The Importance Of Financial Coaching.
Are you bad with money? Do you feel like you can never save or get ahead? Consider a financial coach. This isn’t a financial advisor, instead, think of it like a baseball coach. Your coach sits on the sidelines and helps you understand the plays. This isn’t about coming up with strategic plans to grow your investments - it’s about creating the basis for your finances, so you can invest in your future.
A financial coach helps you get a healthy relationship with your finances.
What does this mean? You’ll learn things such as:
How to save money in your emergency fund
How to get out of debt and stay there
How to set up and keep a budget
How to change your budget when your life circumstances change
How to save for financial goals, both short-term and long-term
The basics of choosing the right savings account and how to calculate simple interest
Are these the type of things you don’t understand or thought you did but came out with less money than you thought? Don’t worry, you aren’t alone. Over 65% of Americans don’t understand the basics of money, but it’s never too late to learn.
Learning to Budget.
If you only learn one thing from a financial coach, let it be how to budget. This is the basis of all of your finances. If you overspend, don’t save, or don’t know how much you need to make it though each month, learning how to budget will teach you how to overcome all these.
A financial coach helps you choose the right budgeting program, as there are many. A few of my favorites include:
50/30/20 budget - 50% of your budget covers your expenses, 30% covers your ‘wants’, and you save 20% and/or use it to pay off debt.
Envelope budget - Determine how much money you need for each category every month and put that amount in an envelope. You don’t spend more than what is in the envelope each month.
Zero-based budget - Give every dollar you bring in a ‘job.’ That job can be to pay a bill, pay for dinner when you go out, or to sit in your emergency fund.
How to reach a financial goal.
Once you master budgeting, the financial coach may help you reach other financial goals. Do you want to:
Get out of credit card debt
Save three to six months in an emergency fund
Save for a vacation
Save for your child’s college education
Buy a house
Financial coaching is for everyone - not just someone with a lot of money. In fact, most people using a financial coach have little money and are in over their heads in debt. A financial coach can help you get your finances in order. You can work with one short-term, or sign on to have him/her as an accountability partner throughout your life.
Once you’re set with your financial coach and on your feet again, you may consider a financial advisor who can help you make smart investment choices to grow your funds even further. Hope this few tips can help you, as you embark on the journey to take control of your finances.
