How Financial Coaching Helps You Reach Your Goals
As much as we may hate to admit it, money and how you use it are important keys to function in our world. Not only do you need money to purchase the items you need to live, but you also need to make smart financial decisions to protect your future. You have to strike a balance between having what you need today and being able to have what you need in the future. In most cases, you have to seek out this information for yourself because it is not typically taught in school.
Get a Financial Coach and Achieve Your Financial Goals
Many of us have a hard time managing our money, especially when our emotions creep into our decision making. Financial coaching can help you through those moments when your emotions or behaviors guide your decisions. Continue reading to find out how a coach may help you with your financial decisions.
What are Financial Goals?
It may come as a surprise to you that if you do not have financial goals set for yourself, then you may have some holes in your finances. Financial goals are goals, or specific steps, that you want to take with your money. These goals help you decide how you should spend and save your money. If you are spending all of the money that you make each month, then you are not preparing for your future. Financial goals can help you reach short term and long term steps to improve your ability to have financial freedom. It is not just a fantasy to have financial freedom. This concept of financial freedom may be different from one person to the next, but with determination and commitment, it is possible.
Different Types of Financial Goals
Financial Coaching may be helpful to you when determining what financial goals you want to set for yourself. There are many different types of financial goals, such as paying off credit card debt or paying off all debt. You may want to save for retirement, or for college for your kids. You may want to save money to buy a house or a car. You may want to start saving money or put money in an emergency fund that is separate from your other savings. You may want to save money for a vacation or new furniture, or perhaps a remodel of your house.
There are many different types of goals. The key is determining which ones are the right ones for you.
Why Do I Need Financial Goals?
If you wanted to cook a new meal, would you just start in the middle without any type of planning and hope for the best? No, you would not. You would have a recipe that gives you a list of ingredients and step by step directions that you would follow. If you just started in the middle without a plan, you would probably have a mess on your hands. The same is true for your finances. If you do not set personal financial goals, you could have a mess on your hands, except in this case, it is with your money.
Financial Coaching can help you set financial goals that allow you to see your entire financial plan. It gives you a clear view of where you are right now and helps you determine where you would like to go. Financial goals guide you instead of you randomly spending money and possibly saving none of it. Once you create goals for yourself, you create steps to reach the goals you have created.
This helps you stay organized when it comes to your money. This takes away moments where you find yourself making random spending decisions. This also gives you the ability to have a plan for your money with each paycheck. Once you have a goal, you can set actionable steps to reach the goal. It should not be all or nothing. You should have steps that you can measure and achieve all along the way to your goal.
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What Is Financial Coaching
Financial Coaching is similar to fitness coaching, whose job it is to talk to you about your goals and then help you create positive steps to get to your goals. The key to financial coaching is that this person understands that spending is emotional and that with proper strategies in place, you may be able to overcome your desire to spend money even when it may be in opposition to your goals.
The goal of a financial coach is to help you build a positive relationship with money, instead of just spending money without thinking about the consequences. A financial coach gets to know you and your motivation so they can help you stay on track day to day. They encourage you through your successes and setbacks.
Coach vs. Planner
A financial coach plays a slightly different role than a financial advisor or planner. While a coach focuses on the behavioral aspect of spending and pays attention to why you spend the way you do, a planner focuses more on how you are spending or saving. A planner focuses solely on the plan, not what motivates you. A financial planner studies your cash flow and manages it, focuses on planning for retirement or investing. A financial planner may also focus on tax or estate planning.
Why Do I Need a Finance Coach
Financial Coaching is intended to empower and motivate you to make better and smart financial choices. A large number of people are not able to cover the expense of an emergency and many people live from paycheck to paycheck. Even more people have a negative net worth, which means they owe more money than what they own.
A financial coach determines where you are financially and behaviorally. They help determine what motivates you to make good choices and bad choices. They work with you to determine your goals and then figure out the best way to reach those goals. A finance coach wants to help you with the success of your long term goals. They give you a foundation that creates healthy habits when it comes to spending money. They also make sure that these habits are in line with your plan, regardless of what that plan is.
Each individual has their own needs, desires, and goals. Once your coach understands your goals, they help you develop a plan to reach those goals. Those without a plan tend to fail because they do not implement a plan to reach their goals. A coach helps to support you towards reaching your goals. Your coach also determines how many sessions it takes to put together the plan to help you reach your goals.
How Can Financial Coaching Help Me?
Financial Coaching can be helpful to you in key ways. First, a coach can help you create a budget for yourself. Many people have no idea how much money is coming in each month. They also have no idea how much is going out and how it is being spent. Once you have a budget, you can see the numbers on paper and have a better understanding of what is happening with your money. This is the first step to being able to set goals for yourself. Once you list all of the bills you have to pay each month, then you can see how much money is left over. Then you are able to begin to set goals for yourself. These must be goals that are meaningful to you. They should not be someone else's goals, or you will have a difficult time reaching them.
These goals could be to get out of debt, create an emergency fund, or save for something specific. You may have all of those goals. Your coach can help you determine what is important to you and a priority for these goals. The main function of your coach is to make you accountable for meeting your goals. It is important that this piece is built into your financial plan because this is what sets it apart from other types of financial help. This could mean that your coach checks in with you monthly to see how you are spending and saving. You and your coach may decide that you need this check ins for up to a year. It will depend on your goals and how difficult it is for you to stick to them. Your coach becomes your biggest advocate and can help you when you fall off track.
Where Should I Focus My Attention When It Comes to Finances?
When you first begin to budget your money and set goals for yourself, you may become overwhelmed by all the goals you have. When you start thinking about money and making it work for you, you most likely will get to a place where you think you just do not have enough money coming in.
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Financial Coaching helps you work with the money you earn. Your coach will help you see areas where you can save money so you have more money with which to work.
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Your coach can also help you prioritize your goals. You may think that they are all important and they are to some degree, but there has to be one that is most important. If you have a large amount of debt, that is probably going to be your most pressing concern. It is hard to feel any financial freedom while burdened with any significant debt. Once you begin to reduce your debt, you can begin to think of some other goals
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Perhaps you do not have a lot of debt, or you have very little, but you do not have any money saved. You may want to focus on a savings plan and an emergency fund instead. You may not have any debt because you spend your money each month instead of saving it.
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You may have to cut back on your spending. No matter which goal is most important to you, you will most likely need to change your spending habits. You are probably spending more money than you realize. You also may not even realize how you are spending your money. This will be eye-opening for you.
What Are Long Term Financial Goals?
When thinking about financial goals for yourself, you want short term goals and long term goals. A long term goal is one that is going to take longer for you to achieve. It usually is going to take longer than five years to reach. This type of goal requires you to be committed to your goal. It also means you must be willing to spend the time working towards it. It may seem like it is a never-ending goal and that is true because it just may be a lifelong goal. Saving money is not a goal that should have an end date.
As long as you have money coming in, you should save a portion of it. You always want to provide yourself that cushion. Paying off your mortgage may be another long term goal. Once you know the goal, you can determine how much money it is going to take to achieve that goal, and then you can see the timeline for yourself. You may also be able to find ways to help decrease the timeline. If you can reduce spending in some areas, that may give you more money to pay off your mortgage faster. You may be so committed to paying off your mortgage, that you find a second job so that you can put all of that money towards your mortgage. Your coach will help you determine the ways you can increase your savings and decrease your spending. Start saving right now. Open your savings account and reach your financial goals. Here are a savings account suggestions for you:
Can Financial Coaching Help Me Prioritize My Goals?
A coach can help you look critically at your goals in an effort to prioritize the order. In reality, these are your goals, so you have to know the importance of them to determine their priority. However, a coach can guide you towards making sound financial decisions. Think about what keeps you up at night when it comes to your finances and that is probably where you should start.
Everyone has different needs and you have to understand your own needs and wants, or it is going to be challenging for you to stick to your goal. Spending money has an emotional component to it. Many of us spend money when we are happy, or sad and it is easy to spend more than we have to get that rush of spending. It is important to understand that when thinking about your own spending habits.
Will Financial Coaching Help Change My Spending Habits?
You have to first understand that you are the one that ultimately decides to spend money or save it. A coach can guide you and make suggestions about areas to change, but it falls to you not to spend the money. A coach can show you areas where you are spending money without realizing it. For example, do you go to your local coffee shop daily and buy coffee? Do you know how much money you are spending there? Or are you eating lunch out every day?
If you begin to make coffee at home and pack your lunch, you could be saving over $100 per week, which adds up to over $5200 a year. All you have to do is adjust your habits slightly. There are probably other small fixes you can make that could save you a lot of money. These are not easy fixes because it requires you to change your habits.
Your coach can show you how you are spending money and show you how much making some changes will save you. At the end of the day, it is you that has to be willing to stick to the plan and not spend money so that you can direct it towards your goals. Your coach can remind you of your goals and why they are important to you. Your coach can support you when you make a purchase that you should not have and show you ways to recover from that decision.
Conclusion
Changing your spending habits is not easy. You will feel like you do not have enough money, or that you are not able to buy the items you want exactly when you want them. However, if you focus on your plan, you will put yourself in a position where you can make those purchases when you want. Imagine a life where you have limited debt and a large amount of money saved. If you work hard now, you can reap the rewards later, but you have to be consistent even when it gets hard.