Do You Need a Personal Finance Coach?

Odd Cents - Do You Need a Personal Finance Coach_

I get it. Not everyone is good with money. It’s nothing to be embarrassed or ashamed about. If you find that you are always in debt, your savings are not growing and you just cannot manage money, you may need to hire a personal finance coach.

I’ve toyed with the idea of pursuing a career in this field, but I realise that a personal finance coach is a serious position that requires a professional that is knowledgeable about anything and everything finance related. Many finance companies have financial advisors and similar roles, who essentially sell their company’s products and services.

That’s not what you need.

You need someone who will work with you to assess your current financial situation and help you to make better financial decisions. The focus should always be on you and your needs and not on how a company’s products can fit into your life.

What is a Personal Finance Coach?

A personal finance coach is someone who can help you to reach your financial goals. This can be done through the creation of positive money habits; learning money management skills; improving your financial literacy; learning how to rationalise financial decisions; and even teaching you how to set financial goals.

A personal finance coach should not be confused with a financial advisor. Financial advisors may be more inclined to assist with planning for retirement; selecting insurance products; purchasing assets; or creating investment accounts. Financial advisors are commonly found in companies such as commercial banks, insurance companies, mutual fund companies and financial brokers who work closely with the aforementioned companies. Financial advisors, who may also be called financial planners, are actively involved in financial planning.

The best personal finance coaches (also known as finance coaches, financial coaches, money coaches or financial life coaches) are independent agents who are committed to helping you get from where you are to a better space.

Elements of Financial Coaching Programmes

Financial coaching is often provided through one-on-one sessions between the coach and the client. It should not be confused with counselling, because it requires you to do some work. Coaches often take the role of mentors and try to help you to monitor your financial goals; correct harmful financial behaviours; and encourage you to be more attentive to your financial needs.

A review of financial coaching programmes in the USA in a study by the University of Wisconsin-Madison revealed that most of these programmes:

  1. Focus on improving long-term financial behaviour
  2. Help clients set and achieve financial goals on their own
  3. Help clients to practice new behaviours and monitor them over time
  4. Target clients who have minimum financial skills and experience

According to the university, the goals of these programmes are to help clients achieve their goals; address financial issues; recommend and support actions to meet goals; improve financial situations, improve or change financial behaviours; facilitate decision making and provide useful tools and resources. These goals are through typical coaching activities such as alliances with clients; setting goals; developing action plans; identifying resources, tools and services; monitoring client progress and making referrals.

Signs That You Need a Personal Finance Coach

There have been times when I wondered if I needed a personal finance coach. I felt as though I was slipping in some areas (e.g. investing) and that a professional might have been the solution I was looking for. Ultimately, I decided against it, when I realised that management was not my problem. For this I needed a financial advisor who could help me to select the right financial products to grow my savings.

However, you may need a personal finance coach if you:

  1. Find that you have more expenses than income
  2. See your debt increasing instead of decreasing
  3. Don’t know how to fix your finances
  4. Want to save for retirement or any other long-term goal
  5. Can’t manage your money effectively
  6. Are unable to mitigate a financial emergency
  7. Have a problem with over-spending
  8. Spend wildly on your credit card or debit card
  9. Want to establish positive financial behaviours
  10. Believe that you can do much better financially

Benefits of Using a Financial Coach

If you make the decision to use a finance coach, be comforted by the fact that you are taking steps to help yourself. There are several benefits of using a financial coach which can change your life. By using a coach, you can:

  1. Set short-term, medium-term and long-term financial goals
  2. Create plans to pay off your loans and get out of debt
  3. Learn how to handle small and large amounts of money
  4. Set up a smart budget that guides your money
  5. Use your budget to make better financial decisions
  6. Learn how to prepare for large purchases such as buying a home or car
  7. Create a targeted plan for retirement
  8. Create medium term and long-term financial plans
  9. Manage changes such as a new job or a change in income
  10. Become financially literate and thus develop good financial habits

At the end of your engagement with the coach, you should be in a better position to manage your money. The right coaching programmes will take you from the basics of personal finance straight through to the more complex stuff. Remember that getting your money right is a process. But if you have a good foundation, you will be able to deal with any issues that pop up along the way.

Further Reading

Dave Ramsay: Your Success Story Starts With a Coach
Nerd Wallet: What Is a Financial Coach and What Can They Help You With?
Kitces: What Is Financial Coaching, And Best Practices For Becoming One
Money Works: Financial coaching guides and supports you to achieve your goals.
University of Wisconsin-Madison: What is Financial Coaching?
Zing by Quicken Loans: Financial Coach vs. Financial Advisor: What’s the Difference?