Ep. 168 - FINANCIAL COACHING – TRANSFORMING YOUR MONEY MINDSET
Hello and welcome to Finance Conversations. I am your host, Marie Jo Caesar, for those who do not know me. I assist professional women in bridging the gap between life and money by providing them with the necessary financial skills and information to manage their money, take control of their finances, and recognize that they can live their best lives with the money they have.
Thank you for joining in today. If you are watching the replay, type #Replay in the chat and leave me some comments and questions. Welcome, welcome, and welcome. I come to you live every Thursday at 7 p. m. Pacific Standard Time to give you essential information about how to attain financial wellness and live a life of means and purpose.
As you know, the Merging Life and Money Show's primary purpose, and my very strong why, is to empower as many women as possible by sharing what I know about money and finance so that they can live their greatest lives yet. So, today, as indicated, I will be talking about financial coaching.
When the term coaching is mentioned, the first thing that comes to mind is sports, specifically team sports such as football, baseball, basketball, and the like.
I will add that tennis players, cyclists, track and field athletes, golfers, gymnasts, boxers, and the like also have coaches.
Moreover, just about every Olympic athlete has a coach. So, why do these professional athletes need coaches if they are the best in the world? That's what they do. Could it be the same in the world of finance?
Let's find out. Grab a pen and a notebook as you might want to take some notes to share and discuss with family members, friends, colleagues, et cetera, because it is about sharing values that could benefit all of us.
Now, if you have any questions whatsoever, make sure to type them in the chat. Okay. And if you want to talk to me directly, I will share my contact information later on in the show.
Before I get into it, let me answer the question I posed a few moments ago. When it comes to finance, do only people who are not very good at managing their money need financial coaches?
In my opinion, just like in sports, those with the best coaches will be the best at handling their finances. Why? because a good coach can help even the most financially aware person grow more than they ever thought possible. So today, I will talk about financial coaching and address the following.
What is financial coaching? Why do you need a financial coach? What is the difference between a financial coach and other financial professionals?
Let's look at the first point. What is financial coaching? Financial coaching is a relatively new term. Most people are familiar with the terms financial planners and financial advisors.
Yes. Financial coaching is a newer business that is not regulated much yet. Still, there are many good reasons to work with a financial coach, and it is important to know who they help and when to use their advice instead of that of a financial planner or a financial advisor. Naturally, financial coaching refers to services provided by a financial coach.
You should talk to a financial coach if you need help getting your finances in order or want to learn the basics of personal finance. A financial coach helps their clients understand the basics of money management rather than making investment decisions for them, analyzing their tax situations, planning their estate, or managing their investment portfolio.
I would even add that financial advisors, like certified financial planners (not to be confused with financial coaches), are very valuable resources for investors who want to build and manage a portfolio that fits their goals, timeline, and risk profile.
As I mentioned, a financial coach teaches you the basics of money management. They help those who may not have a good relationship with money or have other problems that make it hard to manage their money well. Their goal is to help you start and maintain good money habits. Okay.
Financial coaches teach you the basics and help you make a financial plan that fits your goals. They also empower you so that you can make your own decisions, and they hold you accountable for your actions as you implement the lesson that you are learning. They meet, I would say a financial planner meets with their client over a period of time to give them advice and check on their progress.
There are several steps to the whole process, for example, depending on the client's circumstances.
The first step would be to build awareness around their spending behaviors, usually by keeping track of their regular spending. This could be done based on a weekly or monthly cycle, okay?
The next step would be determining what the clients want to do with their money, such as making a budget, starting an emergency fund, or paying off debt. So, at the end of the day, if a financial coach helps you make plans to reach your goals, they hold you accountable as you carry out the agreed-upon plans.
You would have learned more about money and be well on your way to reaching your financial goals. I will end this first point by saying that financial coaches help their clients figure out what they want to do with their money and how to get there. Whether they work with people one-on-one or in groups, they help them develop a vision for their financial lives and plan to get there.
Let's look at the second point. Why do you need a coach? I will start with a few statistics from March 2021. They show that if more people hired a financial coach, they would be practicing good financial hygiene and would be in a better financial place. Okay. According to financial experts, the percentage of Americans in debt is around 80%.
That means eight in 10 Americans have some form of consumer debt. The average debt in America is Circa $38,000, not including mortgage debt. So, as I see it, owing money in America is just a way of life. Collectively, Americans have 14 trillion with a T of debt, and that amount is climbing ever higher every day.
Don't get me wrong. I get it. Not every debt is bad, but most Americans would rather have the money to spend on something else instead of paying off their debt; they would much prefer spending their hard-earned money on fun things like vacations or putting money into savings and in their retirement plans, for example.
Getting into debt, even if it is unavoidable, is like taking money from the future, and many people are feeling the pain of their past decisions. Right now, approximately 13 % of Americans think that they will be in debt for the rest of their lives. So, unfortunately, in America, that is a sad fact of life.
I strongly believe that financial coaching can and will help mitigate this problem. That is one of the many reasons why you would need a financial coach. So, let's dig into it.
More often than not, your relationship with money can be very strenuous and exhausting, knowing that many of your finances are tied to that and will be for a very long time.
You do not have any emergency savings. You do not have any type of compensation plan and exit plan in place for when you decide to exit the workforce. You do not necessarily understand your employee's pension plan if you have one, and you don't know what investment choice you must make for your 401k plan. Yet again, on the surface, everything looks great. You look good on your Facebook, Instagram, or TikTok posts, but you have no real plan to control and manage your finances. Well, my friends, you need a financial coach to help you repair your relationship with money and put you on the path to financial wellness.
Let me say that the simple solution to building wealth is to first create alignment in your life by connecting your money to your values in a purpose-driven plan. Then you have to make money and make some more money and tell your money where to go. Don't be in a position where you find out where it went. And you would want to live within your means by spending less than you earn.
I usually tell people that there is a wealth of information out there to help them DIY with their finances, but clearly, all that information does not seem to solve most people's financial problems. Why? Because when it comes to finance and money, you need a transformation, not just a bunch of changes.
Regarding beliefs, habits, and behaviors, changes are temporary, and transformation is long-term and permanent. Who but a financial coach can help you through that transformation and hold you accountable? Think about it for a moment. What would your life be if you completely controlled your money?
What would be different in your life? How gratifying would it be if you could get answers to all of your money questions? And what would you be able to do? with your money now that you couldn't do with it before. Knowing what, you know, after working with a financial coach, how would you handle your financial future?
Take a little time to think about these questions and decide what is best for you: financial anxiety, being stuck in a rut, ignoring your finances, or hiring a financial coach who will work with you, teach you the skills, and give you the knowledge you need to live a life of means and meaning. You must be wondering what this woman is thinking about.
If I cannot find my way out of a paper bag when it comes to money, how the heck can I hire a financial coach? Well, my answer would be that working with a financial coach does not require you to have thousands of dollars in assets. In fact, most clients have debts, very little saved, and no spending plan whatsoever.
Making and maintaining a budget is impossible for them—I should say it seems almost impossible.
Having emergency savings seems like a dream, although they are making enough money to have a healthy one. Maybe, between credit card debts and loans, they are totally clueless as to how to manage.
All is well. That's when a financial coach becomes a necessity. They will help you develop a budget, create a financial plan, and hold you accountable throughout the process. I'll also add that very often, clients have deep-seated emotions around money, and a financial coach will help them uncover these deep feelings and have them acknowledge the fact that they have those deep emotions about money, and they will have them work through them. So, it's not until your money mindset is right that you will be able to take it in and implement what a financial coach is helping you with.
If you want to change your relationship with money and see a change in your bank account, the next step is to hire a financial coach. Everyone wants to make more money, but most people don't know how or are not willing to be held accountable to reach their goals.
That's a fact. You deserve to get the financial result that you want. So here are a few reasons justifying hiring a financial coach. If you are:
- tired of avoiding your financial problems,
- tired of feeling powerless when attempting to harness your money and
- tired of feeling defeated when facing your bills.
If you want to reach certain financial goals and don't know how to do it.
If you don't have the time, money, or knowledge to reach those goals on your own.
If you want to save money but don't know how to start the process.
If you want a customized plan that you would help develop because you are ready to do the work and transform your financial situation.
If you want to reach your goals in a structured and efficient manner; And
If you want the help of an experienced person who has helped others in similar situations, this is why you should look at hiring a financial coach. I will end this point by referring to my analogy about Olympic athletes.
So if Olympians who are the best in the world at what they do have coaches, doesn't it make sense to have a financial coach to help you manage your money better?
I'm going to leave that with you. Food for thought.
This takes me to the third point of today's show. I want to explain the difference between a financial coach and other financial professionals right now. Even though their names sound alike, financial planners, advisors, and coaches do different things to help their clients make smart money decisions.
I will say that meeting with a financial planner or advisor can be very stressful for many people.
They are totally ashamed to talk about their financial problems, especially if they have a lot of debt or if they live from paycheck to paycheck.
So, what makes a financial coach different from a financial advisor and a financial planner?
As I explained earlier, a financial coach will help you learn the basics of personal finance and develop and maintain good habits.
That's what they do. They help you develop those good habits. They help you maintain those good habits and they help you learn and understand the basics of personal finance. Their main job is to teach you how to reach your financial goals and be responsible for your money. They usually help people who want to save money, people who want to make a budget, people who want to pay off their debts, or people who want to learn more about money in general.
The long and short is that a financial coach will help you save money, whereas a financial planner and a financial advisor will help you invest and grow your money.
You may ask what's the difference between a financial advisor and a financial planner? Again, though these two terms are often used interchangeably, there's actually a big difference between them.
A financial planner is someone who helps you create a comprehensive financial plan that takes into account your short-term and long-term goals. They will look at your whole financial life, including how you handle cash and debt, how you handle insurance, investment, taxes, estate planning, et cetera.
They are, by the way, also licensed to sell investment products, as well as give you financial advice.
A financial advisor, on the other hand, provides guidance and advice on specific financial decisions.
In general, financial planners are more concerned with helping you build wealth over time, while financial advisors are more focused on helping you make the most of the wealth you already have.
So it is important to know as well that financial planners and advisors will make most of your portfolio decisions for you, with your permission, of course. They will talk to you about the choices you have and do their best to help you understand them. But if you don't know much about your financial options already, you might start relying too much on a financial planner and not understand how your money is being invested. These professionals generally charge fees based on a percentage of assets under management, by the way. And in some cases, they could receive commissions from product sales as well. And as I see it, in my humble opinion, this can sometimes cause a conflict of interest.
Also, they have a minimum asset requirement to begin working with you.
Let me expand just a little more on financial coaches and also summarize what they do. A financial coach does not manage your investments or sell you investment products like mutual fund stocks, retirement accounts, life insurance products, or anything similar.
Also, they are not allowed to give investment advice. Like buying stocks or other bonds or whatever because they are not licensed to do so. Instead, financial coaches teach you how investing works, how to talk about it, and when it's best to add it to your financial plan. In other words, they help you learn more about money to acquire the skills you need to handle your finances and make educated financial decisions.
With a financial coach, you will always be in charge of your money. You will not only learn how to make better financial decisions, but you will also be able to manage your money in a way that works for you and that you understand. Also, financial coaches typically charge a fixed fee for their services.
So they are not influenced by how much money they make or how much assets you have.
Coaching is also different from advising because it is usually a short-term arrangement. The goal of coaching is to help the client learn about money and how to handle it on their own.
On the other hand, advising is a long-term relationship where the financial planner or the financial advisor meets with you once or twice a year and keeps your financial portfolio in order.
I will conclude this third point by saying that financial planning and financial coaching are two different businesses. that offer different benefits. Financial coaching is a great place to start if you have trouble getting your money in order and meeting your short-term financial goals.
Just like a sports coach, a financial coach teaches you the skills and knowledge you need to play the game, helps you develop good habits that improve your performance, and then cheers you on from the sideline. The distinction is that the game is very different.
I'm going to wind down some and summarize what I talked about today.
I explained financial coaching, why you need one, and the differences between it and other financial professions. I hope you have enjoyed the show and now understand the role of a financial coach and the benefits of having one. Again, my mission is to help you develop a holistic plan for your money to achieve true financial wellness.
Book a complimentary consult with me today if you are ready to get started. You can do so by visiting my website. I have a banner, so let me put it down. You can visit my website, mariejocaesar.com, or send me a direct message via messenger. As I said, my contact information is scrolling down at the bottom of the screen.
As you know, I like to end the show with a quote. Today, I'm quoting myself, and it reads, ‘Managing your money by yourself can be both challenging and stressful, but a financial coach can guide you and hold you accountable for achieving your financial goals.’
This brings us to the end of today's Merging Life and Money episode.
I hope that you have enjoyed today's show, and I encourage you to watch the replay. For more information about how to achieve financial wellness from the inside out and live a purposeful life with the money that you have, join me next Thursday at 7 p.m. Pacific Standard Time,
Thank you for being here today on the Merging Life and Money show. I am your host, Marie-Jo Caesar. I will be back again next week. Until then, continue merging life and money.
Bye for now.