If you’re looking to take your financial game to the next level, and finally get ahead of your bills and debt, you might want to consider hiring a financial coach.
A financial coach can be an invaluable asset in helping you get started on the right foot with your financial future, guiding you toward more stable footing than you may have had before.
This guide will help you understand what financial coaches do and if they’re right for you or not!
1) Financial coaches help people save money
A financial coach is a type of personal finance advisor. They help people to set and reach their financial goals.
Financial coaches work with clients in many different capacities, including providing guidance on saving money and managing debt, as well as creating budgets or teaching the basics of investing.
If you’re interested in working with a financial coach, it’s important to know what you need from the relationship before beginning the search for an advisor who suits your needs.
For example, do you want someone who will be hands-on helping you reach your goals?
Or are you looking for someone who can provide guidance on how to get started without any direct intervention?
A good place to start your search might be using a tool like Personal Capital’s Investor Quiz.
2) They create budget plans
A financial coach will work with you on creating a budget plan and finding ways to save money.
They can help you figure out how much debt is too much and what your priorities are, so that you can live comfortably without being burdened by debt.
3) They teach you how to handle the inevitable mistakes:
Financial coaches have experience in the mistakes people make, such as living above their means or not saving for retirement.
When we’re surrounded by people who don’t know about our finances or don’t care about them like we do, it can be hard to stay on track with our goals.
A financial coach can provide support and accountability that only someone who cares deeply about us would offer.
They are not just there to tell you when something’s wrong, they want to see you succeed!
4) They offer debt reduction strategies
A financial coach is a professional who helps clients reduce their debt. They may work with their clients on a one-to-one basis, or they may offer group workshops.
Whatever the case, a financial coach will work with you and your budget so you can become financially stable.
A financial coach also provides unbiased advice, as they are not affiliated with any specific bank or credit card company.
A financial coach typically works with people who have a moderate income of $30,000 or higher.
They’re often required to be certified by organizations such as Certified Debt Professional (CDP) International Association of Professional Debt Arbitrators (IAPDA), National Foundation for Credit Counseling (NFCC), National Association of Consumer Bankruptcy Attorneys (NACBA), American Fair Credit Council (AFCC), Association of Independent Consumer Credit Counseling Agencies, Inc., and/or National College for Financial Planning.
5) They teach people about investing
Financial coaches teach people about investing, which is the most important thing that you can do for your future.
There are a lot of different ways to invest, but the three main options are stocks, bonds, and mutual funds.
The best way to think about these is that stocks are risky (but have the highest potential return), bonds are safer (but offer a lower return), and mutual funds (which combine both stocks and bonds) offer something in between.
It’s important to diversify: That means that instead of putting all your eggs into one basket, you should spread out your money among different investments.
In other words, don’t put 100% of your money into one company’s stock or bond.
To figure out how much risk you want in each investment, financial coaches will often use something called the risk tolerance questionnaire.
6) They provide tax planning advice
Financial coaches are experts who help you sort through your finances and determine the best way for you to manage your money.
One of the main reasons people hire a financial coach is because they want someone on their side.
A financial coach will be objective and will do what’s best for you, not what’s best for them.
They also offer other services such as budgeting tips and establishing an emergency fund.
In addition, a financial coach will create an action plan with goals that you set based on your lifestyle needs.
And once those goals have been achieved, they’ll continue to work with you until your new goals can be met.
Once the coach has determined where you’re at financially, then it’s up to you and the coach how far along the journey you want to go.
If you’ve just barely started, then there may be only one or two items you need to fix in order to get your finances under control.
On the other hand, if you’ve done very little about managing your money, then there may be many changes needed in order for you to start building wealth and income stability.
7) They offer retirement planning services
Financial coaches are experts in retirement planning. They can help you understand your options so that you make informed decisions about your finances.
Financial coaches can also help you create a budget and find ways to reduce debt, save money, and increase your income so that you have more choices when it comes to retirement planning.
Additionally, they may offer support through difficult situations such as unemployment or divorce.
8) They provide estate planning services
Financial coaches can provide estate planning services. An estate is all of the assets and property that you own at the time of death.
These assets are passed on to your heirs or beneficiaries.
An estate plan includes a will, living trust, power of attorney, and other documents that allow you to control how your assets are distributed and what happens if you become incapacitated.
Your financial coach can help put together this plan for you.
They can also advise you on ways to reduce inheritance tax costs by using trusts and gifting your money in certain ways.
With a well-thought-out estate plan in place, you’ll be able to avoid worrying about these things while still having an impact on the lives of those who mean most to you.