What Is Financial Coaching? (And What It Is Not)
Financial coaching focuses on personal money management, behavioral change, and accountability, helping clients build wealth by teaching essential skills. Unlike financial advisors, who manage wealth and provide product recommendations, financial coaches educate clients on money habits without tying them to specific financial products. Coaches don’t manage investments or sell insurance but may explain general concepts.
Financial coaches complement financial advisors. Once clients have improved cash flow and accumulated wealth, they can be referred to an advisor for comprehensive planning. Financial coaching is about mentoring, helping clients establish positive money habits, and guiding them until they no longer need assistance.
As a financial coach, I work closely with clients to help them understand their money behaviors, set goals, and develop a realistic plan. Here’s a typical process:
Awareness of Spending: Help clients track income and expenses.
Dream “Awesome”: Encourage clients to define their ideal lifestyle, focusing on present goals, not just retirement.
Emotions & Behaviors: Address irrational money beliefs that affect spending.
Tackle Tough Issues: Establish an emergency fund and create a debt repayment plan.
Build Savings: Guide clients to save 3-6 months of expenses.
Personalized Budgeting: Find the right budgeting tools based on the client’s personality.
Ongoing Support: Provide continued coaching for emotional support, follow-up, and guidance.