In the past, the person to help with your personal finances was a financial advisor. But when people started to become more educated about their finances, they realized that many advisors were not making the best decisions for them.
So regular people couldn’t trust their advisors, but still didn’t know how to manage their finances. For this reason, a new profession was made called the Personal Finance Coach or Money Coach.
In this article, I will breakdown what a personal finance coach is, and I will help you figure out if you need one.
What is a Personal Finance Coach?
A personal finance coach is a new discipline that was birthed from the lack of money education and transparency within the financial industry.
My definition of a personal finance coach is someone who helps others develop effective money management skills and habits so that they can make educated decisions.
Types of Personal Finance Coaches:
I KNOW I’m sorry this definition is super broad and general and that’s because there are so many different types of financial coaches!
I would categorize financial coaches into three main disciplines:
1. Money Therapist:
The way you spend, save, and invest your money is actually heavily influenced by your relationship with money and money psychology. These coaches focus on your past experiences to figure out how to improve your money habits.
2. Day-to-Day Money Coaches:
Day-to-day money coaches are experts at the daily management of your personal finances. This includes making a budget and organizing your bank accounts. These coaches are focused on the present and improving your daily money habits.
3. Money Planners:
There are many complex moneys concepts like investing and taxes that are difficult to understand. Money Planners educate their clients about different money concepts and help them build a money plan. These coaches are focused on the future to help you achieve your financial goals.
As a personal finance coach myself, I use my accounting and finance background to be a Money Planner. But I also teach a bit of the Day-to-Day Money Coach concepts.
So this is what a personal finance coach is, now let’s go into the pros and cons.
No Conflict of interest:
One of the biggest cons of financial advisors is that you don’t know if you can trust them with your money because of their compensation structure. A benefit of a financial coach is that it is a fee for service payment plan. So you pay them once, in exchange for their services. This payment structure aligns the coach’s interests with yours, to get you the most results.
Something that is really lacking in Canada young professionals is financial education. We learn about physics and advanced calculus, and yet people still don’t know what investing means! A good personal finance coach is focused on giving their clients the financial education that they never received.
Just like any fitness coach, you’re always more motivated to workout and perform when you know your coach is watching. The way you behave with money is the exact same thing. A financial coach hold you accountable for your actions, allowing you to actually achieve your financial goals and get your desired results.
Not a Financial Advisor:
Obviously a personal finance coach is not a financial advisor so they can’t invest your money for you. If you just want to give your money to a stranger so that you don’t have to worry about it, you shouldn’t go to a personal finance coach. A good financial coach won’t spoon feed you any answers because then your not learning.
Since a personal finance coach is a new profession there are no formal certifications or qualifications to become a coach. Although some may be Certified Professional Accountants (CPAs) or have a degree in Finance, others might just have their life experiences. That’s why it’s so important for you to do your own research when choosing a personal finance coach! You have to make sure they have the expertise to help you and they can actually get you results.
Overall the reason why personal finance coaching exists is to satisfy a need that has not existed before in the financial industry (aka Financial education). It is a profession that helps with everything from money mind-set, daily money management, and creating a money plan.
I hope this article helps to clarify what a personal finance coach is and the benefits of one. If you’re interested in hiring a personal finance coach to educate you about your personal finances and help you create a financial plan, feel free to reach out!
How to Work With Me
If you want to work with me, make sure to join my Personal Finance Facebook Group to learn more about my coaching program.