How might financial stress be affecting the families you currently work with?

Establishing a Common Ground

What is Personal Finance?

Establishing a Common Ground

This module will provide a brief introduction to personal finance. Personal finance is the process of planning the spending, financing, and investing to optimize the financial situation of an individual or in this case a family. Many families do not manage their financial situations well (Madura, 2002). Consider these statistics:

  • The level of savings in the United States is about 1 percent of income earned.
  • About half of all surveyed people in the U.S. who are working full-time state that they live from one paycheck to the next, without a plan for saving money.
  • About 40 percent of people who work full-time do not save for retirement.

By having a personal financial plan, individuals and families can track and predict their spending, develop financial goals and outline a plan for saving for their future.

A financial plan covers an individual or family's decisions regarding the following:

  1. Budgeting and tax planning
  2. Managing liquidity
  3. Financing large purchases
  4. Protecting assets and income (insurance)
  5. Investing money
  6. Planning retirement and estate

Madura, 2002

Below is a chart with examples of financial details covered in each component of a financial plan.  Following the chart, each of the components is discussed in more detail.

A Plan for:

Types of Decisions

Budgeting and tax planning

What expenses should you anticipate?

How much money should you attempt to save each month?

What debt payments must you make each month?

Managing liquidity

How much money should you maintain in your checking/savings account?

Financing large purchases

How much money can you borrow to purchase a car?

What type of mortgage loan should you obtain to finance the purchase of a house?

Protecting assets and income

What type of insurance do you need?

Investing money

How much money should you allocate toward investments?

What types of investments should you consider?

Planning retirement and estate

How much money will you need for retirement?

How will you allocate your estate among your heirs?

Budgeting and Tax Planning
Budgeting is the process of forecasting future expenses and savings, requiring the consumer to make decisions about saving and spending. Without a budget, spending and saving are left at the whim of impulse and can lead to poor decision making and economic hardship. The first step in creating a budget is to assess financial positions. This includes your income, your expenses, your assets and your liabilities. Assets are anything you own and liabilities are any debt you owe. Net worth is the difference between what you own and what you owe. Saving and investing money increases assets thus increasing net worth. Budget planning gives a clear picture of your financial position, allowing you to make decisions that can increase your overall net worth.

A key component of budgeting is estimating or forecasting your upcoming expenses. If you underestimate, you may not be able to reach your savings goals. Budgeting is influenced by income, which is influenced by education and career decisions. Clients with less income will have less money available to set aside for a savings plan, possibly making their financial goals more long term.

Managing Liquidity
A liquid asset is an asset that can be converted into cash quickly. These include cash on hand, money in checking or savings, stocks, and bonds. Liquidity is the ability to cover short-term cash deficiencies using these liquid assets. It is important to maintain a sufficient amount of liquid assets, such as a checking or savings account, so you are able to access the money in the event you cannot cover an unexpected expense. It is important to manage these assets in terms of cash inflow and outflow, so as to enhance liquidity.

Financing Large Purchases
Loans are needed to finance large purchases, such as college tuition or a new car. The amount of financing needed is equal to the difference between the cost of the item and how much money you have on hand. Managing loans involves determining how much you can afford to borrow, deciding on length of loans, and finding competitive interest rates.

Protecting Assets
Protecting you assets, or what you own, involves purchasing insurance. Insurance planning involves determining the types and amount of insurance needed to protect your assets. Types of insurance most people will come across include automobile insurance, home or renter's insurance, and health insurance.

Investing Money
It is suggested that any funds you have after your usual expenses and liquidity needs are covered should be invested. This is an area where most people are not familiar with the potential financial gains available. These funds can be used to invest with the goal of gaining high return.  Some investment possibilities include stocks, bonds, mutual funds and real estate. When determining how much and where to invest your money, you could consider how much risk you are willing to take on and how diverse you want your investment portfolio to be.

Planning for Retirement and Estate
Retirement planning involves determining how much money you should set aside each year for retirement and how you should invest those funds. Today's families are facing job insecurity and job loss at high rates and plans for retirement become less of a priority. Retirement planning must begin well before you near retirement so you can invest your funds wisely, allowing them to reach their highest financial potential. Estate planning is determining how your wealth will be distributed before or upon your death. This ensures that you wealth and assets are distributed in a manner that you desire.                               

Madura, 2002

For the purposes of this module, we will focus on how you can help your clients make small changes to how they manage their household finances that can provide a clearer picture of where their money is going. Many times, once cash flow becomes clear, people are able to start making behavioral changes to improve their financial situation. If you find that the exercises and suggestions given here are not sufficient for your client's financial situation, use an internet search engine to locate financial counseling services in your area. Use keywords like "financial counselor, Kansas" or visit the Financial Planning Association's website, www.fpanet.org, to locate services in your area. Often more remote areas of the state will not have direct access to these specialized services; consider calling a financial planner or counselor and asking for a phone consultation.

Journal- Which of the six parts of financial planning is most appropriate for the families I work with and how can we make a plan together to address this issue?

Forming a Unified Framework

Models for Financial Planning

It is likely that your clients will not have an extensive financial plan. The disorganization of a financial situation can cause significant distress on families. The two models presented here focus on the relationship between family economic well-being and child outcomes. The first model, Family Economic Stress Model, posits that family economic well-being has effects on child behavior outcomes via a series of mediating variables. The second model, The Investment Model, suggests that families with greater economic resources are able to provide more opportunities for their children which would lead to better academic and social outcomes.

Family Economic Stress Model

The family economic stress model was developed from the Iowa Youth and Families Project, a longitudinal study of 500 European-American families in the 1980's rural Midwest (Conger & Elder, 1994). The model suggests that rather than absolute levels of income and economic resources, it is parents' perceived financial inadequacy that significantly affects children's behavioral adjustment. The model links income and child adjustment through a chain of mediating variables: low family income and negative financial events create economic pressure; increases in economic pressure are associated with decline in parental mental health and increases in parental conflict; poor parental mental health leads to lower levels of involved, nurturing parenting and increased coercive parenting, which leads to poorer socioeconomic adjustment among children.

Family Economic Stress Model

The Investment Model

The Investment Model supports the idea that greater family resources reduce risks associated with the stress of poverty and help create environments that promote competent development. The model suggests that economic resources increase the investment parents are able to make in their children's development, promoting academic and social competencies. Parents with increased resources are able to provide the care, time, and services necessary to support their child's emotional needs. These investments contribute to enriched learning environments, higher standards of living, and safer homes and neighborhoods.

Combined Family Economic Stress and Investment Model

Researchers have combined the two models, considering them as a single understanding of how economic hardship influences children and families. The combined model suggests that poverty and economic hardship in the first generation of a family increases the likelihood of similar financial problems in the second generation.

The model is broken into two sections: second generation (G2) childhood/adolescence experiences and second generation adulthood outcomes. The G2 family of origin experiences are summarized in the first five boxes and the G2 Adulthood area refers to those same children as adults in their own families of procreation. What you may find is that your clients have come from families who struggled with finances and stress related to family income and wealth.

Combined Family Stress and Parental Investment Models


Jill and Jeff have been living together for 2 years and they have a daughter, Nora (4). They were referred to Mary for family therapy because the neighbors reported yelling and arguing in their apartment and that they could hear the baby crying often during the day. In session, Mary attempts to get to the root of the couple's arguments. She asks them what are the top three areas that cause them stress. Jill and Jeff agree immediately: money, Nora, and money. The couple reports that they disagree on how to discipline Nora most of the time. Jill is often passive and does not like to punish her daughter for "mistakes". She often yells at Jeff for being too harsh and he in turn yells at her for being too passive. Jeff agrees that they do not need to spank Nora but he thinks that time out is appropriate for her age and that she can only learn right from wrong if she is punished for her misbehavior. They describe these mistakes and misbehaviors as coloring on the walls, throwing her dinner on the floor, hitting the babysitter, and having temper tantrums before bed. The first few sessions are focused on helping the couple make parenting decisions. Then one day Jeff and Jill confide that they are barely making ends meet and that although they do argue about Nora, most of their arguments are about money. They hoped Mary could help them understand more about how to manage their money better.

Using Strategies and Techniques

Know Your Limits

As stated in the introduction, it is important to konw your limits as a therapist.  The following strategies, techniques and resources are geared towards those with limitedfinancial skills.  If you feel that your clients need more help than you can provide, please refer them to the proper services in your area.

Assessing the Problem

Unfortunately a family's financial situation is not a domain that is commonly assessed (Dakin & Wampler, 2008). In addition to mental health and parenting needs, a family may also have stress related to lack of resources (such as transportation, health care, or child care). When working with families the following multiple levels of assessment should be covered in the initial interview:

  • Level of financial strain- how isthe family experiencing the economic downturn?
  • Mental health- how has the previous description of financial strain affected each family member's (adults and children) levels of stress, anxiety, confidence, and depression
  • Behavior issues- academic issues, negative activities and peer groups in children and adolescents
  • Couples and marriage- how does the couple manage financial stress?
  • Parent/child relationships- assess parenting practices, parental outlook
  • Family/community- what are this family's resources?  Social support?  Community resources?  Is there blame being placed on a specific event or person?

Although you may not be savvy enough to help your clients create an extensive financial plan that covers the six major components, you can help clients assess their current financial state and begin to organize their spending and saving behaviors. Before you attempt the following with your clients, we encourage you to try the techniques using your own finances. This will give you the chance to practice the skills before you teach them.

Journal- How might some of the reported symptoms of family distress be related to the family's financial situation?

Personal Cash Flow and Budgeting

Cash flow statements measure your cash inflow and outflow. By monitoring your cash inflow and outflow you can determine where your money is going and how much money you have left once expenses are covered. Cash inflow is money you earn, generally employment wages but can also include savings accounts that accrue interest and some stocks that generate income. Cash outflow represents all expenses. They can be large, like monthly rent or mortgage or small, like a magazine subscription. After both are calculated, cash outflow is subtracted from cash inflow to determine net cash flow.

Once you have your monthly bills, receipts, and transaction registers gathered, organizing cash flow can begin with a simple internet search. The American Bankers Association (www.aba.com), along with hundreds of other financial organizations, provides a simple worksheet to help organize finances. The worksheet includes various examples of income (such as take home pay and gifts) and a variety of household expenses (such as medical bills, food, entertainment and transportation). If your clients prefer a more hands off approach to organizing cash flow, there are also government endorsed websites such as www.mint.com, which can upload your personal banking information and organize it into categories. Once cash flow is determined, a budget can be created.

Other Methods of Intervention

Couples Therapy
It has been established that couples who treat each other better in times of financial stress fare better than those who utilize blaming, negative attribution and conflictual interaction styles (Conger & Elder, 1994). While some arguing about money can be expected, couples therapy can teach couples how to argue in such a way that can preserve their relationship quality. If you suspect finances to be an area of concern for a family, the ABA provides another tool, the Financially Fit Quiz, which shows consumers how well they manage their money. This quiz focuses on behaviors in five domains: financial management, shopping, credit, insurance and estate planning, and saving/investing. Scores range from 20-100, with higher scores showing better financial management behaviors. This quiz can be used to help couples identify concrete problems and help the clinician make appropriate referrals. A referral option in some areas can be for relational financial therapy (discussed below), a local housing and consumer credit organization, or a private personal financial planner, all of which can be located via internet search.

Family Therapy and Parenting
As previously mentioned, in the face of financial stress negative parenting strategies tend to be utilized more often. Family therapy can help children by helping parents reduce the stress and irritability they express toward children, thus reducing negative parenting (Mistry et al., 2002). Clinicians can work with both parents to build their arsenal of positive parenting strategies (i.e. – reasoning, loss of privileges) and instead express more nurturing, affection and sensitivity to their children's needs. Research has shown that as parents feel more confident and effective, parent/child relationships improve and parenting feels less difficult (Mistry, Lowe, Benner & Chien, 2008).

Community and Social Support Resources
Another way to intervene with families is to increase their social and community support. Research has shown that parents who maintain strong community ties do much better over time (Conger & Conger, 2002). And kids whose parents are involved in church, school, and other community activities tend to grow up and do the same, which increase successful outcomes. By encouraging clients to tap into these resources they can increase their well-being and improve their confidence.

Relational Financial Therapy Relational
financial therapy focuses on encouraging empathy and understanding regarding each partner's financial behaviors. Often couples have differing financial habits and these can become a source of tension. Relational financial therapy helps couples understand more about how their money habits came to be through the use of interventions such as money genograms and spending diaries. Once couples have empathy for one another, they can more easily work to compromise and make adjustments to their financial behaviors for the betterment of their family (Stuchell & Barrett, 2010).

Journal- In what ways can you work with my families to help with their financial decision making?

Applying the Framework


Jill is employed at a local restaurant as a cashier and Jeff delivers for a local newspaper. Jill is able to earn tips at her job, which makes her income variable each week. The most she has earned is $600 (during special events) and the least is about $400. Jeff's income is based on the number of customers he delivers to. At one time he made about $500 per week – currently reports that he makes about $200 per week. Jill and Jeff have a daughter, Nora (4). The clinician agrees that she will help them and asks the couple to list their expenses and income (see below).















Total Expenses


Total Income




By using a money genogram Mary is able to learn more about how each family understood and talked about money. She found that both Jeff and Jill have been living in financial hardship since childhood. Jeff reported that he was raised by a single mother and that during junior year of high school he had to drop out of school to work to support his family. Jeff still has not finished his GED. Jill's parents were farmers and did well for much of her childhood. When her father passed away, her mother could not maintain the farm and so they had to move in with family. Jill had to change schools and her mother could not find work because she had no skills. Fortunately Jill's family supported them but Jill never learned to manage money. When she turned 18, she began to open store credit cards and had a large amount of debt in her name. She was able to file bankruptcy but she is still recovering.

Once Mary became aware of the couple's concerns, she realized that it would be more helpful for them if they worked with a professional on how to improve their financial situation. Mary spoke with her agency and was able to learn more about the financial management services in the area and eventually she was able to find what she thought were "good fits" for her family. She encouraged the parents to meet with each once and compare their experiences and decide for themselves who they would like to work with. Once the couple began to search for financial management resources, Mary was able to talk with them about how it affected their parenting and other day to day tasks. Jill and Jeff felt that just knowing they were going to be getting help eased some of the tension at home. Mary agreed that she felt they were more open in their parenting sessions since they first spoke about their economic distress. Mary encouraged the couple to continue with the planner they eventually chose concurrently with their family sessions.

Application of Integrated Model with the Vignette

With the budgeting worksheet, Mary was able to help the couple see that their monthly expenses were $400 more than their monthly income. This was surprising to the couple and helped them see, in a concrete way, where their income was going. The financial genogram jumpstarted the conversation about money in a non-threatening way and helped Mary assess beliefs and schemas around money and money management. Once Mary knew that she would not be able to help the couple to the extent they needed, she decided to make a referral to several professionals in the area. It was important to Mary that the couple continued with both services so that their needs were being met in each of the areas that caused the most stress – parenting and finances. Your agency may have resources or relationships with money management professionals/organizations, so don't hesitate to ask.

Post Test

Click the link to respond to the following survey: