Financial coaching is becoming a familiar term. On the other hand, there is still a lack of understanding of what a financial coach does.
Financial coaching is about coaching. In coaching, the coach guides an individual of a team to improve their performance. Coaching is not about the past. It's about the actions the client will take in the future. Part of being is certified financial coach is to be aware of the coaching aspect of being a financial coach. From general coaching back to financial coaching, financial coaching aims to prepare clients to make sound financial decisions in the future by themselves.
This guide covers the basics of financial coaching and what financial coaches do to prepare their clients to become better at making financial decisions.
Financial coaches (also known as money coaches or budget coaches) the coaching process focus on the following points:
Behavior modification – changing the frequency of action until it becomes a habit. Behavior modification in personal finance is about the skill of creating a budget and sticking to it. The financial coach guides the clients with setting the budget and creating the accountability tools to stick to a budget, i.e., building a habit.
Executive attention – is the capacity to choose what to focus on and ignore. Any coaching, including financial coaching, is a process of concentrating and finding ways to improve. As part of the financial coaching process, financial coach works with their clients on a specific area of improvement, building a foundation of personal finance best practices.
Goal setting – is the process of creating an action plan for reaching a goal. The end goal is to reach financial peace of mind in financial coaching. But there are small steps to accomplish to reach an important goal. For example, to become debt-free, there is a need to prioritize debt payments. A financial coach helps with prioritization and accountability.
Goal tracking – once the goals are clearly defined, it's essential to track the progress. In the process of financial coaching, executive attention leads to behavior modification.
From the four areas of financial coaching, software can assist with goal setting and goal tracking. There are apps to create a financial plan, connect to a bank account, and track progress. We believe that financial coaching will stay a person-to-person interaction with behavior modification and executive attention.