Why money coaching exists
When I was young, I bumped into an old golf pro at a driving range where he now taught.
He said to me:
“I could help every single one of these people become vastly better at golf, in less than 30 minutes, if they just asked. But hardly anyone ever does.”
That stuck with me for a long time, as it applies to everything in life.
When you want to get really good at fitness, you typically hire a personal trainer. When you want to learn to play piano properly, you hire a piano teacher.
Why do we not apply the same thing to our finances?
Having a secure financial future, becoming debt free & wealthy are all things most people dream of. It is all achievable, yet most take so little action to make it a reality.
Just a few small tweaks can literally save you thousands of dollars over a long period of time – or maybe even over a few months. Money coaching exists to help you make those key changes.
Perhaps it is because our finances are a taboo subject. Perhaps because it is a source of stress in our life. Perhaps because the pursuit of the almighty dollar seems hollow.
But having financial freedom unlocks so much of life that is otherwise unavailable. Having additional money unlocks piano teachers, personal trainers, golf professionals, or anything else that helps you pursue your hobbies, hopes and dreams.
Yet money coaching (aka financial coaching) – a valuable tool you can use to unlock financial freedom – is still not mainstream. It is growing immensely in popularity, though, and for good reason.
Who is money coaching for?
There is a huge gap between having no financial guidance whatsoever and financial advisor-level guidance. Money coaching or for those that sit in between.
You know you need a financial ‘health check’ or guidance, but you’re just not profitable enough for a financial advisor to take you on.
Financial advisors are generally unaffordable for most, and rarely provide good value for money (as we discuss further below).
Financial coaching on the other hand, is an accessible, effective option for everyone.
There are many different scenarios where you would consider using a money coach service, like ours. These include:
- Learning proper budgeting
- Debt Management
- Improving your money mindset and relationship to finances.
- Learning about investing.
There’s also retirement planning, college saving planning, emergency fund planning, career transition assistance and so much more.
The benefits of using a money coach
How exactly is a coach beneficial for the above scenarios? Many reasons!
Remember that class you took in school where you learned about budgeting, investing, tax planning and so on?
No, neither do I.
Most people do not get taught about finances or how to become financially independent in school. The first reason to use a money coach is that they educate and improve your financial literacy.
It’s one-on-one personal coaching (or in couples sometimes), and it’s like having your own personal finance tutor. They break down all that financial jargon into digestible nuggets of wisdom tailored just for you.
Think of it as a crash course in adulting. It’s much needed to compensate for our education system’s failings.
A money coach helps you for the same reason a personal trainer or piano teacher helps. Yes, they are experts, but the real value comes in smart goal setting and accountability.
Money coaches help you stick to your goals and create long lasting good habits.
Furthermore, everything is completely tailored with financial coaching.
Your financial plan is as unique as you are. A money coach takes the time to understand your financial situation, goals, and dreams before crafting a plan that’s tailor-made just for you.
Finally, the goal of coaching is to coach. Your mentor will help you apply the knowledge you have learned, push you to reach the goals you have set.
Coaching someone simply works. There is an abundance of evidence around the web from people whose lives have been transformed by having a money coach guide them.
Cost vs. value for financial coaching
Few things in life provide a tangible, real ROI (return-on-investment).
- Was that college degree that landed me in debt worth the money?
- Was that course about social media marketing a worthwhile investment?
- Was it worth getting all that insurance?
Maybe. But it’s sometimes hard to say.
Financial coaching is one of the few investments in life where you almost always see a significant ROI.
For example, a coach may examine your income and expenditure and immediately spot an area for improvement. That might be a way to reduce debt payments, expenditure that you are not utilizing, or a way to boost savings for example.
Over the next year, you can track the hundreds or maybe even thousands of dollars you save as a result.
This is the most basic example, but extremely common. A coach can go much further in providing you with value in the form a heavier wallet.
It’s natural to be on the fence about spending money on a coach, particularly if you are having money issues. It’s a very personal decision, but from experience I can say it is a worthwhile investment for 99% of people.
Money coaches vs. professional advisors
My firm belief is that financial advisors, wealth managers and so on are generally not worth the money except for high-net-worth individuals or those with very complicated financial arrangements.
It’s well documented that active investment managers underperform and overcharge. For me personally, it is both mindboggling and infuriating how much people are taken advantage of when it comes to someone else managing their money.
It seems logical that the more you pay, the better your investment performance. You feel compelled to pay a professional a lot of money, because you want them to take care of your money.
But with professional wealth managers, this is one area where you very often don’t get what you pay for.
Clearly, I am biased as a financial coach. But trust me when I say no-one will take better care of your hard-earned money than you.
A money coach is focused on giving YOU the information and coaching YOU into applying knowledge and making good financial decisions.
We are not incentivized in any way to give advice that might by in some way suboptimal (unlike advisors who may suggest products and services that give them a better commission).
All of this for a fraction of the cost a financial advisor may charge.
Usually, financial coaches charge a flat rate, whereas advisors and wealth managers charge an ongoing annual percentage of your wealth. The latter can insidiously add up to hundreds of thousands over a lifetime (see this article on fees, for example).
There are many great financial advisors out there. This is not to disparage them.
But for the vast majority of people, advisors are not the correct option. Coaches, may well be.
Do-it-yourself finance is the way to go
You might say, “I simply don’t have time for all of this, that’s why I want to pay a professional to do it all for me”. To that I say two things:
- You simply can’t pay someone to do it all for you IF your goal is for it to be done well and affordably. That service doesn’t exist, because you need to charge a lot to provide that service, negating its effectiveness (see the quotes from the financial planner in the next section below).
- You DO have time for this. It’s very easy, it’s automated for the most part, and can be completely hands off. Invest a small amount of time learning about finance, take some guidance from a coach, and you can be set for decades to come.
If you truly valued your time so highly, you would take the time to learn about basic personal finance concepts. That’s because once you understand the return on investment you can get from things like compound investing over time (try our calculator on investment returns, for example), you would understand how much value you could receive from a few hours of coaching.
Financial advisors recommend financial coaches
Financial coaches are becoming increasingly common, and it is now a well-respected profession within the financial services industry. Coaches fill a gap that sorely needed to be filled.
In fact, many financial advisors have working relationships with money coaches. Both parties refer clients to one another, as they each have a different type of expertise.
In a Reddit thread with Pete Matthew, a chartered financial planner in the UK, Pete recognizes the inherent problem we have in the financial services industry.
When asked quite simply, how do I get good, affordable, impartial financial advice (where you are not being ‘sold’ anything), Pete admits, “This is the question that keeps me awake at night”.
He goes on:
“We’ve calculated that it costs us about £1,200 ($1,500) to take on a new client, without making any profit. So, we’d need to charge X% more than that to make it worthwhile. Most people want to pay for a couple of hours of an adviser’s time, say £300-400 ($400-$500) but it’s just not profitable at that level. That’s why I think that the rise of financial coaches is a really good thing – it could fill this gap.”
Why not to use money coaches
Certainly, as accredited financial coaches, we have a clear bias. So, let’s consider the reasons why you would not want to use a financial coach.
- You can teach yourself everything with the right books, videos and content on the web.
This is true. However, the fact is, most people do not know where to look.
They may look at content that may be harmful to their finances (crypto, AI, stock bets!). They may not have the basic level of jargon in finance to even understand most financial advice.
Some are able to teach themselves. That’s the same with becoming fit without a trainer or learning piano without a teacher.
A lot of the time though, those self-taught gym goers get form-related injuries, and those self-taught piano players create bad habits. There’s no guarantee a novice can teach themselves well, and it may take them a long time.
- A financial advisor has more accreditation, knowledge, and capability.
This is true, too. If you have a high net worth or a complicated financial arrangement, advisors can be great. But once again, they are generally not worth the money.
If you feel safer going with a financial advisor and paying the extortionate fees, it is understandable. If I haven’t convinced you otherwise, I won’t continue to try!
- You have the self-discipline to do it yourself.
A big part of why coaches exist is that humans are fallible.
We convince ourselves of things that are monetarily untrue. We set self-limiting beliefs about what we can achieve.
True, motivated, and self-disciplined people can overcome their financial issues without support. In our experience though, most people need a little help.
Summary: Financial coaching & the future
The arguments against coaching don’t hold weight, in our view.
We can tell you from experience that we’ve provided measurable benefit to so many people that may otherwise still be struggling to this day.
Financial coaching is worth it in the same way paying our schoolteacher’s salaries is worth it. It’s effectively an essential discipline that helps fill a huge gap in society’s knowledge.
Most coaches (like us!) even offer a free consultation, so you can get a sense if it might be worth it for you.
