Most people who earn a living wage, especially those who live paycheck to paycheck, seek ways to be more financially stable. There are many programs and policies to help people achieve this and such support systems have gone beyond traditional approaches such as joining homebuying seminars and bankruptcy seminars to include financial management apps, child savings accounts, and one-on-one finance coaching.
Financial coaching has grown particularly well across the United States in the last couple of years, and yet not everyone knows or understands what is exactly involved with this. In this article, we explain what finance coaching is, how it works, and how you can benefit from it. We will even include a few lessons from some coaching programs from credible organizations.
But first, what is financial coaching? Read on.
Financial Coaching 101
Coaching involves a relationship between the coach and a client undergoing one-on-one sessions from which they can set goals and work towards meeting and managing immediate and long-term goals. The same applies to financial coaching, except the coach and client work on achieving financial goals. Although financial literacy programs are aimed towards transferring knowledge, coaching is more on taking a client-driven approach. This means that rather than focusing on one problem with a fixed framework, the coach provides his/her client with an achievable framework to meet their goals.
Ever since the early 2000s, coaching programs nationwide have grown significantly. These coaching programs were assisted by corporations, foundations, and the government. As of the moment there isn’t any specific ‘model’ for coaching programs: for some companies, coaching is just one among the many services they provide; for others, coaching is the most important service they offer. In the same manner, even though some organizations do focus on coaching, some are more focused on providing training, resources, and assistance.
Financial Coaching: How Does it Work?
Considering the individualized nature of coaching, its intended effects may be a bit different depending on the client or program involved. However, there is a specific goal or pathway to success.
Finance coaching, first of all, is intended to be a long-term relationship between clients and coaches. Clients are required to attend multiple sessions over time. After all, in order for coaches to have an impact on their client’s or anyone’s lives, they need to see them several times. One or two meetings is definitely not enough to establish a relationship, whereas after three or four meetings, we start seeing people achieving real outcomes.
During the first finance coaching session, clients provide their coaches with personal and financial information. Together they pull and review credit reports, talk about and decide on their financial goals, and work out how they can meet those goals. Goal-setting is an important part of coaching. It’s important to set SMART (Specific, Measurable, Attainable, Realistic, Time-bound) goals.
SMART goals can be broken down into steps, where the coach can tell a client that he will be able to get them there in three months, in nine months, or in twelve months. Basically, it’s a lengthy process, but it’s one that will help clients get to the finish line.
Short and Long-term effects of Financial Coaching?
After successive sessions, coaches work together with clients on several undertakings that lead to intermediate results. For instance, if a client’s goal is to get better or improve their credit score, then the coach should take immediate steps to review a credit reports and how to fix it, including contesting errors or creating a plan on managing credit card payments. Being able to complete these steps often bring instantaneous results (such as better credit score) that likewise lead to improved economic standing and financial stability.
Financial coaching, in other words, impacts one’s savings, debts, and credit scores.
Why do People Hire Financial Coaches?
People enlist the help of a financial coach for a number of reasons. Below are just some of them:
- They’re ready to stop delaying their dreams of building wealth and start living it.
- They’re ready to take a step towards realizing their dreams but don’t know how to get started. They need a step-by-step guide so they can remove any doubts and actually move forward consistently to achieve their goals.
- They want to come up with their own customized plan for wealth-building based on tried-and-tested principles designed to fit their skills, resources, and interests, and not just any generic action plan.
- They want to know how much money they need to retire so they can come up with a realistic plan to prepare and transition to that next phase of life without being caught unaware of surprises and unforeseen events.
- They want to stop being anxious about their financial future and actually start acting on it by saving money and improving their investment strategies.
- They want to increase their passive revenue to be more than their expenses so they can stop working for money and enjoy the fruits of their labor instead.
- They want a complete educational resource that includes more than just the basics of financial investment. Stuff like that can be learned from attending seminars and reading books but will not necessarily translate to money.
- They want to gain the support and understanding necessary to survive any unexpected and inevitable challenges that impede their progress each time they take a few steps forward.
- They want to be accountable to their financial goals. They want to focus on their goals and learn to ignore all the distractions that derail their plans for building their wealth.
- They want to align themselves with experts in wealth-building, who provide sensible, achievable ideas that help them save time and money.
Conclusion
Financial freedom and wealth-building doesn’t have to be such an impossible dream—it’ IS achievable! Finance coaching can make a difference in helping you build the future you desire. We may not have the power to change the financial decisions we made in the past, but we can learn from them and use those to guide us on building the groundwork for a better, brighter financial future.