What Is Budget Counseling And How Does It Work?

Even when you’ve got a lot of things right, you might reach a point when getting your financial situation under control seems impossible. If you’re really struggling financially and aren’t sure which problem to tackle or how, budget counseling can help.

Budget counseling

Budget counseling can teach you how to budget and budgeting methods. Plus how to protect your credit scores and other key financial strategies. But you may be curious if it is right for you, and if it is, you may wonder, “Where can I find budget counseling near me?”

So, let’s dive in and see exactly what budget counseling is. Plus how it works and how to get the help you need.

What is budget counseling?

Budget counseling is when you meet with someone who can help you improve your finances. Many budget counselors work for nonprofit organizations, so you may be able to get assistance at no cost.

Even if there’s a cost involved in working with a budget counselor or consumer credit counseling, that doesn’t mean you should rule it out. When you’re drowning in large amounts of debt or chronic struggles with money management, working with a trained counselor is likely worth a small investment.

Types of guidance you can get from budget counseling

Let’s talk about some of the types of help a budget counselor might be able to offer you. That way, you can decide if it’s the right choice for you.

Help with managing your money

Money management is one of the key ways you could benefit from budget counseling. A trained counselor can guide you through steps to help you manage your money, such as evaluating what you need to improve.

Money management includes things like setting up a budget or a better budget, monitoring your credit, and planning ahead with sinking funds for big expenses.

As an example of large expenses, you may need to save and get a loan from a mortgage lender for home ownership, or you may want to purchase a car. These goals are easier to achieve with good money management.

Help with creating a budget

Money management is a rather broad goal. One key skill your counseling sessions can help you develop is budgeting! You could learn about different budgeting methods, like the 30-30-30-10 budget or the cash envelope system. 

Budgeting is just knowing how much you have coming in and how you’ll spend or save it. You might do best with a strict plan for how every cent is used, as with the zero based budget. Or you may need a looser strategy that gives you just a few categories, like the 70-20-10 budget.

Either way, budgeting can help you manage all of your expense categories. Things like utilities, groceries, and medical bills, as well as saving for the future.

Working closely with a budget counselor could help open your eyes to your money story and the way you relate to money. They can also guide you through budget challenges, such as the process of creating and sticking to a budget.

Credit score monitoring

Unfortunately, keeping tabs on your credit score and credit report is something too many of us neglect in our money journeys. We think that everything will be fine as long as we pay our bills.

However, you need to monitor your credit score because it is so key in determining whether you can get financing from creditors. You could be unable to rent an apartment or buy a car at a decent interest rate if your credit score has dropped significantly.

Consider talking to a counselor if you’re unsure of how to keep track of your credit scores. It’s actually pretty simple to check your credit score regularly through a free credit report. A budget counseling expert can help you take steps to raise your score if it’s down.

Guidance in paying down debt

Another important aspect of budget counseling is often learning how to attack your debt and reduce it. A credit counseling organization and a certified credit counselor are usually well-trained in how to help people out of debt.

Often, unsecured debts and high interest rates can be one of the most painful parts of your money story. The idea of lots of debt can weigh you down, bring you feelings of shame, and make you feel hopeless.

Talking to a budget counselor can help you deal with debt stress. In addition you can figure out a game plan for dealing with credit card debt or loans.

According to Bankrate, more than half of adults in the U.S. find money stressful. Talking to a budget or debt counselor can help you find your way beyond debt and help you get rid of that extra monthly payment.

Identity theft protection

Although identity theft is one of those things you probably don’t expect will happen to you, it’s a real risk. Budget counseling could provide assistance if your identity has been stolen, which is a horrible situation to have to sort out.

With cyberattacks and fraudulent activity on the rise, we’ve all got to be vigilant.

In fact, according to Experian, about 1 in 20 (5%) of Americans are affected by identity theft each year.

Budget counselors can help you figure out the best way to prevent identity theft and fraud, as well as help you if you’ve already been a victim. They can talk with you about whether you should freeze your credit and other preventive steps.

Dealing with predatory lenders

We’re all aware there are some shady players out there, and the world of finance and lending is no exception. Sadly, many lenders have predatory practices—they may be deceptive or coercive and convince borrowers to take on loans that could ruin them.

When going through budget counseling, your counselor can help you learn to spot red flags of predatory lenders. (Watch out for payday loan traps, for example!) You can find out ways to deal with or report a lender that’s breaking the law.

Expert tip: Leverage budgeting tips from counseling to improve your finances

In addition to seeking out professional help with your finances, it’s a good ideas to take extra steps on your own to learn more about your money.

Read books, listen to podcasts or YouTube, go to finance workshops, and learn more about any financial topics you might be struggling with.

Having more information about budgeting, interest rates, investing, and credit cards is a great way to get your money back under control. So even if it takes some time, learn as much as you can.

How much budget counseling costs

As you’ve read about the benefits of budget counseling, you’re likely wondering one key question: how much will it cost? The good news is that you can find places that offer free counseling and information.

For instance, you can try our completely free financial courses right here at Clever Girl Finance to gather more financial knowledge.

In addition to our courses, here are some other options to check out as well:

For-profit counseling

In spite of the fact that budget counseling or debt counseling may imply you don’t have any savings or a lot of excess cash, some organizations do charge for their services. These are for-profit counseling agencies.

Even if an agency is for-profit, its fees may be quite reasonable. Ask upfront before selecting a budget counselor if they charge and how much. And you’ll want to look for free options first in order to focus on getting your financial house in order.

Fortunately, the Federal Trade Commission reports that credit counseling agencies should, at a minimum, give free information about their services. (If they charge even for basic information, run the other direction!)

Non-profit counseling

Plenty of non-profit budget counseling agencies exist, so you’ll want to examine your options in that arena first. Of course, your first step is simply gathering information. If you find there are several organizations in your area, read over their websites or call to request info.

Some places that may offer free counseling include your local consumer protection agency, credit unions or banks, universities, housing authorities, and military bases.

One warning: the term non-profit may not mean the agency’s services are totally free. So even if an agency is labeled as a non-profit, you still have to do a little more homework to find out if they charge for debt or budget counseling sessions.

Where to find a budget counseling service

You may be wondering, “Where do I find budget counseling near me?”

First off, you’ll want to try locating a counseling service that is free of charge. However, in some cases, you may need to sign up for a Debt Management Program (DMP), which will usually have a cost.

The good news is there are several reputable sites where you can find a budget counseling service that can help you get back on track with your finances! 

If you know anyone who has gone through this process, you might also ask them for referrals and recommendations.

Financial Counseling Association of America

The Financial Counseling Association of America (FCAA) is an organization with financial counselors available to help you. You can get basic budget counseling at their various agencies as well as debt management plans.

The FCAA is a non-profit organization. You can find resources like articles on specific types of financial assistance, housing assistance, where to find bankruptcy counseling information, and more on their website, fcaa.org.

National Foundation for Credit Counseling

Another reputable nonprofit option is the National Foundation for Credit Counseling. They can help connect you to a member agency that will offer debt relief solutions.

The NFCC does charge a monthly fee for services related to the debt management program, which helps you pay your debts.

However, even a one-time counseling session of 30-60 minutes can help you come up with action steps to improve your financial health.

Questions to ask to help you choose the right counseling service

When you’re wondering, “Where is budget counseling near me?”, it’s a good idea to look into several different agencies or types of counseling. What you choose will depend on how severe your needs are, along with other factors.

Any decision about going through budget counseling requires you to ask a few key questions. You can look online for these answers, of course, or try calling or emailing a representative at a few agencies.

Here are some questions to get you started.

What services are available?

Naturally, you’ll want to find out what types of services an agency offers. If they specialize only in debt management and you’re looking for more basic budgeting guidance, you can look elsewhere.

How can I access budget counseling (online, by phone, or in person)?

You’ll likely figure out the answer to this question with your initial investigation. Try your preferred method of contact first, and then you can ask what types of counseling they provide.

What free information is available?

Whenever you’re talking to a representative or reading online resources, you can find out about free resources. Most reputable counseling organizations will provide information at no charge. If they charge you even to give out information on their services, that’s a bad sign.

Is there a formal contract to sign?

Ask any budget counseling agency you’re considering about contracts. What level of counseling is offered, how many sessions are there, and are you obligated to sign any recurring contract with fees?

How are your budget counselors trained or certified?

Knowing what kind of training the counselors at agencies go through, or if they are accredited or not, will help you make an informed decision. Plus, it will give you peace of mind knowing you have a financial expert who is able to help you make the right financial moves.

What makes a financial counselor and a financial advisor different?

The basic difference between a financial advisor and a financial counselor is what they focus on teaching you and helping you with. A financial counselor will focus on helping you build great money habits through budgeting, debt repayment, etc.

On the other hand, a financial advisor tends to focus more long-term on investing and retirement planning. They run scenarios that show you how much you need to invest and provide guidance based on your long term goals.

In a nutshell, a financial counselor can teach you the basics about money, and a financial advisor can help you plan far into the future.

Does budget counseling affect your credit score?

Your credit score is not directly affected by budget counseling. However, when you choose to take action with any debt you have because of the counseling, you may see a change in your credit score.

For example, closing credit card accounts may negatively impact your credit score temporarily. But this can all be worth it in the long run if you are trying to clear up any debts you have and become financially free.

And remember that the opposite is also true, by creating a plan with your counselor to repay debts, you can positively impact your credit score, as well.

If you liked learning more about where to get help with your finances, check out these articles next!

Consider budget counseling to get your finances in order!

You may think you’re a lost cause when it comes to finances. Please, don’t believe that for a moment.

You can take control of your money by starting a new life for your finances, and budget counseling just might be the tool you need to make that happen. Leverage the tips in this article to create a plan and seek out the support you need.

Leave a Comment

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.

Scroll to Top