After a few seasons away from the tennis court, your backhand swing is rusty. If you are like most people, you may watch a YouTube video or two to try and correct it but will likely look to a professional for help. You are confident a tennis coach can help you work on this skill, and it seems logical to invest money in an area where you do not have expertise. Did you know the same frame of thought can be applied to your personal finances? Financial coaching is a burgeoning field that filled a gap in the market for more financial education. Financial coaches offer unique services to help clients understand their relationship with money. Educated consumers should understand what financial coaches do, and better yet, recognize when they would engage a financial coach or a financial advisor.
While a financial advisor is generally hired for a long-term relationship, financial coaches may be hired for short-term goals. This may be something like getting help putting together a new budget because you started a new job or saving for an upcoming vacation. A financial advisor is licensed to manage your investments and long-term financial plan, offering advice based on your goals and needs. Financial coaches, on the other hand, do not manage assets or make investment recommendations; rather, they help you understand your relationship to money and build new routines to support positive behavior. As a result of this distinction, financial coaches do not need specific credentials to practice.
When the words relationship and money are used in the same sentence, you may do a double take. But everyone has experiences related to money that go all the way back to childhood. Did your parents talk openly about finances? Were you taught how to set up a bank account or apply for a credit card? The lack or presence of these early interactions influence the role money plays in your life today. Are you comfortable discussing money with your romantic partner? Do you unknowingly block opportunities to earn more income because you have grown accustomed to living paycheck to paycheck? These habits are engrained. They can cause problems in other facets of life unless addressed. And financial coaching can serve as a tool to process this relationship and set up a new plan moving forward.
To get the most out of a financial coach, clients should be open and transparent about their personal finances and patterns. The idea of being so vulnerable with a stranger may sound off-putting considering the topic can be difficult to discuss with those that are close to you. However, expanding your self-awareness around personal finance can be an opportunity for growth, a chance to change routines and share this knowledge with your family and friends.
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