Financial freedom is the new wave. Sometimes you need an ally to help you understand which moves are best for you to make on your journey. This may be where you start contemplating hiring a coach. They’re everywhere now and it can be difficult to determine who’s qualified to help you. Here are some things to consider.
Coach vs. Advisor
A financial coach is a short-term relationship with a lot of interaction. This is because a coach helps you with the basics of money management – things like budgeting and saving.
After hiring a coach, you should develop a healthy relationship with money if you heeded to the advice given. Coaches often offer check in calls.
While they don’t manage your money for you, they do get you off to a good start with taking care of what you have now which means you’ll better navigate what you earn in the future.
A financial advisor plays a very robust role. They help you manage assets and investments. For example – if you’re into the stock market your advisor can decide which companies you should invest in.
In short, they help you grow your money. Your relationship with a financial advisor will likely be ongoing which allows you to be more hands off. You live your life and your advisor will manage your money and set up periodic check ins with you throughout the year.
Financial Coach Qualifications
Financial coaching doesn’t require a formal education. Coaches can use their personal experiences and successes to guide you towards a better future where money is concerned.
Choosing a financial coach is less risky in comparison to choosing a financial advisor but you should still vet the person before hiring them. Follow them on social media for a while.
What kind of tips and resources are they providing? Are they consistent? Are you able to verify the information through your own research?
Do their methods and ideas line up with yours? You can also be referred to a coach if you know a person who’s used one in the past.
What else can a Financial Coach help with specifically?
- Creating a personalized budget for you
- Finding areas where money is being wasted
- Helping you pay off debt quicker
- Finding ways to increase income
- Giving surface level info on investments (remember, they’re a coach not an advisor)
In addition to these things, your financial coach provides accountability. Think of them in relation to a personal trainer. You could easily get a gym membership and exercise on your own.
However, that trainer makes sure that you show up when you’re feeling lazy. They push you to do more than you thought you were capable of and you’re happy about it in the end.
So, in the case of a financial coach – yes you can search online and read books about whipping your money into shape. But that doesn’t compare to having someone with you helping along the way and giving you a personalized approach.
What’s your responsibility?
1.Your main job is to be 100% transparent with your financial coach. That’s the only way they can truly help you improve. Don’t be embarrassed by any bad habits that you have. You’re already taking a big step towards getting better.
2.Your next job is to ask questions. You need to understand the logic behind why a coach is telling you to do certain things. Remember that your time with the coach is limited and once it’s up you need to be able to continue on with the practices that you learned.
3. Lastly you need to be coachable. That means you have to be a good listener and committed to the process that your coach has you in. A big part of learning from your financial coach will be unlearning behaviors and patters that you’re used to.
Should you hire a financial coach?
It’ a good idea to hire one if you need guidance with the day to day handling of your money and are trying to secure a better financial future. If you answer “yes” to 3 of the below questions then you’ll benefit from a coach.
- Are you living paycheck to paycheck?
- Are you struggling to build an emergency savings?
- Are you paying bills late?
- Have you taken a loan from your 401K to cover expenses?
- Have you been unable to make progress with your financial goals?
- Do you need an accountability partner in finances?
- Would you have to borrow money if a car repair or family emergency came up?
So…do you need a financial coach?