If you’re looking for a career change, have you considered becoming a financial coach? It’s a great way to help others find financial freedom while also doing something you love. If you want to become a financial coach, the process isn’t as tough as you might think. We’ll take you through all of the steps you need to become a financial coach below.
What does a financial coach do?
Before we get into the nitty-gritty, first let’s talk about what a financial coach is. A financial coach is a person who helps others build a positive relationship with money. It’s their job to help people establish healthy spending and saving routines to maximize their wealth.
It’s easy for clients to want to splurge on that brand-new video game console or skip paying their credit card bill this month. As a financial coach, you'll look out for these issues and advise them on a better course of action (i.e. not spending money they don’t have and paying their bills on time).
You'll motivate your clients to keep them on track with their goals and successes. Part of this might be by helping them track their income and expenses and creating a monthly spending budget in different categories.
When you become a financial coach, you’re basically a client’s personal financial cheerleader. You’ll educate and assist them in reaching financial freedom. In other words… it’s a great gig that can really make a difference on a personal level.
Difference between a financial coach vs. financial advisor
While the job titles sound similar, a financial coach is different than a financial advisor.
Financial advisors also help people manage their money, but their goal is more about implementing certain financial products and strategies. For example, you might turn to a financial advisor when you need help navigating the stock market or finding the right fund to invest your 401(k) in.
Financial coaches, on the other hand, are more hands-off when it comes to products and services. They don’t provide any recommendations for where to invest money. Rather, they help people build habits to adjust their financial habits and accumulate money for investing.
One way to look at it is like this — as a financial coach, you'll help clients build their savings through budgeting and other positive money-handling tactics. Then, once they have enough saved up, they might head to a financial advisor for help on investing it.
Why become a financial coach?
There are tons of great reasons to become a financial coach. Let's go over a few of them so you can see why becoming a financial coach could be a good move for you!
You’ll get to help others
Perhaps number one on the list is your ability to help others become more comfortable with their finances. Studies show 25% of Americans worry about money all or most of the time, so you can help bring peace of mind to some of these concerned people as it relates to their finance. Helping others is not only personally fulfilling, but it's also positively impactful on the lives of the people you help.
Your work is on your own schedule
The cool thing about being a financial coach? It gives you the freedom to work on your own terms. You’ll gather your own roster of clients, and you can set up meetings with them based on your schedule. While starting a coaching business is hard work, you'll be able to plan your time accordingly based on what's best for you.
There’s a high earning potential
We’ll go more into the average salary for financial coaches below, but just know that there’s a lot of potential for earning. It all depends on how much work you want to put in. And this is because when you own your own business, there is no cap on your earnings!
What is the average financial coach salary?
Your financial coach salary all depends on how many clients you take on and your experience. Obviously, a more experienced financial coach with proven success can charge more than someone just starting out. Additionally, someone with financial coaching certification may be able to make more than someone without it.
Financial coaches can charge an hourly rate for their services. If you’re lucky, you may be able to collect a monthly retainer for clients that require your services on an ongoing basis. You can also set a fixed fee for a set period of engagement, such as six months of coaching services.
With that in mind, the average financial coach salary in the United States is $44,342. This is less than a financial advisor makes yearly ($87,850), but that’s because it’s a job that requires less certification. That said, you can definitely earn more if you’re building your own business and taking on more clients.
How to become a financial coach
Becoming a financial coach isn’t as hard as you might think. Let's talk through the process!
Make sure you are comfortable teaching financial literacy
As a financial coach, one of your core competencies is to teach financial literacy concepts as you guide your clients on improving their finances. So you'll want to make sure you are comfortable teaching this. You also want to make sure that you have an understanding of what's required to teach and coach based on your clients' needs.
Get any needed certifications
One thing you might want to think about is financial coach certification. Keep in mind, you actually don’t need any certifications to become a financial coach. However, having certifications gives you an additional level of credibility, so it might be worthwhile to pursue one. We'll get into some of the best financial coach certifications below.
Determine your financial coaching focus area
Next, you’ll want to think about the areas you’d like to focus on. For example, you may have experience in a specific area of finance. If you recently were close to bankruptcy but were able to turn it around, you might want to market yourself to clients in a similar situation. Similarly, if you develop the discipline and patience to pay off a large sum of debt, you could coach others to do the same too.
Learn from other financial coaches if possible
Once you’ve narrowed down your niche, try to get some experience. See if you can shadow a financial coach so you can see how the coaching process works. This will help you see what tactics work best with a variety of clients before you’re on your own. Alternatively, many coaches now share their process and experience via podcasts, videos, and social media.
Determine the tools and resources you'll need for your business
When you’re ready to start building your own business, make sure you have the tools in place you’ll need to succeed. This would include setting up your business website and blog. This also may involve investing in financial coaching software to help manage your clients.
Software like this saves each client’s credit scores, bank account balances, and other financial information all in one place so you always have it secured and handy. Keep in mind, it is possible to get a job working for a business as a financial coach, but you’ll lose a lot of the freedom that comes with owning your own business.
How to get a financial coach certification
As mentioned earlier, it’s not required to become a financial coach, but it can help you become more knowledgeable in the field. Also as mentioned earlier, having a certification can provide you with an extra level of credibility. Certification can also put new clients at ease — after all, clients would much rather trust someone with a proven background in the field.
Before choosing your financial coach certification, just make sure it’s legit. There are a ton of organizations and “experts” out there offering financial coaching classes and tutorials. While these might be helpful, they certainly aren’t official certifications you can list on your resume.
Your best bet is to stick with official certification organizations with nationally recognized credentials. That way, you can be sure the information you’re learning is legit and not just an online scam.
Types of certifications
While there are several financial certifications, there few specific financial coach certifications you can get. These are all certified organizations and recognized as legitimate in the field of financial coaching.
Financial Fitness Coach (FFC)
This certification comes from the Association for Financial Counseling and Planning Education (AFCPE). The AFCPE is one of the premier financial certification organizations in the country and will teach you how to support clients with lasting financial behavior change through three separate education modules.
Certified Personal Finance Consultant (CPFC)
This certification comes from the National Financial Educators Council. In this program, you’ll learn everything you need to become a competent financial coach during 180 hours of training and practice.
Certified Financial Education Instructor (CFEI)
This certification is also from the National Financial Educators Council. When you enroll in this program, you'll learn the skills you need to become a finance education instructor so you can educate others about financial topics. This program requires ~40 hours of study.
Is financial coaching right for you?
Financial coaching is a fulfilling career that can really make a difference in your clients’ lives. So is it the right path for you? That all depends if you’re ready to commit to starting your own business.
You don’t have to quit your day job (yet), but you do have to make sure you have enough time to commit to your clients’ needs. If you’re ready to start making a difference by helping others build a strong financial foundation, give it a try today!