Financial Coaching: Teaching Financial Security

Financial Coaching: Teaching Financial Security

Market Trend. Recession. Investment portfolio. Cryptocurrency.

These words make most people feel like they’ve hopped onto a rollercoaster and can no longer tell where they’re headed. However, if you’ve always had a clear head on your shoulders when it comes to all things finance, you might be someone who’s equipped to be a financial coach.

Who Is A Financial Coach / Money Coach?

A financial coach, also called a money coach, will take you back to the basics of managing your money.

Their field of expertise is personal finances.

They teach you how to manage your money well to get out of debt, save for more significant financial goals, and achieve a financially controlled lifestyle. Not the other way around.

What Does A Financial Coach Do?

A financial coach provides guidance and advice to help people break unhealthy habits and practice better home life.

But before they start, they take time to understand the client's unique routines and aspirations. Start by tracking your liabilities and budgets for a short time (perhaps a few weeks).

As they gain a clearer understanding of a client’s relationship with money, they will understand what habits are detrimental to their financial well-being and how they can adopt new healthy habits. You will also learn about your emotional connections to money and how these connections affect your finances.

Role #1: Discuss the Client's Financial Goals

First, the financial coach will review the client's short- and long-term goals.

Want to save a down payment on a house? When do you want to retire?

Are you capable of repayment on that new car loan?

For many of us, this list can get quite long, and it can be difficult to decide which goals to prioritize. A financial coach can help you stay organized and teach you how to adjust your spending and saving patterns to reach any goal.

Role #2: Create a Lasting Financial Plan

A financial coach will come up with a plan tailored to your needs and desires to get you on track.

They can help you set a new budget, pay off debt, build an emergency fund, save for retirement, and more. They usually meet with you every six months to a year, every week, or every two weeks, and hold you accountable.

By the end of that period, a financial coach will teach you how to maintain a lifelong habit of managing your money well.

What's the Difference between a Financial Coach and a Financial Advisor?

If you need help planning your retirement, understanding your tax situation, or even saving, a financial coach and financial advisor can both help. While these professionals have a lot in common, they are quite different, and it's important to understand how they differ.

1. Services

First of all, clients who hire financial coaches and financial advisors usually have different starting points.

For example, if you have minimal savings and even a lot of debt, you need tips and tricks to get your finances back on track. A financial coach can provide this service! On the other hand, if you already have a lot of savings but don't know what to do with the money you've saved, a financial advisor is a better option.

Financial advisors are the experts when it comes to investments. One of their main responsibilities is to manage their clients' investment portfolios, most of which require a minimum of $100,000 or a $1 million initial investment. However, financial coaches are not licensed to provide investment advice to clients, so the advice they recommend may be limited and not specific. However, financial coaches can address deep-rooted financial issues that clients may have. Finances are stressful for almost everyone, whether you're a keen budgeter or on the brink of bankruptcy.

2. Credentials

Another important difference between trainers and consultants is training.

Most Financial advisors have undergone extensive training and have specific qualifications, such as being a Certified Financial Planner (CFP) or a Certified Financial Analyst (CFA). In addition, Financial Advisors must be licensed and registered with the Financial Industry Regulatory Authority (FINRA).

However, financial coaches do not need to complete specific training or certification to offer their services. For this reason, anyone interested in becoming a financial coach must do their due diligence and prioritize completing a basic level of education, training, or certification.

3. Duration

Financial coaches and advisors also vary based on the amount of time they spend with their clients.

Financial coaches aim to help people gain a basic understanding of the best budgeting practices, so their business relationships are generally short-term.

However, financial advisors or consultants work with clients on a long-term basis. They may meet once or twice a year to assess client assets and manage investment portfolios.

Financial advisors offer several different types of payment plans, either commission-based, result-based, or a combination of both. Most financial consultants calculate hourly rates ranging from $150 to $300 per hour or a rate based on the number of assets under management. Fee-based financial advisors receive payments from investment providers for selling products to clients.

4. Cost/Rate

One of the main differences between coaches and consultants is how much they charge for their expertise.

Financial coaches do not require formal training or licenses, making them a much more affordable option, even for those with large amounts of debt. However, prices vary greatly for the same reason. A money coach can charge easily between $75 to $600 per hour, but some coaches prefer a flat rate per session or for a set number of sessions.

When Do You Need a Financial Coach?

Treating yourself to an unplanned dinner or an unexpected vacation isn't always a bad thing.

Let's say your goal is to buy a house. You opened a savings account and saved some money over the years, but progress was slow and minimal. Or maybe you're living paycheck to paycheck and don't even know how to start saving on such a tight budget.

Let a financial coach step in and review your spending and saving habits. They can help you uncover unseen opportunities and chart a path to reach your financial goals.

Another serious problem that may require the assistance of a finance coach is when finances are affecting your health and well-being.

Money is a major stressor for most people. It can affect everything from what you eat to how you sleep (or sleep deprivation). In some cases, the anxiety you feel about money can even harm your long-term heart health. If so, consider contacting your financial coach for help. Do not expect these problems to resolve themselves. Act now for your health and future.

Why Should I Become a Financial Coach?

Becoming a money coach is a great way to help people find financial freedom. Financial coaches provide clients with strategies, organize their day-to-day finances, and provide support in achieving their financial goals.

Instead of focusing on financial products and services, they will focus on the emotions, attitudes, and habits of their clients when it comes to their finances.

The responsibilities and duties of a financial coach are as follows:

  • Analyze financial information.
  • Track a client’s income and expenses.
  • Create a monthly budget.
  • Suggest ways to change financial habits.
  • Show your customers how to save money on their investments.
  • Teach positive strategies for handling money.
  • Helping clients get out of debt.

How to Become a Financial Coach

Here are some steps to becoming a Financial Coach.

Step #1: Learn How to Teach Financial Literacy

First, financial coaches need to have a knowledge base on how to teach the concept of financial literacy.

As a prospective financial coach, you should have a good knowledge of finance so that you can properly guide your clients on how to improve their finances.

Second, you must be comfortable teaching these concepts, understand teaching strategies, and learn how to coach clients based on their needs. 

Step #2: Get Certified

Getting certified as a financial coach is not mandatory, but it can give you a competitive edge by increasing your knowledge and credibility.

Most clients find it easier to trust someone with strong credentials in this area. Many organizations offer financial coaching courses, tutorials, and certifications, but it may be best to hire an organization with nationally recognized credentials.

Here are two courses you can take up to get certified as a money coach or financial coach.

i. Financial Fitness Coach (FFC):

The Association for Financial Counseling and Planning Education (AFCPE) is a leading nationally recognized financial accreditation agency. They offer three educational modules to gain a certification as a Financial Fitness Coach.

ii. Certified Personal Finance Consultant (CPFC):

The National Financial Educators Council is a nationally recognized organization with a 180-hour training program that teaches you how to become a competent financial coach.

Step #3: Find Your Niche within Financial Coaching

Many money coaches focus on specific areas of personal financial advice or find a niche they enjoy. This specialty often stems from personal experience. Helping a client recover from bankruptcy, developing a savings method, or developing a strategy for debt service are all different aspects of financial coaching that you can specialize in.

Whether your areas of focus come from personal experience or your love of researching the subject, it's good to have areas of focus that you can use to market your services and teach your clients.

Based on the services you offer, you could look at the following money coaching niches.

  • Socially responsible investments
  • Business succession planning
  • Wealth management
  • Fee-based financial planning
  • Business planning
  • Retirement distribution planning
  • Estate planning & conservation
  • Investment management planning
  • 401K retirement planning
  • Tax reduction strategies
  • Insurance or specific products: annuities, life insurance, long-term care, etc.
  • Mutual Funds
  • Self-directed plans
  • Socially conscious investments
  • Life planning
  • Education/college planning
  • Personal financial planning
  • Profit sharing

Step #4: Learn from Other Trainers

Gaining experience is a popular way to build knowledge and broaden your expertise. It helps you learn new tactics, see which strategies work best, get to know different clients, and observe the coaching process. There are many ways to gain experience in financial coaching. Start by following already successful financial coaches or watch videos and podcasts.

  • Internships
  • Apprenticeships
  • Conferences
  • Workshops
  • Volunteering
  • Networking
  • Joining Organizations

Step #5: Build Your Financial Coaching Business

When building your own coaching business as a money coach, make sure you have the right tools and resources. A few things to consider are the company's website, company blog, and investing in coaching management software.

Financial coaching software helps you manage your clients by storing and analyzing their financial information. It also keeps all their financial information safe in one place. A business website or blog can help you advertise and market your business, engage customers with your services, and provide resources to your customers.

A good financial coach should be able to:

  • Provide financial coaching to clients through one-on-one, couples, or small group sessions.
  • Competently assess the client's current financial situation by reviewing tax returns, accounts, credit reports, and more.
  • Calculate financial health indicators (debt to income ratio, net worth, etc.).
  • Ability to document results, make accurate measurements, and report results.
  • Must have the necessary skills to motivate and encourage positive behavior while empathizing with the client's financial situation.
  • You need the substantive knowledge necessary to provide quality and timely financial education to your clients.
  • Communicate well. A good financial coach must have effective verbal and non-verbal communication skills. They must also have excellent writing skills.

Start Your Journey

A good financial coach can completely change the course of a client’s life. They can help them attain financial stability and get them through tough times in the economy. It is a highly lucrative and fulfilling field to work in.

If you’re someone who is good with finances, becoming a financial coach or a money coach can be a great side business to help you make the most of your free time.

At Evercoach, we offer all kinds of training courses, resources, and more for aspiring coaches across all niches. Check us out here  to upgrade your coaching skills and take your business to the next level.