The views and opinions expressed in this article are those of the author and do not necessarily reflect the views or positions of any entities they represent.

Let’s start with a simple question: what is coaching?

I define “coaching” as helping another person to get more out of an area of their life than what they are able to do on their own.

Coaching – especially financial coaching – is not about the coach; it’s about the client.

A client who does things because you said to do them is not coaching; it’s instructing or lecturing.

What Does Great Coaching Look Like?

Over the years, I’ve had a lot of coaches – in sports and life, and the great coaches had a few things in common:

  • They owned their shortcomings.

  • They viewed every member of the team, club, or sport as an individual.

  • They welcomed and even encouraged out-of-the-box ideas and suggestions (and sometimes changed their game plan because of it).

  • They embraced everyone’s individuality and checked on team members who needed additional support.

  • Their main focus was on the effort, not the win.

  • Rather than demanding that everyone fall in line, they ran the team, the gym, and the “crew” as a cooperative community rather than a monarchy.

What Is Financial Coaching?

Here at the Financial Coach Academy®, we define financial coaching as helping a person to achieve more financially than they could achieve on their own.

I personally love financial coaching because it is a beautiful mix of technical, financial, and mathematical calculations plus behavior changes, adjusting habits, and figuring out what makes a person tick. As financial coaches, it’s our job to help our clients figure out how they can feel excited and motivated about the things they’re doing with their money and the way they’re living their life.

Financial coaching requires engaging both the right and left brain (which, honestly, is a really fun way to make a living).

Where does financial coaching fit as a business?

I believe that financial coaching falls under the “coaching umbrella” of industries and professions, so if you’ve got the coaching umbrella, then underneath that you’ve got life coaching, then underneath life coaching is financial coaching. Financial coaching is not under the umbrella of investments or financial advising like a lot of people think.

Financial coaching is both technical and creative.

Coaching helps a person as they become the person who creates a certain outcome for themselves. You, as the coach, are likely already “that” person who creates positive financial outcomes.

Financial Coaches facilitate the process and help a client navigate the development needed to reach a certain outcome by guiding them through the process with empathy and leadership.

I know this because you’ve cultivated expertise & knowledge, you’ve gained understanding, you have a certain level of awareness, and you have a particular skill set to make decisions a certain way with your money.

Great financial coaches empower their clients to make decisions because the client chooses to. Many new or inexperienced coaches struggle with this – myself included. In fact, when I first started coaching, I needed a framework that would help me apply financial coaching to different sessions and concepts in different coaching situations.

Looking back (after doing a LOT of coaching), I can so clearly see exactly where I went wrong as a new financial coach. I was missing non-negotiable steps!

As a new coach, I thought I could simply teach my clients the steps they needed to take to achieve their goals. I completely missed the necessary step of considering a client’s thoughts and feelings (and reactions to what I was teaching!) – which are the “gas” that makes their “car” – their action – go. 

Your client’s situation is a circumstance – it’s where they are right now. A statement of fact, so to speak. This is where great financial coaches shine: they paint a crystal clear picture of the situation by interpreting the client’s thoughts, feelings, and goals into a narrative that will allow you both to see the situation as the client sees it. And having a Financial Coaching Framework makes that process streamlined and even easy.

The Financial Coaching Framework

With financial coaching, we get to help our clients understand the many ways that money works. For example, there are things you’re allowed to do (like cash or write a check) and things that are illegal (like embezzling money from your business).

As financial coaches, we have to balance a fact-based approach (because accurate information matters when you’re helping people understand their money) with creative solutions that fit a particular client’s needs, goals, and means.

And there’s not a clear path for this – instead of having black and white, yes or no “rules,” money management is more like a series of paths through the woods. There are a number of different directions or decisions you can make to reach the same location.

This is where most financial professionals get it wrong (and where I also got it wrong as a brand-new coach). While it’s tempting to tell a client that they must do something one way in order to be good with money, a great coach will share the variety of paths available to them and help them choose the path that is best for them.

To do this – to help your client achieve their goals – you need to start with three things:

  • Education,
  • Application, and
  • Commitment.

Step 1: Education

Every new client begins with education – this is the step in the Financial Coaching Framework that allows them to learn something new – as the coach, you’re providing examples, resources, data, and facts that will allow them to make the best decisions possible for their finances and their goals.

This is where you, as a coach, can learn a lot about a client’s ability to process and ask questions as you help to show them the possibilities. As you discuss their goals and provide them with options, resources, and definitions, it’s your responsibility (as their coach), to ask them how they interpret and understand the information you’re sharing. Taking the time to recognize where your client is at with their financial education will allow you to better recommend and guide them.

The Education period is when you assess their baseline financial situation and baseline financial knowledge. Understanding this allows you to meet them where they are. Knowing their starting point means that they get those “wins” or transformations more efficiently and that the very same client will actually understand exactly how they got their “win” or transformation.

Step 2: Application

Once your client has the knowledge, they need to apply it – hence this second step in the Financial Coaching Framework. The application of their knowledge & education (thanks to you, coach!) is where your client tests tools, techniques, and tactics – they also learn to trust themselves as they develop new skills. 

Just “knowing” isn’t good enough – most of us need to engage in “doing” to actually fully comprehend the knowledge and information that we’ve learned by listening, watching, and reading. It’s quite common to bounce between the education step and the application step as your client can more readily describe what they want and what they need and actually see what’s working.

As you move through the Framework (especially these first three steps), each time the client applies what they learned, there will be consequences (both intended and unintended). This is why you allow the process to move or bounce between Education and Application. As the client learns what works for them (and what doesn’t) – they’ll have questions that need additional coaching and support, and further education.

This second step of the Financial Coaching Framework takes time – it can be tempting to just “skip to the end,” but if you do that, you end up an educator…and not a coach. Yes, answering a question with a definitive answer may seem easier (or faster), but as a coach, you want to help your client have a total transformation – which can only happen when you’re allowing your client to learn at their own pace.

As your client’s confidence grows, you’ll find that you’re bouncing back and forth less and less. With each new lesson, you and your client can more easily identify (and even predict) things that are working well for them – and things that are not.

Your job is to help each of your clients identify additional refinements and adjust their application. And you’ll do that over and over and over again until the client is confident and ready to take the next step.

The Application period is crucial to your client’s financial future, as it allows them to test out the knowledge they learned during the Education period – they’re taking a theory or concept and seeing how it applies in their everyday life

This is one of the stages where financial coaches add value because there is definitely not a shortage of financial education out there (just ask Google).

Step 3: Commitment

The third step is the client’s Commitment. It’s at this step that you need to assess the client’s progress and uncover their true feelings and reactions to both the Education and Application steps.

This can be done by asking key questions about the process, such as:

  • What do you think of the new tool you tried or skill you applied?

  • Do you feel that this is relevant to your situation?

  • How would you like to proceed with this knowledge?

  • Are you ready to set a goal around this?

  • Did you discover a new habit that you’d like to hone or improve upon?

If the client isn’t quite ready to jump in with both feet, you can also gain a commitment to revisit the new skills or tools in the future – whether that’s in a few months or a few years.

You may have a client who wants to celebrate their success because they’re really excited about what they achieved during the application process. If they want to celebrate, they absolutely should.

The Commitment step is all about bringing closure to the education and application of the new skills that the client has learned, implemented, and added to their financial toolkit while allowing the client to process what the new habit means for their life and goals. 

As a coach, your job is to guide and lead your client through the phases of their growth.

The result is a client with a greater depth of self-awareness and self-trust, all while making financial progress.

Yes, you’ll need to educate them. But you’ll also support them as they take focused action while they’re working to master their new financial skills.

Beware of staying in “education only” mode – as a financial coach, when you’re coaching a client, the focus of your time and your action plan should be determined not by a rigid 7-step process but instead by what’s most important to the client’s individual goals, wants, and needs. 

Being a Financial “Expert” is ≠ to Being a Financial Coach

(A.K.A. Why Dave Ramsey is Not a Financial Coach)

When I started my career as a financial coach over 15 years ago, there were really only a few people who even came close to doing the work that I wanted to do. In fact, coaching as a whole wasn’t really a “business” yet. This is why, when I went looking for other financial coaches, the names I found were people like Suze Orman and Dave Ramsey.

As they were the only people publicly giving financial advice, of course, I followed them – I watched their shows, listened to interviews, read articles, and read their books.

To be honest – I have not picked up either of their books in over 10 years, but at the time, I thought that they were “coaching.”

And I thought that until I became truly curious about the “coaching” side of financial coaching compared to the “financial” side. I was fascinated by the differences and began exploring – and like Alice, I fell down the rabbit hole. I dove deep into researching human behavior, skill development, cognitive function, decision-making, and more. Honestly, I still do this because the way our minds work absolutely fascinates me.

I realized that if I could combine the behavioral research I was doing with the financial things that I wanted to teach and share, I may actually be able to help people not only understand the numbers but identify the behavioral patterns that were keeping them stuck. And you know what? It worked.

My client sessions became LESS about knowledge and understanding and MORE about growth and application/transformation. 

In fact, combining the financial facts with supportive coaching & guidance worked so well that I developed hundreds of resources and methodologies that I and our Financial Coach Academy® grads use every day with clients.

As I changed my financial coaching methods, my coaching sessions looked a lot more like transformation and growth for my clients (and a lot less like the cookie-cutter advice I was seeing the “gurus” promote).

The further I went down the behavioral rabbit hole, the more I realized that the techniques and formulas that were being shared by the celebrity “financial gurus” was not coaching. I noticed that their methods and advice did not, in fact, work for “everyone” as they claimed.

I realized that what they were calling “financial coaching” was actually financial consulting.

Financial Coaching Cannot Support An “All or Nothing” Mentality

If you didn’t know, I love to roller skate – I’ve been on 8 wheels for what feels like forever. But I had to start somewhere. I fell. I tripped. I knocked the wind out of myself. But I kept trying because I had friends and family who were there to praise me and encourage me – instead of focusing on my (badly) bruised knee (and ego), they applauded and commented on my progress:

“You made it 4 laps this time!!”

“You’re getting better at falling!”

“I can see you improving!”

Hearing those words of encouragement gave me the tenacity to keep going. It wasn’t pretty, but it was worth it.

And now my daughter Carmen has taken up roller skating – she’s at those beginning stages- falling, tripping, and constantly getting the wind knocked out of her. But I’m there to praise her and encourage her – instead of focusing on her bruised knee (aka. bruised ego), I focus on the progress she is making as she learns each new skill or technique.

I am so proud of how fast she is at getting back up after she falls now because that’s half the battle! And she’s skating backward already, which is a real challenge when you’re starting out!

I realize that managing your money is not the same as roller skating, but there’s a lesson to be learned here. 

If I’d had an “all or nothing,” “black and white” attitude the first time I fell, I would have quit. Instead, I got up, made sure that no one I knew saw (I mean, teenagers, right!?), and tried again. Did I think about quitting? Sure. But I had supportive people who cared about me and knew how badly I wanted to figure this out.

Financial Coaching is like being that supportive bystander – you give tips on technique, provide demonstrations and alternatives, and offer a bandaid when failure happens…but we coaches are there to recognize their progress – even if they’ve overspent 7 times this week and aren’t able to stick to the budget that they’re using.

The first method that you suggest may not make sense or work given your client’s individual circumstances. Having additional tools or methods that you can suggest they try after they fall down can make all the difference.

Let’s Review

I know that I’ve covered a LOT of ground here, so let’s take a quick moment to recap what I’ve shared with you. As you now know, here at the Financial Coach Academy®, we define financial coaching as helping a person to achieve more financially than they could achieve on their own.

This means that financial coaching falls under the “coaching umbrella” of industries and professions. At the Financial Coach Academy®, we believe that using a simple framework with clients not only helps the client to see their progress but allows you to adjust your suggestions and coaching to meet them where they are.

This is drastically different from the work that a financial advisor or “financial guru” who has made a name for themselves using a single, “black & white,” “this is the only way” program or formula.

I firmly believe that when you combine your financial knowledge with real coaching skills, you become the coach that your clients need you to be – a supportive, trusted, knowledgeable guide that will provide them with options so that they can then choose the best action for them & their lifestyle.