5 questions to help decide if financial coaching is for you

You’ve possibly never even heard of ‘financial coaching’. It’s still a relatively new concept in the UK, although it’s pretty well established in the US.

First of all, it’s maybe best to understand what financial coaching is not.

Most importantly, it’s not about the sale or intermediation of financial products – a financial coach will not provide you with regulated advice. And it doesn’t matter how much or how little money you have now.

Instead, financial coaching will focus more on your own financial knowledge, beliefs and habits. This could be looking at ways to better organise your finances, your spending and savings patterns or even just understanding your pensions.

Ultimately, it’s about building financial confidence and empowering you to make your own decisions about your financial wellbeing.

Ask yourself the following 5 questions to find out whether financial coaching could be right for you.

1. Do you feel sceptical about financial advice or worry that you can’t afford it?

Trust is one of the most important aspects in a financial advisory relationship, but due to past mis-selling scandals and a legacy of commission-based sales, some people find it difficult to trust advice providers. Others feel they are not wealthy enough for an adviser, or that fees will be unaffordable.

Coaching has no link with financial products and instead, the focus is very much on you and your financial behaviours. There can be no conflict of interest around product sales or commission and you will simply pay a coach for their time.

And because coaches are not weighed down with the costs of regulation, it can be a more affordable option and there should be no minimum level of savings needed.

2. Would you like to improve your financial confidence?

According to this financial capability survey for the government’s Money & Pensions Service, 47% of us do not feel confident making decisions about financial products and services. 55% of working-age adults do not feel that they understand enough about pensions. Coaching and mentoring can be an interactive and even fun way to build up knowledge, good money behaviours and confidence.

3. Do you sometimes feel anxious or stressed about money?

You don’t need to look hard for stories and headlines about money anxiety. This news article from a couple of years ago suggests that 77% of us are stressed about money – but we’re not talking about it.

Financial coaching can address this directly, because it’s very much about bringing money thoughts into conversation, in a comfortable, informal and confidential way.

4. Do you and your partner ever argue or strongly disagree about money?

This is pretty common really, because as individuals, we all have own financial habits and attitudes. Once you realise that our attitudes to money are pretty much set by age seven, it can be easier to understand why we have such deep-rooted differences in opinion.

In fact, money worries are the main reason for break-ups, driving one in ten married couples to split. According to this article by the BBC, 8th January each year is dubbed ‘Divorce Day’ as the strain of festive finance takes its toll.

Coaching can be a great way to explore money attitudes in more depth, learn to appreciate different viewpoints and find common ground.

5. Are you willing to invest some time and effort into your own development?

With coaching, it’s important to understand that you will be more involved in finding your own solutions. You will not be paying an adviser to look after your money on your behalf so you can just forget about it all.

This is about empowering yourself to take control. You need to be prepared to learn and reflect, not just about money, but about yourself. It will undoubtably involve some effort and a coach will likely take you through a number of exercises that need some thought, but it can be transformational.

Summary

So what next? If you answered “no” to all of these questions, then financial coaching may not be of much benefit to you. You either feel that your personal finances are under control, or you might be more suited to traditional, regulated financial advice.

If you answered yes to one or more of the questions, working with a financial coach can help you develop your knowledge of personal finance, explore your relationship with money and build confidence. It could be your path to financial freedom.

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