If you need help getting your finances organized or setting up a plan to effectively work towards your financial goals, you might benefit from the help of a financial coach.
A financial coach works with clients to help them better manage their money and to develop healthy, long-lasting, finance-related habits.
These professionals can help clients pay off debt, create an emergency savings fund, stabilize their finances, and develop an overall plan to reach their financial goals.
Unlike financial advisors, financial coaches spend more time helping their clients understand the fundamentals of finances, rather than recommending investments and managing their investment portfolios.
Read on to learn more about financial coaches, what they do, how much they cost, and how to find one.
What Does a Financial Coach Do?
According to the Consumer Financial Protection Bureau , a financial coach is a trained professional who collaborates with and guides their clients to reach their financial goals, including:
• Better money management skills
• Improved savings, debt levels, and credit scores
• More financial confidence
• Increased goal attainment
Financial coaches typically individualize their approach based on the needs of each client, with the goal of helping them make progress in the area of their financial life that they identify as most important.
A financial coach can help you reach your financial goals by teaching you money management skills, such as how to build savings, avoid overspending, or pay down debt.
Financial coaches also often assist their clients with the behavioral and emotional components of managing money. A coach can help you uncover what drives your financial decisions, so you can create a healthier attitude that leads to better money habits.
Coaches often work with their clients over the period of several weeks to several months, and may meet with weekly or biweekly to provide advice and check on progress.
The full coaching process typically consists of a series of steps that may include: building awareness around spending habits (usually by tracking daily, weekly and monthly spending), defining the client’s financial goals, and developing a budget and a financial plan to achieve those goals.
Accountability is typically built into the process—so, rather than managing a client’s person’s finances, a financial coach gives clients the tools to help make informed and responsible financial decisions.
What a financial coach can’t do: offer investment recommendations or help clients manage their investment portfolios.
While coaches can provide basic advice on the concept of investing, they are not licensed to provide financial advice like financial advisors are, and therefore cannot provide specific product recommendations.
How Much Does a Financial Coach Cost?
Unlike financial advisors, who typically charge their fees based on a percentage of the assets under management, financial coaches generally work on a fee-only basis
Some may charge a flat fee based on how long you plan to work together (such as three or six months), while others might charge per session.
Coaching rates typically run between $100 to $300 an hour. But because of the wide range of fees charged by coaches, it’s a good idea to ask about costs upfront.
How do I Find a Financial Coach?
While there is no required coursework or license, and there are no certifications to become a financial coach, there are training programs run by the Association for Financial Counseling and Planning Education (AFCPE) .
You can begin looking for financial coaches in your area through the AFCPE website. It’s also a good idea to ask for personal referrals from friends and family, as well as other financial professionals you know or work with (such as an accountant or financial advisor).
Before selecting a coach, it can help to consider specifically what you are looking for in a financial mentor. This can involve thinking about your own financial strengths and weaknesses, and what your goals are.
Are you, for example, struggling to save enough money for a down payment on a house? Or, do your credit card balances keep going up? Identifying your needs can help you suss out the best coach for your situation.
Once you have a list of financial coaches, you may want to reach out to each candidate to get a sense of their personality, methods, and coaching style.
Some questions to consider asking:
• How long have you been a coach?
• What’s your business specialty?
• How long do you typically work with clients?
• What’s your plan to help me reach my goals?
• What is your availability?
• What are your fees?
Maybe you’ve tried to make a budget, but just can’t stick to it. Or, perhaps you’ve run up so much debt between credit cards and loans that you don’t know the best way to pay it off.
A financial coach can help you structure your budget, build a financial plan, and hold you accountable throughout the process.
Financial coaches can also help clients understand and work through deep-seated emotions around money that may be preventing them from reaching their financial goals.
If you’re looking to better manage your money or simplify your finances on your own (or before meeting with a financial coach), SoFi Money® can help.
SoFi Money is a cash management fund that allows you to earn, spend, and save–all in one place.
Using the SoFi app, you can easily track your spending and saving, and even create separate savings “vaults” for specific financial goals.
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