If you have always wanted to know how to become a financial coach, this piece offers action steps to guide you on that career path. So, let’s dive right into it to learn what a financial coach is and how to become one.
What Is a Financial Coach?
On a lighter note, financial coaches are more like money shrinks. You book sessions with a psychiatrist to get things off your mind and hear what the expert has to say about those troubling thoughts. It’s quite similar with financial coaches and their clients; the only trouble this pair discusses is money.
Financial coaches help clients understand emotions related to money. These coaches also teach people how to maintain a healthy relationship with money and use it to actualize future goals.
While a financial coach could help improve clients’ financial literacy, it is unlikely, or even out of place, for them to offer investment advice. Instead, the peak of their proficiency is to help people learn and adopt healthy financial habits.
Remember that everybody knows that staying active bolsters physical health, but only a few get around to nailing the reps in the wellness goal statement. Similarly, some folks have lofty financial goals but don’t develop the many habits that would foster easy attainment.
In summary, a financial coach is a cheerleader who roots you towards achieving those lofty money goals.
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What Is the Role of a Financial Coach?
Now that we have an idea of what a financial coach is let’s take a quick look at the role. The job description of a financial coach includes the following activities:
- Help you with debt management.
- Teach you the nitty gritty of establishing an emergency fund.
- Get clients to realize that how they interact with money is largely tied to emotions.
- Offer guidance with crafting a clear-cut financial plan.
- Encourage you to maintain a budget-making habit.
- In addition, a financial coach could help you understand patterns in your spending habits.
Now, here’s what distinguishes a financial goal from a financial advisor: investments. A financial coach helps you become a financially responsible individual, while a financial advisor can make investment recommendations or even manage your investment portfolio.
Steps to Becoming a Financial Coach
Here are five foolproof steps to take when starting a financial coaching career:
1. Acquire the Proficiency to Teach Financial Literacy
Even when money management and personal finance come to you naturally, teaching financial literacy to someone else is a different ball game. Some training is essential to teach any form of proficiency. So, the first step is to arm yourself with enough knowledge about financial concepts.
Over time, you can then transfer your knowledge to clients in a bid to improve their finances. However, you must feel comfortable sharing your knowledge on money matters.
2. Obtain Relevant Certifications
Financial literacy and even a wealth of experience teaching money management may not be enough to prove your proficiency to new clients. So, certifications are the best bet for winning over new clients.
Multiple organizations offer financial coach certifications around the country. However, endeavor to obtain such certifications from nationally recognized organizations.
We recommend the following two certifications for financial coaches:
- Certified Personal Finance Consultant (CPFC), awarded by the National Financial Educators Council
- Financial Fitness Coach (FFC), awarded by the National Financial Educators Council
3. Carve Out a Niche For Yourself
There are several focus areas of financial literacy that you could specialize in as a coach. For example, you could specialize in helping folks regain their groove after the financial rock bottom of bankruptcy. Also, budgeting and saving strategies are other niches you could consider.
4. Stand On the Shoulder of Experienced Coaches
In reality, there’s no self-made individual in the true sense of the word. Even financial coaches who learned through personal experience and self-improvement can learn more from others. There’s always a wealth of knowledge to glean from professionals who have gone on before. Listen to podcasts, attend seminars, and, if possible, get a mentor in the trade.
5. Improve the Value You Offer Through Tools
Tools make a job much easier and, in most cases, result in quality deliverables. So, you could hit the purpose of your consultation sessions by adopting tailored tools. For example, you could develop a business website and blog for PR. Also, some coaches invest in financial coaching software or coaching platforms for clients’ management, and some use marketing services.
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How Much Do Financial Coaches Earn?
There is no official benchmark for financial coach salaries. We would have found one on the US Bureau of Labor Statistics portal if one existed. However, judging by unofficial data, the average financial coach in the United States earns about $74,422.
Most financial coaches run sole proprietorships, meaning they get to choose their mode of compensation. So, some charge hourly rates for sessions. Meanwhile, certified coaches with years of experience often have wealthier clients and naturally earn more than the newbie.