Financial coaching reflects a shift toward engaging people in becoming more active managers of their own finances. It is not about just teaching specific personal finance content, but rather helping people change behaviors and set realistic goals, act, and follow through with positive behaviors that they themselves realize are important to their financial success. Coaching is a partnership between the coach and client(s). Financial coaches inform, demonstrate techniques and processes that engage clients in developing patterns of behavior that are sustainable.
Financial coaching applies techniques emerging from research in positive psychology, a branch of psychology focused on improving life experience. Coaching techniques have been used in athletics, health, personnel management, and other settings for decades, and are often embedded into mentoring, counseling, motivational interviewing, or other approaches. Financial coaching is developing a unique identity related to your personal finances. Coaches and clients work in four main areas:
- Alliance: forming a partnership between the coach and client;
- Agenda: letting the client decide what is important and define his or her own goals;
- Awareness: allowing clients to explore their own beliefs and motivation to change behaviors
- Actions: clients act on their plans under the supervision of the coaching relationship.
Financial coaching is best suited for those that want to achieve financial success in their personal life and are willing to act.