What is financial coaching?
Financial or money coaching is a process where a financial coach offers guidance to a client to help them achieve their financial goals. It differs from financial advice in that a money coach aims to empower people with the knowledge they need to better their relationship with money. Financial coaches help people address their emotional and psychological relationships with money, such as uncovering limiting beliefs, overcoming fears, and reframing negative money narratives.
In this video, certified financial coach and money mindset mentor, Sarah Brill, explores what a financial coach is, the benefits of working with a money coach and what you can expect from sessions.
What does a financial coach do?
For some people, talking about money can feel shameful or even taboo. Talking to friends or family about money worries can also be tricky as their relationship with you may cloud their opinions. This is why, for many, talking to someone objectively in a confidential setting, such as a coach, is an ideal option.
A financial coach aims to help you better understand your relationship with money, make any changes to this relationship and support you in developing greater control over your finances. They can help you unpick limiting self-beliefs and support you as you fill the gaps in your knowledge.
You might also see a financial coach to:
- help negotiate pay rises at work
- support your career progression
- learn how to charge for your services and create invoices
- support your transition from being employed to owning your own business
- navigate difficult conversations with others about money
Coaches who work in this field often have a background working in finance, bringing their knowledge of the industry with them into the coaching world.
With terms such as ‘effective annual rate’, ‘loan-to-value’ and ‘compound interest’ it’s no wonder that 77% of UK adults are confused by financial jargon. Six million Brits have racked up late fees due to misunderstanding language, and others have seen a negative impact on their credit scores.
- Read more about how to take care of your financial wellbeing.
What's the difference between a financial coach and a financial advisor?
Generally speaking, a financial coach focuses on empowering clients and helping them change their mindset around money, by navigating challenges like budgeting, savings, or restructuring debt. Coaches do not manage funds or recommend where to invest. Instead, they help educate you, give basic advice on investing, suggest ways you can save money, and help you to become more financially literate and confident in managing your own finances.
A financial advisor is regulated to help manage investments and recommend specific products. Many people who receive financial coaching also choose to work with a financial adviser.
You’ll often have regular financial coaching sessions over a certain period, so every session offers you this sense of gentle accountability. If you’re prone to putting off anything finance-related, this accountability can help you take action - even when it feels hard. Your coach will be with you every step of the way, providing support and encouragement.
If you’re in a relationship and have joint finances, you may find it helpful to see a coach together. Getting on the same page when it comes to your finances as a couple can help ease tensions and ensure you both have shared goals when it comes to your future.
What are the benefits of financial coaching?
Working with a financial coach can come with many benefits. A financial coach can help you to:
- understand and change your relationship with money
- unpick limiting self-beliefs
- change unwanted habits or behaviours around money
- set financial goals and learn how to plan for your financial future
- increase your awareness of your financial health
- support you to increase your knowledge of finances
- understand financial needs when starting/expanding a business
- overcome anxiety and fears of handling/managing your finances
- better understand factors that can affect your credit score
- help you to feel confident in your knowledge and understanding of your current finances and future planning
Financial coaching helps people gain confidence and clarity around money. For many people, knowing where to start is the biggest hurdle. A coach can guide you through the process, breaking it down into achievable steps.
What to expect during a financial coaching session
Financial coaches are there to help you focus on the future. While they can help you to identify current and past mistakes you may have made, they aren't there to dwell on what you've done 'wrong' or to make you feel bad for making mistakes. A financial coach wants to help you make an achievable, actionable plan that suits your unique situation and needs.
Typically taking place one-on-one, a coach may ask you some preliminary questions to find out what areas you want to focus on first, what your current financial situation is, and what goals you want to set. Maybe you want to pay down debt but aren't sure where to start, or perhaps you want to invest in your financial future but feel lost and unsure where you should be focusing. A coach can help you to prioritise, teach you more about areas where you may feel uncertain, and help you to increase your confidence.
Your coach will let you know ahead of time if there is any paperwork you need to fill out or bring with you. They may ask for you to bring along a basic outline of your current budget, or a snapshot of your money (how much you earn, your current debts, and any big concerns or questions you have).
Sessions can take place face-to-face, online, or by telephone, depending on which you prefer and what your coach offers. While no two sessions are identical, common topics to talk about can include how to save, how to better communicate with your partner about your finances or theirs, and how to reduce or eliminate debt. Creating a sustainable, realistic budget is another common focus for those working with a financial coach.
You'll usually leave sessions with key clear actions to do before your next session. This could be creating a plan, setting goals, or even thinking of potential side hustles. A single session is rarely enough to fix everything, as it can take time to reprogram money blocks. But through working together with a coach, you can become equipped with the tools needed to learn how to manage your finances confidently and stay accountable.
How can a money coach help me?
The Money and Mental Helath Policy Institute notes that almost half of people in financial difficulty have a mental health problem, with 86% of people in debt saying that their financial situation worsened existing mental health concerns.
Money worries can entangle themselves in all areas of our lives and, as tempting as it may be to bury your head in the sand, this often only worsens the problem. Becoming more aware of your finances, understanding how your beliefs around money impact you, and filling any gaps in knowledge can all help. This is, essentially, financial self-care.
Understanding your relationship with money
If you want to change your money habits, the first step is to understand why you feel the way you do about money. A coach can support you with this. Many of our habits and beliefs live in our subconscious and are often picked up in childhood. The way your parents talked about money, for example, may have seeped into your subconscious, planting a belief that is now affecting how you view money.
Consider the following beliefs and ask yourself if any resonate:
- money is the root of all evil
- wealthy people are unkind
- money is difficult to earn
- I’m not good with money
These are just a few examples of limiting beliefs - beliefs that hold us back. When we believe these statements, our brain seeks confirmation of this (this is called confirmation bias). When we see this confirmation, our belief gets cemented.
Understanding where our beliefs come from and how they limit us is key. Of course, it’s important for us to highlight here that the economy is a complicated thing, and we’re certainly not all on a level playing field. Changing your beliefs about money will not magically change your situation. Instead, we recommend you view it as one tool in a larger toolbox you can access for support.
Finding the gaps in your knowledge
Taxes, pensions, investments… how many of us were taught about these things in schools? Many of us weren’t, so it’s not surprising that we lack confidence around money. Some also have negative connotations with numbers and maths, finding anything money-related just as repellent.
Taking a look at your knowledge about money and picking out any gaps is a crucial step. Once you’ve identified what it is you don’t know, you can look to educate yourself with the help of a coach. Understanding how to manage your money practically can go a long way in changing your relationship with it.
With practical knowledge under your belt and a positive mindset, change can happen. When it comes to educating yourself, we recommend learning from official sources. The Money Saving Expert website, for example, is a trusted and well-respected resource to get started with.
Taking the next steps
Money may feel like a complex and intimidating force in our lives, but it doesn’t need to be. With the right tools, we can pick it apart, understand it, and make it work for us. Financial coaching can be truly transformational. It can help you achieve financial freedom, align your finances with your values and help you feel more empowered to make financial decisions.
To find out more about how a coach could support you, we would recommend reaching out to a coach for an initial consultation, selecting ‘Finances’ from the A-Z dropdown. From here, you’ll be able to find out more about them and see if they’re able to help you.
