Free Financial Counseling: Reduce Stress And Boost Your Financial Health

Financial challenges can put considerable strain on an individual’s mental health, and basic financial wellness is tied to quality of life in most cases. For those who are experiencing financial difficulties and related stress, free financial counseling could be a helpful form of support. Here, we'll explore who may benefit from financial counseling and how it may help improve your mental health, and we’ll also suggest ways to care for your financial and mental health together.

Financial stress can cause mental and emotional distress

Manage your mental health in therapy

What is free financial counseling?

Free financial counseling is a no-cost service offered by skilled professionals who provide advice and support to people experiencing economic challenges. Debt management, budgeting, and financial planning are a few examples of the services typically offered by free financial counselors. 

What is the difference between free and paid financial services?

Free financial counseling differs from paid financial services in several ways, beginning with cost. Unlike free services, paid financial counselors may charge an hourly rate, a flat fee, or a percentage of assets under management. Nonprofits or credit counseling organizations often provide free financial services, while non-public licensed financial advisors or financial planning firms typically offer paid financial counseling.

Additionally, free financial counseling usually targets individuals with lower incomes or significant debt, while paid counseling may cater to a broader range of clients with more complex financial goals. Free financial counseling typically assists in managing debt, budgeting, and negotiating with creditors. In contrast, fee-based counselors may offer more in-depth services like tax optimization and estate planning.

Potential benefits of free financial and credit counseling

Whether you hire a paid professional or find a financial expert offering free services, financial counseling has many potential benefits. Just remember to choose someone qualified so that you can receive the right advice for your unique situation. When researching counselors, consider their credentials, experience, and reputation. You can also check with your state attorney general and consumer protection agency to ensure the professional you choose is reputable. Below are some of the potential benefits of getting free financial counseling from a qualified expert.

Greater financial stability and reduced stress

Financial counseling may help you learn to manage overwhelming financial situations and be better prepared for when an unexpected crisis arises. For many, this type of greater financial stability leads to less stress in other areas of life and contributes to overall well-being. This relationship is often cyclical: Better fiscal health can give you more peace of mind, and you may also find that stronger mental health can make financial management easier.

Improved financial literacy and debt management 

A financial counselor may assist individuals in learning to budget their expenses and making a plan for reducing debt. They may also educate clients on how to build better savings habits and maximize their money-saving potential for improved financial stability. For example, this type of counselor might provide information on where to find free tax services or an affordable bank account that’s right for their  client’s needs.

Better decision-making 

Counselors may also offer guidance on setting realistic financial goals. Experienced counselors are often familiar with areas where people struggle to make sound economic choices. As such, they might provide strategies for avoiding common financial pitfalls. 

Connection to financial and credit counseling resources

Financial counselors often have the ability to easily connect with vetted resources. For example, they may offer clients referrals to free or low-cost housing assistance services. They may also have contacts with local social service agencies for those needing more specific assistance, such as help finding affordable healthcare or childcare. Counselors might also provide contacts at credit bureaus to address possible report discrepancies. 

Who can benefit from free debt management and financial counseling?

Regardless of income or financial circumstances, virtually anyone who makes and/or spends money may benefit from financial counseling. From managing debts to managing estates, financial counselors often have expertise and knowledge that people without a background in financial management do not. Counselors can pass on some of that literacy to their clients, empowering them to make healthier financial choices.  

More specifically, the following are groups of individuals who may especially benefit from free financial counseling.

Individuals in financial crisis 

Financial crises can be significantly emotionally distressing. Examples of such situations include severe debt, unemployment, and an unexpected crisis like a natural disaster or healthcare emergency. A financial or debt management expert may help bring a sense of stability and hope to people experiencing such situations by supporting them in making a recovery plan.  

Families facing financial transitions 

Crises aren't the only situations that can create financial challenges. Events like welcoming a new baby, selling a home, or retiring from a job can also present financial challenges. Consulting with a financial counselor can help people in such situations manage these new circumstances and perhaps prepare for additional changes in the future. 

Young adults learning money management

Learning to manage money often takes time. Young people who are new to managing their own finances may benefit from the guidance of a financial counselor who can teach good spending habits and financial best practices. A counselor might also provide useful advice on making significant financial decisions, like purchasing a car or planning to buy a home. 

People with student loan debt or other significant debt

Large amounts of debts can be challenging to manage. According to the Education Data Initiative, the average US student borrower takes 20 years to pay off their debt, while professional graduate student loans may take over 45 years to pay. An experienced financial counselor can help individuals with considerable debts such as student loans develop a plan to pay off their debt as quickly as possible without adding extra financial strain.

People needing help with foreclosure prevention 

Financial counselors can provide information and resources to help homeowners understand their options for avoiding foreclosure. An expert can also help identify foreclosure rescue scams, reducing the risk of their clients becoming targets of predatory practices. Counselors will often assist individuals in working with their mortgage lenders directly.

People looking to improve their credit and financial habits with free financial counseling

Chronic financial trouble can be discouraging, making some feel as if they’ll never get their finances under control. A counselor can help create a sense of financial empowerment in clients, supporting individuals in improving their financial health and building good credit. They can also teach people who are struggling to manage their finances how to cultivate better financial habits in the long run.

The relationship between money and mental health

Financial and mental stability are often intertwined. Studies suggest that people with a high number of debts or who are having difficulty repaying their debts are at “greater risk for depression and suicidal thoughts and behaviors.” People with overwhelming debt might feel hopeless and trapped. Plus, stigma about economic difficulties—which often involves the false belief that financial challenges are a sign of personal failure—can contribute to feelings of shame. 

Financial stress can influence quality of life in several ways. It has the potential to cause symptoms like:

• Increased symptoms or risk of anxiety and depression 
• Difficulty concentrating 
• Reduced self-worth 
• Sleep disturbances 
• Headaches and muscle tension 
• Digestive issues 
• Arguments and tension with family and partners over money 
• Social withdrawal and isolation
• Reduced work productivity 
• Unhealthy coping mechanisms like overspending or substance use 

Tips on getting the most out of financial counseling

Working with a financial counselor can seem daunting. It often requires divulging details you may not feel comfortable discussing at first. However, getting the most out of financial counseling typically requires openness and honesty about your financial situation. Do a little research to help you find a counselor you’ll feel comfortable with. Consider factors like length of practice, specialization and expertise, and accreditation and association memberships. 

Prepare a list of questions about what to expect and what you'll need to bring. Set realistic expectations and list your goals. Are you most interested in paying off debt? Do you need help controlling your spending? Whatever your needs, work with the advisor to set specific goals and devise a plan. Then, try to stay consistent and proactive in implementing their advice.

Finding free financial, student loan, and foreclosure prevention resources

You may also find financial guidance from familiar sources. For example, some banks offer free financial advice. Some employers have employee assistance programs (EAPs) that can be used for this purpose. Even some local libraries offer free financial advice. 

You may also benefit from seeking out bigger organizations for more in-depth, comprehensive assistance. For example:

• The United Way and the National Foundation for Credit Counseling (NFCC) offer free financial aid
• The US Department of Housing and Urban Development can help with foreclosure prevention
• The US Department of Education provides resources on student loan forgiveness and repayment possibilities

Tips for caring for your mental health during financially challenging times

Financial problems can challenge every aspect of an individual's life. A person might start having trouble with relationships or problems at work or school. They may experience sleeplessness or changes in appetite, and lack of concentration or focus can also result when one’s thoughts are preoccupied with financial concerns. In some cases, financial stress can lead to more severe challenges like anxiety, depression, or substance use disorder.

Here are a few ways you can care for your well-being during times of financial stress: 

• Acknowledge and validate how you feel; accept that financial stress is real and can impact your mental health
• Prioritize healthy habits like regular sleep, nutritious meals, and physical activity 
• Spend time with supportive friends and family
• Limit negative self-talk and avoid self-blame
• Practice stress-management techniques like meditation and deep breathing exercises
• Use hobbies or creative outlets to help manage stress
• Focus on smaller, achievable goals to avoid overwhelm

When to seek professional help

It may be time to seek help from a mental health professional if financial stress is significantly interfering with your ability to function in daily life and relationships. It can be especially important to speak to a therapist if you’re struggling to manage unhealthy coping mechanisms like substance use. It’s also recommended that you seek support if you experience persistent feelings of anxiety, depression, or hopelessness. 

Many assume they can’t afford therapy; however, there are lower-cost options than traditional therapy available. For example, some in-person providers offer a sliding scale for their services based on income. Or, through online therapy platforms, you can get matched and meet with a therapist for a cost that’s often less than traditional in-person treatment without insurance. Plus, online therapy can offer more flexible scheduling, which may be useful for those juggling financial stressors.

Research indicates that methods like cognitive behavioral therapy (CBT) may be highly effective in treating mental health conditions associated with financial worry. For example, a 2022 study suggests that people engaged in online therapy for financial stress showed “statistically significant improvements in symptoms of depression, anxiety, and perceived financial well-being.” Participants continued to show improvement in follow-up assessments at four and eight weeks. Since other research suggests that online CBT can often be as effective as in-person CBT, seeking online support for financial stress can be a viable option too.  

Takeaway

Financial counseling has the potential to play a pivotal role in helping individuals and families address money-related challenges and build toward a better financial future. Financial well-being can contribute to less stress, more life satisfaction, and more stable relationships. Take the first step toward financial wellness by exploring the free resources available to people who need assistance with money management. If you’re experiencing mental health challenges resulting from the stress of financial challenges, you might explore lower-cost options for mental health therapy.