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This is a guest post at One Cent at a Time from David Bakke, who writes about important personal finance issues on Money Crashers, a financial resource that helps you better manage and grow your money.
Many aspects of today’s world pose challenges that, for many, require the enlistment of a specialist to offer expertise, guidance, and assurance. Like life coaching and career coaching, money coaching is an industry that has blossomed from such modern needs.
Money coaches offer clients individually tailored financial management plans. The services they offer vary, but typically include personal finance analysis, research, and planning. Many folks have successfully partnered with a money coach to resolve their financial management needs – but it is crucial to first learn more about them, and determine if hiring a money coach is right for you.
Defining “Money Coach”
A money coach possesses varying degrees of expertise in the world of finance, and differs from a Certified Financial Planner (CFP), who has to pass a certification process. Some CFPs aim to sell customers a financial product. When you work with a money coach, however, you pay for objective, unbiased advice, and typically do not purchase any financial products.
Money coaches can help you improve your finance management, but their expertise can be costly. Do you truly need a money coach to reach your long-term financial goals?
Determining If You Need a Money Coach
Perform an Objective Financial Analysis
To determine if you need a money coach, start by asking yourself a series of questions related to your finances. Try to answer the questions with brutal honesty:
- Do you have a firm grip on your finances? Do you carry balances on your credit cards? Do you pay your credit card bills on time? What is your credit score?
- Do you have any current controls in place regarding your spending? Do you follow a monthly budget? Do you track your spending and your income? Do you track your monthly bills?
- Do you have any plans for your retirement? Have you set aside anything for retirement? Do you have any idea how much to save for retirement? Do you have any kind of long-term vision for your finances?
Consider Becoming Your Own Money Coach
Many people may benefit from working with a money coach, but you can also benefit by increasing your knowledge base, rather than relying on someone else to resolve money woes. Instead of hiring a money coach, consider becoming your own money coach.
Some reasons to become your own money coach include:
- Nobody knows your finances better than you. Inviting a stranger to review, revise, and revamp your personal financial situation may not offer many additional insights. You know your own expenses – you know where they originated, and you know why you have them. You also know how much you can afford to spend on a monthly basis.
- Everything you need to know is at your fingertips. You can find extensive personal financial tips and guidelines online. Need to save money on groceries? Look it up online. Trying to find ways to save money on car insurance? Do an Internet search to learn how to save hundreds of dollars annually.
- I did it myself. I write about personal finance for a living, and I came from the school of hard knocks. I can guarantee that I made many of the same financial mistakes that you have made. I came to my own conclusions on how to save money, and I researched online for the remaining information I needed to improve my financial situation. I also talked with close friends and family members who offered me the benefit of their experience and expertise. I did all of this without spending a dime.
Will You Ever Need a Money Coach?
Qualified money coaches can offer clients valuable assistance to help them get their finances on track. If you have no control over your spending, if you have no idea how to get out of debt, and if you have no immediate plan for saving for retirement, then a money coach could play a vital role in your financial life.
Before hiring a money coach, thoroughly check references and their tenure in the industry, and review success rates. You can conduct research using the money coach’s name and email address. Read everything you can find online about a money coach, and use this information to help you make a solid decision about who to hire.
Final Thoughts
I recovered from the depths of financial debt without using any professional assistance – but this approach may not work for everyone. If you feel that you lack control over your spending and have no long-term savings plan, then a money coach may be right for you. As with many areas of the financial industry, this group of professionals includes highly qualified, knowledgeable individuals, as well as financial predators. Carefully conduct research and consider all of your options before you agree to work with a money coach.
SB’s Thoughts: I am not debating the need of a money coach. I had one, my father. He talked me about few simple money rules. No investment techniques, no frugal tips, he let me find my way. I didn’t pay for learning money. Go ahead and get a money coach if you feel you need one but spend money wisely, even on your money coach.
What are your thoughts on money coaches? Have you had any positive or negative experiences working with one?
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I think everyone could use someone in their life to give them a kick in their financial pants. Most people don’t struggle with the concepts of getting out of debt or investing. They struggle with actually doing them. Whether it be someone you pay or a good friend or a family member, having someone to keep you accountable can be a big help.
Jeremy,
I agree wholeheartedly, and thanks for weighing in…
Anytime you can get someone who knows more than you about money to help you do better, I think it is worth it. You can read a lot and become your own coach but someone pointing out what to do will improve your efforts aster and can be more beneficial.
krantcents:
You hit on a topic that I firmly believe-you yourself have better insight into your personal financial situation that anyone else! Before considering looking for external help, consider looking at it with your own eyes.
Thanks for commenting.
We could all use a money coach at least once in life. I would love to become one after I go over the hurdles of personal finance myself.
Briana:
That’s an awesome idea! If you’ve fixed your own problems, then maybe you can help others. Thanks for chiming in…
David,
I don’t believe you’re aware of the type of services we offer and train others to offer at The Money Coaching Institute. Our focus is on “interior finance” and not “exterior” as we help people identify and shift their challenging money patterns and beliefs and live their lives in greater alignment with their truest desires, values and beliefs.
This appears to be quite different from what you describe in your article. I invite you to visit our website and learn more about the services we offer and the training we provide to those seeking to become Certified Money Coaches.
Steven “Shags” Shagrin
VP, The Money Coaching Institute
http://www.MoneyCoachingInstitute.com
Steven:
Thanks for the insight. I will check out your website, and by all means, you are right. You probably can offer services and training that some readers can benefit from.
i think hiring a money coach is another source of wasted money. If you’re in debt, hiring a money coach will probably increase your debt. i’m totally against it.
Charles
Depending upon your situation, I would agree with your statement. However, if you are overwhelmed by personal debt and don’t know what to do, then maybe a coach is the way to go.
Thanks for writing.
I think we should educate kids about personal finance and responsibility in school. It’s too bad that we aren’t doing that. A money coach is probably a good idea if you need help with your finance.
You also hit on a great point–why is there not a class in current curriculum regarding personal finance? Considering that it is such an issue in this country, it is surprising. However, until that changes, I guess the responsibility lies on us as parents to educate our kids.
I would like someone to look over my finances and get their opinion. I might be doing better than I think!
Lisa
An outside, objective opinion never hurts! I wish I had gone that route during my financial troubles. My journey out of personal debt may have been simpler. Thanks for weighing in.
What you describe is not what we do as Certified Money Coaches. Rather that focus on the external aspects, we work with “interior finance” to help people identify and shift their challenging money patterns and beliefs and live their lives in greater alignment with their truest desires, values and beliefs.
I’ve never worked with an official money coach, but I do remember wishing there was someone who could do the things some of your commenters have mentioned when I was just getting started.
Jackie
Having an outside opinion on your personal financial situation never hurts. The question remains–should you pay for it? It is a question you should answer for yourself. Thanks for taking the time to comment.
I’m with you on being your own money coach. I would also say lean on your significant other or a family member for help. If you need real financial advice go with a financial planner who happens to be a CFP
YFS
Great insight. Personally, my money coach is my mother and I use her to this day, even though I am financially sound. Spouses, friends and family members come with a built-in trust factor. Beyond that, research your options before making a final choice and go with someone that you trust.
I agree with Steven; many money coaches do a lot more than just help you with a budget: we look at why you make the financial choices that you do. We all know, for instance, that we shouldn’t go on shopping sprees when we haven’t paid the bills, so there’s more to it than just saying “Here’s your budget, now stick to it.”
To see more about my style of money coaching, please visit http://www.esmegosling.com
Thanks!
Esme
Good to receive a genuine feedback from a moneycoach. Let’s hope we help people in financial trouble in our own ways.
The original post is on the old side, but felt that I should weigh in, since I’ve spent the last few months researching this industry. I am a CPA, who really wants to help people learn about personal finance and manage their money wisely. What I found is that there is a great deal of confusion and lack of transparency in the financial industry.
First, if you are need of budgeting and debt assistance, I would recommend finding a local Financial Peace University class. These are frequently offered through local churches, take place in a group atmosphere and cost less than $100, which includes all materials. Dave Ramsey if very inspirational and does a good job with motivating people to get out of debt and live below their means.
If you need a financial plan or advice regarding retirement planning, college savings, etc. I would NOT recommend going to a financial “coach”. Financial coaches are totally unregulated and frequently do NOT have any post-secondary financial education. Ramsey has a weekend class for his “certified coaches”. I don’t know about you, but I don’t want to entrust my life savings to someone who was flipping burgers last week and took a weekend class to get “certified”! I have also discovered that many of these “coaches” are actually breaking securities laws by claiming to do retirement planning without the necessary licensing and regulatory filings.
Instead, I would recommend a FEE-only HOURLY financial planner. This is where you have to read the fine print carefully, because some planners claim to be “fee-only”, but are still more “asset gathering salesmen”, than true independent advisors. Unfortunately, the general public is not aware of the availability or difference in compensation structures and services. Visit the Garrett Planning network to learn more: http://www.garrettplanningnetwork.com (I am NOT affiliated with the Garrett network, but am considering joining as I pursue the necessary credentials.)
Anyone who will be advising you on investments, both legally and for your own good, and should have a real credential, such as a CFP or CPA-PFS, and will be strictly regulated by the SEC or the state regulatory authority.
Very thorouh in explaning your points. If you have seen my comment on the post (below actual comment) you’ll see my reservation on seeking a money coach. I never needed one. But, then again I don’t know what I am missing. I see your points, we should not blindly follow any one posing as a financial planner. A certificate should be bare minimum criteria. For that matter you shouldn’t follow financial blogs as well. More than 90% of bloggers write about financial planning without having any sort of training or certificates. That credential is missing.
Thanks for you time and comment!