5 Reasons to Hire a Financial Coach
It might just be the best money you ever spend
Humor me for a minute and think back to high school, how much can you remember? You can probably recall mind-numbing hours in double maths learning long division and putting condoms on cucumbers are likely to be seared into your memory.
But what about money management? I’ll go out on a limb here and hazard a guess that it nada, zilch, little or nothing. Back in my school years, we had one lesson of personal social education dedicated to teaching us how to write a cheque. Yep cheques: you know those things grandma still sends you for Birthdays.
And that was it.
Going back to school
The lack of financial education in school is inexcusable. Money is so crucial to every facet of our lives. Getting control of it and more importantly, getting it to work for you is a keystone habit. It’s a little like fitness: the work you put in compounds and the ripple effects spill into everything you do in life. Getting it right benefits your relationships, work and of course your mental health.
So if school didn’t provide you with a solid foundation of financial knowledge, where do we learn about money? I’ve identified three key influences and we begin with the biggest. Yup, you guessed it, your parents.
Influences
As youngsters, we operate like sponges soaking up attitudes from Mum and Dad particularly around emotive topics like money. We learn not from what they say but what they do.
Take my parents, they decided like many to hire a financial advisor. At the start of each tax year, our advisor would pull up in a Porsche (without fail it would be an ever sportier model). His arrival was accompanied by hushed tones, a dusting off of long-forgotten insurance documents and the rolling out of ‘the good’ china. The lesson for little Max was clear, personal finance was something complicated, even a little scary, something best left to the experts.
This is not to beat on my parents they simply made a choice to outsource the worry or managing their nest egg. They passed on a lot of good habits; I owe my innate frugality to my Mum’s habit of reusing teabags despite having cleared the mortgage. Go figure.
Next up is The Media. TV, Films and newspapers all play a role in shaping us. Whether it is the latest escapades of the Kartrashians, The Wolf of Wall Street or articles in the Daily Mail. Each input impacts your money mindset, often reinforcing stereotypes of greedy bankers or condemning those working minimum wage. In her excellent book Open Up- The power of talking about money. Author Alex Holder explains that no demographic is safe even squeezed middle classes are routinely criticized in the weekend papers.
Our social circle is perhaps the most important influence as we reach mid-life. Are your peers loaded up to their eyes with credit card debt or quietly squirreling away cash for a rainy day? The old saying holds; you are the average of the 5 people you spend the most time with. So it pays to choose your friends carefully!
All the above pour into your subconscious to lay down what is known in financial coaching circles as your Money Blueprint. This is your operating system for how you interact with money. It governs nearly everything from saving to investing and whether or not you budget. If like me you balk at the cost of Starbucks Latte that’s your blueprint kicking in. Just being aware of it can reduce its power and you can start to take back control of financial decisions.
It’s not too late
The good news is unlike my new MacBook you can add more RAM, rip out the hard drive and update your firmware. Your money blueprint isn’t set in stone. Mid-life is an ideal time to reexamine your financial life; how you got to where you are and where you are heading. By now you will have had enough life experience to have made a few mistakes:
Bought a BMW?
Snapped up the first house you viewed with the biggest mortgage possible?
Just me then!
If you have made a few slip-ups (and who hasn’t) don’t panic there is plenty of time to learn from and rectify them. Chances are you will be working for the next 20 years depending on where you might be on your timeline to FIRE. Hopefully, paid work will be optional before then but it is always useful to have a contingency plan.
Our generation is also one up on our parents. Sure we can’t buy our houses with pocket change. But we can choose to plug into excellent resources, blogs, podcasts and books are all available at the click of a button, many for free. Time is somewhat of the essence and it is important to act now. The generational transfer of wealth from the boomers to millennials is already happening and it might mean you one day have a large inheritance to manage.
Opening up
Hopefully, you can see why a coach might come in handy. Financial coaches are a relatively new phenomenon at least this side of the pond. Often they are former financial advisors or have a background in teaching, many are followers of FIRE, having ‘eaten their own dog food’ to reach financial independence. They operate in a similar way to a personal trainer. Instead of helping you get that summer-ready beach body, they will help you sweat your dollars and cents to get your money working for you.
Now to the 5 reasons you should consider one:
1. You don’t know what you don’t know. The coaches I have spoken to report that clients in their first session will go through a series of light-bulb moments. They explain that the flood gates open with clients finding sharing details often that they have kept bottled up for years- the process is truly cathartic. A good coach will help you navigate blind spots and identify practical steps you can take to secure a brighter financial future.
2. Coaches are emotionally unattached. This is a biggie as often the people closest to us our family and friends are far too enmeshed in our lives to give advice. This doesn’t mean a coach does care but they can take a dispassionate long-term view. After getting to know you they will often ask to see bank statements, brokerage accounts and your Amazon purchases to spot unhelpful patterns of behavior and work with you to course correct.
3. Encouragement. The best coaches like personal trainers recognize that every client is unique. They will set about constructing a plan of action that is tailored to your particular quirks. The idea is not to turn you into George Soros but to take a holistic look and question our situation and habits.
4. Quick wins but also big wins. Cutting out a morning Cappuccino will only get you so far. A financial coach has experience walking clients through big financial decisions. Like taking on a mortgage, budgeting for a wedding or even setting up a limited company. If you are reading this and already have a good grounding in the fundamentals of saving and investing then consider hiring a coach for one of these major life events.
5. Taking control builds confidence. You won’t need a coach forever; once you have a robust money management system in place you can pick up the keys to your financial life and run with it.
At its core reaching financial independence requires switching off the noise and taking a contrarian approach to the one that society and yes even our parents espouse. Thanks to the Internet you can now connect with lots of kindred spirits all pursuing financial independence. A late arrival to the movement? No problem we are a broad church where encouragement, creativity and determination come together to create a thriving community.
Thanks for reading!
If you enjoyed this post and are interested in all things financial coaching. I recommend you pick up a copy of Open Up- The Power of Talking About Money* in which the author Alex Holder sits down with several financial coaches to unpack their advice.
*Amazon affiliate link
