Here’s the deal. Whether you’ve paid for one or not, you’ve had a money coach. Your earliest coach was probably your parents or someone else who took a parental role in your life. Starting at an incredibly early age, their actions, directly or indirectly, began forming your beliefs about money. Maybe you watched them struggle to make ends meet or work their asses off to give you everything you wanted. Maybe they spoke directly to you about business and investing or helped you manage your allowance. Maybe money was a taboo subject that nobody ever discussed at home. No matter what your situation was, many of your views about money were formed by your very first “money coach” in early childhood.
Unfortunately, most of our first money coaches had bad money habits and taught us pretty terrible financial lessons. They taught us that money is scarce and hard to come by. They taught us to be fearful of investing and that it’s only for the rich. They talked badly about anyone who spent extravagantly and flaunted their wealth. They told us that all debt is bad and to avoid it at all costs.
All of these teachings became ingrained in our brains and formed the foundation of our money habits, and unless you were one of the lucky ones who was taught about wealth building and you’re set to inherit generational wealth, you probably need to hire a qualified money coach and learn some new money lessons. Here are some tips to help you find the best money coach for you.
What a Money Coach Does
Money Coach vs Financial Advisors
Money coaches are different from financial advisors or wealth managers. The primary goal of a money coach is to educate you on your options and build your financial literacy. Financial advisors and wealth managers do something similar, but they also usually manage your money for you. The problem is that the fees financial advisors charge to do that can add up to hundreds of thousands of dollars, and if you haven’t built at least $1 million in assets, you don’t need to hire a financial advisor, you need to learn how to build your wealth and make smart financial decisions.
Instead of managing your money, a money coach gives you the tools you need to make smarter financial decisions and transition to building wealth passively. They take a comprehensive look at your financial situation and educate you on the various ways you can improve it. Whether your goal is to save up an emergency fund, decide whether to pay off debt or invest, or learn how to better manage your investments, a money coach can outline your options and give you the tools to make the best financial decision for your individual circumstances.
And if you’re thinking, can’t I get all of this information for free on the internet? The answer is yes, you totally can. You can also find lots of free information on how to paint landscapes on the internet but that doesn’t make you an artist. Piecing together your financial journey with free information online will work, but only at the expense of hundreds or thousands of hours of your time and several costly mistakes along the way. Hiring a money coach is like buying the fast pass at Disney, it takes you straight to the front of the line so you can enjoy the ride.
Understanding Your Financial Goals
One of the biggest mistakes people make with their finances is that they invest and save without knowing what their goals are. Without knowing your financial goals, you’re pretty much crossing your fingers and hoping you’re doing the right thing.
It’s obviously a huge problem if you aren’t saving or investing enough because you may not be able to cover an emergency expense or have to put off retiring. But saving and investing too much is also a problem. All of the money sitting in your savings is being devalued by inflation, so over saving just reduces your money’s value over time. Over-investing will end up making you a lot more money in the future thanks to the exponential growth compound interest will create, which can’t be bad, right? Wrong.
Sure, retiring with extra money so you can do more things and leave a larger inheritance sounds great, but it comes at the expense of missing out on experiences you could be buying today. While it isn’t a fun thought, you might not even make it to retirement. Do you really want to forego having fulfilling experiences now so you can have too much money when you retire? I doubt it.
On top of saving and investing errors, prioritizing paying off debt is another common mistake people make. There are definitely instances when it’s better to prioritize paying off debt, but in most cases, you shouldn’t. Getting a clear picture of your entire financial situation so you can determine your financial priorities, establish concrete goals, and develop actionable plans to reach them is one of the most important reasons you should work with a money coach.
How to Choose a Money Coach
Now that you know the benefits of hiring a money coach, you need to be able to choose the best one for you. These tips will ensure you end up with a qualified coach that can help you reach your goals.
Check Their Credentials
A lot of money coaches started off documenting their own personal finance journey and then used what they learned to teach others. While it’s important that money coaches practice what they preach, it’s also important that they know all of the financial tools available to you, not just the ones they’ve used.
There are so many different aspects of personal finance, saving, debt payoff, investing, wealth preservation, and more. You want someone who’s informed about all of these aspects so they can tailor the information they give you to what you need, not just tell you what worked for them.
Before you pick your coach, ask about their credentials. Do they have a finance degree? If not, have they taken courses in financial coaching? Have they worked in the finance industry or as a financial advisor? You wouldn’t hand your money over to a financial advisor that didn’t have credentials (I hope) so don’t pay to get your financial education from a money coach that doesn’t have credentials either.
Match Your Needs with Their Expertise
As I mentioned above, there are a lot of different aspects to personal finance, and as cliche as it sounds, personal finance is personal. You may have no debt, but are living paycheck to paycheck and want to learn about budgeting. You may have thousands of dollars of credit card debt and student loans that you don’t know how to manage. You may feel secure financially, but don’t know how much money you’ll need to retire. You may be so fearful of investing that you’ve been putting it off and need help managing your fear and getting started. Maybe you just graduated and are looking for tips on salary negotiation.
Depending on your situation, you’ll need different things. If you want help budgeting, find a coach that specializes in it. Looking to start investing? Find a money coach that has an investing course. There’s no one size fits all approach to personal finance, so find a coach that offers exactly what you’re looking for.
Pick Someone You Like
On top of vetting your coach’s credentials and offerings, make sure to pick someone you like. If their offerings match what you need but their approach makes you uncomfortable, how open do you think you’ll be with them about your money? Probably not very open.
Money is a difficult subject for most people to talk about, but to get the best advice from your money coach, you’ll need to be vulnerable and open about your financial situation. To make sure you can do that, pick someone you think you’ll mesh well with and can deliver information to you professionally and in a way that you can absorb.
Why You Need to Hire a Money Coach ASAP
Even if you can see the benefits hiring a money coach will have, you may still want to put it off until later. The problem with that is that being able to build wealth easily is all about front loading. The earlier you start building wealth, the easier it becomes. That’s all thanks to compound interest, which allows you to earn interest on the money you deposit AND on any interest you’ve already earned. This creates exponential growth for your investments, but it takes decades to start making really huge gains. Because of that, it is incredibly important to start investing asap. If you put in the effort now, you could reap huge rewards, I’m talking hundreds of thousands of dollars of passive income a year rewards, with almost zero effort later.
So while most of us start off with less than qualified money coaches who teach us terrible money management habits, all hope is not lost. Find yourself a qualified money coach that can help reframe your relationship with money, build your financial literacy, and help you set financial goals and develop plans to achieve them. Once you do, you’ll feel confident about your finances and start building wealth in no time.