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  • Writer's pictureVolker Patent

Why most people need some financial coaching

Coaching clients often focus on goals that are linked to money or that are themselves money goals. Particularly working with clients recently has made me want to write a little bit more about financial coaching and about coaching on money issues, with a focus on my own journey.

My own money coaching journey

First a bit about myself and my experience of money issues. Some of my first memories of money were big antique coins from the German empire with a picture of Bismarck and the German Kaiser on the head side of the coins. My grandparents collected paper notes from the 1920s and told me stories of hyperinflation where money was worth very little and buying a loaf of bread was millions of Marks, with people putting money in wheelbarrows to go to shops. To be fair they probably had no real memory of this, being born just before it in and likely to have absorbed their parents’ accounts and reactions of these historic events. Back then in my early life while listening to my grandparents talk about the events unfolding in their early lifes of course I had no idea about money, or the reasons why at some point people where literally burning money for heat.

Burning the money in the Weimar Republic

Fast forward to the time that I became a coach. By then I had already experienced many of life’s challenges, and one of my biggest challenges has always been with money. I would often end up spending more money than I had, spending money on thing I didn’t really need or make poor purchasing decisions, for example by buying cheaper items only to find that the quality of what I had bought was not living up to expectations. I was bad at saving money and would run a permanent overdraft while also paying off credit cards and personal loans. At the same time I made decisions about careers based not on how much money I could earn but on how much money I didn’t want to earn. This was driven by a belief that having money, being rich etc, would lead me to becoming the sort of person I did not then want to be, or that having this much money was only for other people and not something I deserved or could achieve. At the same time I occasionally would get depressed or anxious about not having enough money and projecting into the future would worry about my retirement, fearing an impoverished old age. It was not until relatively late in life that I owned my own property. Since then I have sold it and am now planning on buying an incredible property in a village location. To help with this I have started to take much more control over my finances which overall has had a positive effect not just on my finances, but my self esteem, my prospects and my confidence about other areas of my life.

My journey into coaching exposed my somewhat negative and counterproductive relationship with money in the past, including the mechanisms that prevented me from taking any kind of financial action or made me want to only do the bare minimum, just to keep the wolves from the door. Money or the lack of it had been something that just happened to me and the feeling of being out of control of money made me really not want to face up to it my lack of control. Money was an uncomfortable issue for me to spend analyzing or taking action on.

So here are some of the things I learned bout my own relationship with money:

I was not actually doing that bad in the long term. There were people in much more precarious positions and worst of all they were not aware of this. At least I had an awareness of possible problems ahead, and a reasonable place to start from. With such awareness comes the possibility of taking action.I discovered that my beliefs about money and my desires where sometimes at odds with each other: what I desired (freedom from debt, more money, security) where blocked by my behaviours (spending) or attitudes (money is evil, and I did not want to be part of that) leading to inertia, or passivity.On the occasion when I looked at what I could do to improve I focused so much time and energy on thinking about earning more money that I ignored questions about my passions (e.g. coaching, songwriting, art). Consequently I was looking at career paths which appeared to promise big incomes, but which did not really align with my interests. As a result I ended up feeling stuck, and as I had not really ever made any money from my passions, I assumed that I would either have to end up in a job that was well paid but not what I really wanted to do and working crazy hours, or to carry on on the path of a lower paid job as best I could, while doing my best to maintain my passions as hobbies. The thought that I could combine passions with financial goals had not been at all apparent to me.That my discomfort in facing up to not being in control could hijack me emotionally to the extent that I would procrastinate or make excuses for not taking any action.

Coaching made me realise that my success in achieving financial goals depends on four things:

  1. Ability to understand clearly what my financial goals are, including the outcomes I hoped to achieve.

  2. Ability to see how my life goals were linked to my financial goals.

  3. Being able to see my way through the different ways I thought about these goals that were helpful as well as those that activity prevented and blocked my achievements of those goals

  4. Putting actions into place to address financial issues and goals

I have worked with coaches, who have helped me to order my goals in a way that facilitates financial goals, as well as other important life goals. Often other life goals are easier to achieve with money backing and vice versa money goals become more meaningful when they are part of a bigger strategy for achieving big aspirational life goals. This is what made coaching work for me and I now am in a position where I am pursuing my interests, a career as an academic and as a coach. Working with a paid coach creates accountability and responsibility (both of which are important for achieving financial control) and although it might seem paradoxical to pay a coach money to talk about getting financially stronger and more stable, in my experience clients (and that includes myself) may be more motivated if they have invested in the process. While I have done plenty of pro-bono coaching and also have been coached for free, there is a clear commitment people make when they pay a coach for an hours time to explore strategies for achieving financial goals.

So how does financial coaching work?

Financial coaching is essentially like any other form of coaching and will be client-centered, positive and future facing. It will lead from goals to actions with the difference being that the actions are focused on financial outcomes. The important bit for any coaching  session is that you, the client develops new insights. New learning, new behaviors, which over time can become new habits.

Financial coaching is not financial advice! Financial advisers will advise you on what financial products and strategies you should adopt. A coach may be trained as financial adviser, but this is not essential as a good coach would never endorse any particular product or financial solution. Instead a coach will be there to explore your goals and identify actions (one of these may well be to see a financial adviser) to help you build the steps necessary to achieve your ultimate goals. However more often the issue is not the exact financial advice but how to change behaviors and attitudes that lead to the difficulties clients experience with money. Some coaches, including myself will use some assessments to identify more about your money style. This can become a topic of conversation around which it is then possible to develop some goals for the future.

Financial coaching as I understand it is not:

  • A get rich quick scheme

  • A magic bullet to all your money troubles,

  • Advice on money-making and saving

instead it is

  • an opportunity to learn about your own financial motivations and goalsdevelop practical strategies for overcoming obstacles and blockages. These strategies are designed to work for you and with your personal values and circumstances.

  • the beginning of a lifelong journey with a different relationship with money.

  • more than just about the money, but about your future, your happiness and how your life may unfold.

Is financial coaching for you?

Only you can decide if financial coaching is for you. If you have had coaching before you may already be clear about the power of coaching in helping you address financial goals. If you have never been coached, financial coaching may be the focus for your coaching and you will probably discover that coaching can be quite flexible, in terms of the areas of life it can help address. If you have any of the following issues financial coaching may well be appropriate to gain control over your financial situation:

  • If you spend money you haven’t got.

  • Are unable to repay your debt.You feel that you have no control over where money goes every month.

  • Are stressed out over money.

  • Find it difficult to spend any money at all even if you have got it.

  • Feel that you are underpaid and undervalued at work.Are concerned about your retirement, mortgage repayment

  • Are unsure about whether to invest money and savingsAre anticipating a change in your financial incomeWant to pursue interests that need you to be financially independent.

If you would like to have an informal, no obligation chat, please get in touch.

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