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Financial Coaching FAQs
What is financial coaching?
In today's era of technology obsessed fast world and added responsibilities, managing finances could be complex mind game for a lot of people who aim to secure their future financially. Seeking professionals like financial coaches show you the path towards a healthy financial future.
Financial coaches are professionals proficient in the fundamentals of finance like savings, fund management and decreasing debt. They aren't your financial advisors while they will guide you through the basics of investment topics. They deal with clients who fail in money management, unhealthy money investments and guide them to understand the importance of money management in everyone's life. The sessions aren’t much regular; a financial coach works for several weeks with a client with weekly sessions. They help you throughout the process and encourage you to reach your financial goals. They work with clients who have little or no savings or going through debt and struggling to pay it off. Financial coaches help you analyse daily routines and make a plan for you to follow and reach your finance goals. Over time, they help you reach a better stage where you are accountable for your own actions and at better stage of counselling a financial advisor for your current wealth. The relationship between a client and a financial coach is more about communication of personal growth and managing finance.
Financial coaches don't necessarily need a formal degree or qualification. Financial coaches are usually trained people with certification and are clear with the basics of finance and the certification isn't mandatory. A person who is knowledgeable about the basics and push people's potential through their words is a financial coach. The coaches aren't particular about any investment decisions; they encourage you towards a healthy financial future making you smart enough to be held accountable for your own actions.
When should you work with a financial coach?
Sometimes you want to stick to budgeting or cover up the recent loan but you aren't able to stick to the financial plan you have made. Maybe you earn enough but you have no idea where all of your money goes at the end of the month or the debt you are struggling to pay back, have little or no savings. In such situations, a financial coach helps you analyse your current situation and evaluates a financial plan for you to follow up. The weekly sessions help you towards personal development and helps you understand the fundamentals of budgeting, cash flows and finance. The goal is to make you develop healthy money management traits for better money making decision in future.
It is common to have no knowledge and less patience to manage finances for a lot of people, the financial coaches educate their clients about the basics so they don't stress about their finances going wrong. The coach studies the client’s behaviour around money, counsels him/her accordingly through the weekly sessions. A coach looks into your daily routines and habits and tries to analyse the constraints stopping you from saving money, or the budget plan you have made to repay the loan and comes up with a plan, where you and the coach work together as a team to achieve your goals
. Sometimes we are too confused with a lot of ideas and plans going on in our minds, the coaches will help you figure out an outline to accomplish your goals and navigate a plan which your and your coach will work together towards it. Coaches will not help you with other financial subjects involving in and outs of an investment policy in a particular share market, they are here to improvise on your poor decision making towards money management and make it right for life time so you don't need them again.
Before hiring a financial coach, do your research, know what your requirements are and educate yourself enough about do you really need a financial coach? If yes, you are already on your journey towards success.
What is the difference between a financial coach and a financial advisor?
Financial coaches are people who help their clients suffering through poor money management traits and help them rectify the errors they make in finance whereas financial advisors are people who help you to manage your current assets and help you build them by suggesting a better policy or help you build a better wealth portfolio.
Financial coaches meet you for several weeks to help you move towards your goals and once you achieve you may not need again because now you have gained the knowledge and tactics for a better financial management whereas financial advisor is the one licensed to give you financial advice and meets you once or twice a year and managed your financial portfolio.
The communication is more personal with financial coaches as they look into your life routines and habits, help you evaluate a better financial plan and is there with you throughout the journey towards success, while the conversations with a financial advisor is more professional and has analytical approach about building and investing the current assets towards a better direction. They explain you in and outs of high interest savings account you are interested and guide you through it with lesser meetings.
Coaches don't need to have a specific background in education qualification in finance, anyone can become a financial coach who is knowledgeable enough and is proficient in the fundamentals of finance, they are usually trained certified professionals. Anyone can't become a financial advisor, one needs to be licensed and registered with the Financial Industry Regulatory Authority (FINRA) . In order to get themselves licenced they need to pass exams in their particular specialization. They don't particularly need a degree for this but usually most of them have a bachelor's degree in finance.
At the end one needs to figure out their particular requirements through self-analysation and hire a financial coach or advisor.
How to become a financial coach?
Becoming a financial coach is little different than any other life coach or relationship coach methodology. It doesn’t require a degree in finance or any mandate certification though, however to be able to guide people on their financial planning capabilities, one has to have a thorough knowledge of the subject.
You may know the aspects of handling personal finances and you could be good at doing it yourself; however, training people in the same is a different ball game altogether. You need to ensure you acquire knowledge on behavioural psychology, how to coach or train people effectively and the overall coaching methodology as well. You could start with attending a basic Coach training program which could help you understand the Coaching methodology and all about the coaching business. You may not necessarily go ahead for a certification program before you have practised it for some time.
The next step is to shadow through or get some guidance from an existing Financial Coach or a mentor who could help you in understanding the nuances of coaching at a practical level. This way you can build up to what you have learnt and what you will practice when you become a Financial Coach yourself.
You could develop some Systems, processes and Resources in place as a next step to ensure you are able to serve your clients in an effective manner. After following all the three steps, you could then start out yourself as a practising coach and help people build their financial assets and investments. Once you start practising with a few clients at a time, you would be able to understand the process in depth and then make modifications in your coaching style, if required.
After practising Coaching with a few clients and seeing good results, you can now enter the Financial coaching industry with a level of confidence and start marketing yourself as a full-fledged Financial Coach.