There are few worse things than turning away a prospective client because I cannot help them right now as a financial advisor. Melissa Tosetti of The Savvy Life explains in this guest post when it makes sense to hire a money coach rather than financial advisor. Please note that Melissa is not the only financial coach. Compass Catholic Ministries and Great Gain Financial for instance, offer financial coaching services for Catholics or Christians, respectively. Or, explore AFCPE if you’re seeking financial counseling services.

Money Coach or a Financial Advisor: 

Which one do you need?

Financial advisors work with you to create a holistic financial plan to grow and protect your money now and in the future.  Typically, they provide clients with financial services, planning or advice related to investing, retirement, insurance, mortgages, college savings, estate planning, taxes and more.

If you’re a regular reader of this blog, you are likely familiar with the role of a financial advisor.  In this article, I’ll focus on explaining the role of a money coach, sometimes referred to as a cash flow planner.    

Types of Money Coaches

There are various types of money coaches.  Some focus on creating plans to help clients get out of debt.  Some are experts in behavioral spending.  Most money coaches work on issues related to your day-to-day finances.  While some financial advisors do help in this area, money coaches specialize in it.

For example, our company, The Savvy Life works with clients to create Spending Plans and then educates them for how to live within their plan.  It’s one thing to “Tetris” numbers on a piece of paper to make those numbers work.  It’s another thing to try to live within those numbers.

On paper you may realize you need to reduce your spending on a certain category, such as groceries, by 20%.  But how do you actually do that?  Our job is to get a clear understanding of your day-to-day life, the challenges you might have around spending less on groceries and to work with you to come up with a plan for how to make that change.  One suggestion might be to have your groceries delivered so you “stick to your list” and don’t get distracted while shopping.  Another may be to change your shopping schedule from after work when you’re tired, hungry and apt to purchase more than you intend and instead shop in the morning when you’re fresh, your willpower is intact and you’ll be more inclined to stick to your list.  Another might be to show you how to time your purchases taking advantage of sales or bulk buying, but managing it so the food in your refrigerator and pantry doesn’t become decorative.

In this day and age, money moves so fast! The amount of financial transactions we make in a day are more than we previously made in a week! Our spending is rapid fire.

Is Technology Helping or Hurting?

Over the last 30 years, the advances in banking and technology have done little to help.  In fact, instead of simplifying our day-to-day financial life, in many respects, banking and technology has complicated it. Money moves in so many different directions and in so many different ways – debit cards, credit cards, automatic payments, automatic renewals, it’s chaotic at best, catastrophic at worst.

Without strong money habits in place, we easily become pinballs bouncing from one expense to the next feeling as if we have no control over our financial lives.  A money coach can help you create an overall plan for where you want your money to go on a daily basis that aligns with your short-term and long-term goals.

 Much of the work we do with clients focuses on teaching them how to become more purposeful in their spending.  While retailers like Target, Costco and Amazon Prime do much to make our lives convenient, without good money habits in place, they can easily keep us, or at least slow us down from achieving our goals.

If you’ve ever walked into a store like Target for one item and walked out pushing a shopping cart loaded with bags, you understand what I mean.  You didn’t walk in to purchase those items. They were not on your list.  But, because Target is one of the top Diabolical Marketing Geniuses, you got distracted, potentially by $100 or more.  That money could have been applied to something you and your family truly want, such as your next vacation, an emergency fund, debt reduction or increase in investment contributions (i.e. retirement and college savings).

 Every day we’re confronted with dozens of spending decisions that need to be made.  Too often, we’re making those decisions without really thinking about them.  How often do you have the experience where you walk into a store, make your purchase, walk out and somewhere in the parking lot, realize that you have no idea how much money you just spent?  This common phenomenon is called Swipe-Go-Not Know. 

 A money coach can help you not only create an overall Spending Plan, but can help you recognize and then replace your negative money habits.

When to Hire a Money Coach

Here is a guideline that can help you decide if perhaps you need to work with a Money Coach prior to hiring a financial advisor:

• You’re five or more years into your career and still feel like you’re living paycheck-to-paycheck.

• You make good money but don’t feel as if you have an understanding of where it goes.

• You’ve found yourself on a roller coaster of building, then paying off debt.

• Or you’re buried by debt.

____________________________________________________________

Melissa Tosetti is the founder of The Savvy Life and author of the international bestseller Living The Savvy Life. For the past eight years, she’s worked with over 550 individuals and families to create Spending Plans and then taught them how to live within their plans.

She has traveled across the U.S. giving over 200 Savvy Living presentations and has taught over 240 webinars related to the subject.