For years I have been surprised how often I would be asked “What is Financial Coaching?”
The past several years, thankfully it has grown in popularity. This is fantastic news, since I think that as money coaches – we have the ability to change not only our clients lives – but society as a whole by improved financial literacy.
Worried about your finances? You aren’t alone. Multiple studies show that nearly 80% of Americans feel the same way. That means in a room of ten people, eight of the ten worry about their finance.
There is still a lot of misunderstanding about what a financial coach does, so I’ve addressed it here today
What is Financial Coaching?
You’ve probably heard the term, but still wondering – what is financial coaching?
Since you are reading this, you may be wondering:
- What is Financial Coaching
- Uncertain what a Financial Coach does
- Or what services a Financial Coach provides.
As a client, a former financial planner, and current Financial Coach – I feel I can give you a unique and in depth perspective and answer all of your questions. My hope is by the end of this article you will be able to
- Understand what is Financial Coaching
- What a Financial Coach does
- If and how a Financial Coach can help you
- What makes a Financial coach different than a Financial Advisor
For many people, dealing with your money and finances can often be overwhelming and intimidating. When starting out, many discover Financial Advisors are only interested in managing their portfolios. Or their portfolio isn’t large enough for the advisor (YET!!). And this is when most people discover Financial Coaching
Ex. Source: What is Financial Coaching (www.michaelryanmoney.com)
What is a Financial Coach, or Money Coach?
I will be honest, when people find out I am a Financial Coach, they frequently ask “what is Financial Coaching”? In the simplest form – a Financial Coach is someone who can help walk you through your finances, to put you in a better position with your money moving forward. My number one goal when working with a client is to make sure that they are achieving their financial goals. The second goal is to make it easy for them.
Money and finances are full of technical jargon – for many, finances are just a foreign language. This is the reason Financial Coaching is becoming more and more popular as an option. However, because the phrase itself is a little unclear, you might be wondering what precisely financial coaching entails.
What is the secret to weight loss? Everyone knows it is to eat less, burn more calories, and you will lose weight. Then why are 42.4% of Americans not just overweight, but obese?
Recommended: What is a Financial Coach and Can They Help Me?
What is the secret to finances? When it comes to money, everyone knows the formula: earn more, spend less equals save more money. Then why has the lack of financial literacy cost the average American almost $1,400 a year?
So, most people know what to do – they just need to know HOW. That is where a Financial Coach comes in. Coaches of all types help people become better at something – whether it is sports or finances. A Financial Coach teaches individuals how to better manage their money on a day to day or month to month basis. Saving consistently, becoming debt free, increasing a credit score – all things that will have an everlasting effect on people and their lives.
Unlike a Financial Advisor, Financial Coaches do not need to be licensed. The reason is, a Financial Coach will not offer specific investment advice nor manage your portfolio. A Financial Coach will not sell you insurance or annuities. A Financial Coach will educate and empower you to make good financial decisions for your own personal situation.
You could be seeking advice as simple as how to create a spending plan, day to day finances, opening accounts. It could be as complex as college or retirement planning, tax planning or estate planning. Having someone who is knowledgeable and experienced to work with you is invaluable.
Ex. Source: What is Financial Coaching (www.michaelryanmoney.com)
What is The Process of Financial Coaching?
The goal of Financial Coaching is to achieve the clients financial goals. This is done as a process by:
- Determine where you are today financially.
- Establishing your financial goals and priorities. What is important to you?
- Establish the strengths, and weaknesses, of your current financial situation.
- Work to removing your weaknesses and building upon your strengths
- Ensure the steps you are taking match with what your financial goals are compatible
A successful Financial Coaching relationship is one that you are taking steps towards achieving your financial goals. Whether it is learning to budget, building and designing a portfolio, paying off debt, or retirement planning.
The primary mission of a financial coach is to educate clients in order to understand their values and goals, build a comprehensive financial plan, and offer tools. Then to encourage and hold them accountable. A financial coach can assist you in grasping the fundamentals of money management.
Financial coaches will assist you in
- Improving your relationship with money
- Focusing on an executable plan and
- Developing great, life-long financial habits.
- Determining your long-term financial objectives.
- Creating a financial strategy to achieve your goals
- And then ensuring that they keep to it – while selling you financial products
- Budgeting and debt management are only a few examples
- as are retirement planning and
- investing knowledge.
Some examples of ways I work with clients:
- Providing non-product-related advice
- Connecting clients with other resources, such as debt-relief, calculators, books, and information sources.
- General money management advice and techniques
- Referencing information that customers may utilize to help them make better decisions.
- Providing clients with my tools and resources, such as budget templates, spreadsheets, and calculators
For people wishing to take charge of their own finances, money coaches give powerful responsibility and inspiration. Ideally, working with a Financial Coach will give you the option in the future to work with a Financial Advisor. The role of a Financial Coach is to equip clients with the information, skills, and habits necessary to develop wealth in the first place, regardless of their income level.
Let’s be honest, we know a majority of Americans are not taking the time to manage their finances properly. It’s no different than a fitness coach – we know what we need to do. But we do better when someone is telling us what to do. And holding us accountable to do it.
Do you keep piling credit card debt on top of each other and can’t manage to get ahead?
Are you afraid of getting into debt that you have no debt and a poor credit history?
Through guidance, support, and informed counsel, a financial coach will work with clients to enhance that connection.
Consider hiring a financial coach if you don’t know how to get your money in order. Financial coaches, unlike financial advisors, devote more time to helping their clients learn the foundations of money.
Continue reading to find out what a financial coach is, if you need one, and how a financial coach differs from a financial adviser.
Ex. Source: Hiring a Financial Coach (www.michaelryanmoney.com)
What A Financial Coach Will NOT Do
A Financial Coach Will Not Sell You Investment Products
I do want to be clear that a Financial Coach differs from a Financial Advisor. A Financial Coach will not provide you with specific investment advice. You will not be sold insurance, annuities, or any other investment. The role of a coach is to help you understand your current financial situation, plan ahead for your future financial goals, and keep you focused and accountable throughout the process.
Financial advisors are more concerned with selling and managing the wealth you have already accumulated.
A financial coach usually has no investment or insurance product affiliations. A Financial Coach does not handle investments or sell insurance. We strive to educate our clients on the fundamental ideas of insurance, investing, and diversification – but we do not provide particular investment recommendations. A client can choose to manage their own investment or work with a financial advisor once he or she has achieved his or her aim of having a positive net worth and cash flow.
Ex. Source: Do I Need a Financial Coach (www.michaelryanmoney.com)
How Much Does a Financial Coach Cost?
Related Reading: Article that goes in depth about How Much Does a Financial Coach Cost?
What Is the Role of a Financial Coach?
A financial coach helps develop a healthy relationship with money and staying on track to meet your financial goals. A Financial Coach will teach you the fundamentals of personal finance and assist in developing a financial plan that is in line with your goals. The objective is to give a client the information, skills, and habits that will help them develop wealth in the first place.
Working with a financial coach does not require a large sum of money. Many clients do have substantial assets and incomes. Many people are in debt and have nothing in the way of savings.
In my opinion, the key role of a Financial Coach is to educate clients on the fundamentals of personal financial finance. Then together we work on a financial plan to reach the clients financial goals. I must encourage the client to be responsible for their choices, to grow and learn, and work as partners throughout the process.
People work with coaches for a variety of reasons throughout their life
- Tutors in school
- Sports coaches and lessons
- Work and business coaches
- Even marriage coaches
We get checkups for most things in life. An annual physical, a dentist visit, we bring our car into the dealership. But how often do you do a checkup for your most valuable resource? Your finances. Has anyone ever sat with you to help you think about, handle, and organize your finances? That’s exactly what Financial Coaching accomplishes. The purpose is to show you how to take charge of their financial life.
Know what you don’t know
Do you have confidence in dealing with your day to day finances? Are you proactive in accumulating wealth? Do you have a clear plan for your finances? Today is a great day to start.
Sign up for our newsletter, and comment below.
The information here is for information purposes only, and not guaranteed to be accurate. The information may not be full and complete. This is not investment, insurance nor tax advice. You should talk with your financial advisor or accountant to figure out which of your options is best for you.
Michaelryanmoney.com does not provide legal or tax advice, and the information provided is general in nature and should not be considered legal or tax advice. Consult an attorney, tax professional, or other advisor regarding your specific legal or tax situation. Michaelryanmoney.com takes no responsibility for the current accuracy of this information.