Finance Coaching: Everything you need to know

Many people find personal finances complicated, even daunting. There is much jargon and mystery surrounding it. Financial Coaching is a good starting point for debunking this topic as most people do not know this service exists or what it is. I believe that a Financial Coach is one of the first points of call in a person’s financial journey.

Miss H case study:

Miss H was earning a good income in her job as a Head of Year at a secondary school but couldn’t comprehend how she was in a tough financial situation.
“it tired me knowing I was consistently in the red even though I had savings of around £6,500. I required guidance on how to utilise my money because of overspending, paying my student loan, repaying credit card increases and receiving overdraft fees”.
Miss H met with a financial coach and articulated her goals. The financial coach highlighted that Miss H lacked a sturdy budgeting plan. Together they created a realistic, achievable budget to help Miss H clear her debts while continuing to save. They had regular meetings over a period of months.
Within a few months Miss H could keep on top of her finances, she implemented new money management strategies and received finance education on different topics including ways to improve her credit score.
With time Miss H credit score increased and within the space of two to three years Miss H could take out a mortgage on a property for the first time. This would not have been possible without the help and guidance of a financial coach.
You can find the link to Miss H story here

Financial Coach Definition:

A Financial Coach is different from financial advisors and other finance service providers. A coach educates their clients on the basics of personal finance and works with them to create a financial plan that reflects their goals. Financial coaching involves spending more time with their client delving into money habits and behaviour. Their aim is to help a client develop a healthy financial outlook, implement good money habits/ techniques and achieve their financial goals.

Financial coaches typically charge a flat fee.

There is no specific authorised qualification assigned to a financial coach, though it is expected that the individual coach have some experience, training or qualification in finance.

A financial coach is not regulated by the financial conduct authority because they do not sell or recommend specific financial products (e.g. an investment fund or mortgage) to clients.

A Financial Advisor on the other hand is regulated.

Financial Advisor definition:

Financial advisers are authorised by the Financial Conduct Authority to recommend specific financial products, services or advice relating to investing, retirement, insurance, mortgages, taxes etc to their clients. Generally, a financial advisor works with clients who need help to manage and invest their assets.

A Financial Advisor has to hold an appropriate RQF Level 4 qualification or higher. Listed on the Financial Conduct Authority (FCA) website are the qualifications you will need to practice. The FCA is the main UK financial services regulator.

Why is a Financial Coach a starting point for many people:

When an individual leave the education system, they repeatedly feel unequipped to handle their money effectively and sometimes lack confidence or knowledge to make good financial decisions.

It was only from Sept 2014 that financial education was first officially launched in schools. Therefore, quite a large portion of people are often in need of financial guidance and help on the basics, otherwise known as the FOUNDATION of money management.

People come to a financial coach when:

  • They have had a bad relationship with money
  • Have obstacles managing their finances well.
  • They find themselves in debt
  • Do not know where to start or find the topic fearful
  • Needing accountability to help them stay on track
  • Want a second opinion before making a major financial decision
  • Value for money; you can recoup costs after a period of months through good money management
  • Want to have a long term financial plan that leads to financial freedom
  • Would like to implement a savings strategy and have money to invest
  • It helps them to improve their credit report and score

How does Financial Coaching work?

Often the financial coach meets with the client either weekly, fortnightly, monthly or on rear occasions quarterly, depending on the client’s circumstances. The meeting can be a face to face meet up or via phone/video.

The coach works with the client to help them track their daily, weekly and monthly spending. They also work together to define the client’s financial goals, whether it’s getting out of debt, building a savings fund, purchasing a property or even preparing for maternity leave when one income earner will be at home.

Developing a realistic plan to achieve these financial goals is a key part of the coaching process. The coach provides the client with accountability and transparency and sometimes provides a system or routine (weekly/ monthly) for the client to follow.

The coach works with their client to help them become financially self sufficient within a specific time frame.

Financial coaching can also assist couples iron out their financial differences because the coach brings a neutral perspective.

Ultimately, after six to twelve months, having improved your financial literacy you should be on your way to achieving your financial goals. It is important to note that financial coaching does not offer quick results and takes time; the effort you put in will reflect the results you get out of it.

If you get your finance foundation right, you will be on the right track to achieving financial success.

Finally, your financial coach will help you communicate your financial dreams and fears.

For the second article from this financial service series, please click this link ‘Financial Advising: Is having a Financial Advisor really worth it?’

Written by Neala Okuromade

  • Qualified Accountant (FCCA)
  • Diploma in Financial Advising (MLIBF)
  • Practising Financial Coach and Author of the successful book series ‘What’s Your Financial Gameplan?’

Neala Okuromade is an experienced and reputable financial coach. Neala is taking on a new cohort of clients looking for guidance and help. Click this link for more information.

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