The Role of Financial Coaching: Powering Up Your Career Coaching Practice
By Gale Hemmann
The path to self-sufficiency and financial independence requires more than just a paycheck.
– Goodwill Industries International, Inc., (2019)
Working with low- or moderate-income clients who are new to earning a steady or higher paycheck may require more than just employment support. Assisting clients in maintaining employment and adjusting to a new work-life balance is important; however, it is crucial to assist clients with the creation of a financial plan. A financial plan includes budgeting daily money management (including a plan for the loss of public benefits), repairing credit, and building savings. A financial plan is only one aspect of financial coaching in which career professionals can engage with their clients.
By providing financial coaching, career professionals are working on two levels: one, developing an individual client in a more holistic way than employment coaching alone, and two, furthering the social justice and equity potential of our work as career coaches by providing a true pathway to prosperity for underserved communities (Elsdon, 2007; Lodoño-McConnell, 2014). By helping low- to moderate-individuals get tools on how to “earn it, keep it, and grow it” (United Way of Pierce County, 2019), career professionals are linking clients to a chance at stability, building assets and realizing a unique vision for their future.
Financial coaching should be viewed as an important aspect in the career development process. Similar to career coaching, this emerging field offers a high-touch approach based on an ongoing relationship with the client. The financial coach helps the client review their finances, including money beliefs and habits, and guides a client to create an action plan. It is directed by the client’s goals, with the coach serving as “an accountability partner” throughout the process (Kitces, 2017). Financial coaching differs from financial counseling (helping clients overcome a crisis situation) and financial education (teaching clients from a set curriculum), though these can definitely support financial coaching and may be appropriate for some clients. Also, financial coaches generally do not promote a specific product. Financial coaching is available to clients in several major cities and often through nonprofit organizations such as Goodwill and United Way.
Paired with employment coaching, this is a power duo for success: knowing how to earn more and how to manage it. Though it is an emerging field, the results of incorporating financial coaching are promising. A study by the Economic Mobility Corporation (Roder, 2016) found that clients who enrolled in combined services (employment and financial counseling) had more success in meeting their financial goals than people in programs receiving employment assistance alone. They were more likely to be employed year-round and reduce non-asset-related debt (Roder, 2016). Other studies echo positive early results (Collins & O’Rourke, 2012; Consumer Financial Protection Bureau, 2016). When clients see savings and credit scores grow, they are able to gain momentum to maintain employment. Assisting clients to set aside funds for emergency situations can also help clients who may experience sudden transportation issues, or even a lack of equipment, technology, or work-related necessities. Clients can begin to start tapping into a different mindset to help them stay employed. Finally, being financially calm, particularly after a stressful financial period, is proven to allow clients to be less distracted while at work (Babcock, 2014).
How can career professionals help clients plan for financial success as they take their next career steps? Envision how to incorporate financial coaching discussions within the services you already provide. Below is an example of a checklist to review when implementing financial coaching with clients.
Checklist of Financial Considerations for Career Coaching with Clients:
- Is this job/field going to represent a change of income for this client?
- Will it create a loss of any benefits income (Social Security, housing subsidy, food stamps, or other benefits)? Are they worried about this change?
- Will it create any new expenses (such as childcare, transportation)?
- Are there other income-related supports this client should be referred to (Social Security Administration, Department of Health and Human Services, or other agencies)?
- Could this client benefit from a referral to financial coaching for help with planning, budgeting, or access to community resources?
- Is the client interested in a referral to benefits counseling or financial coaching?
Checklist for Referring Clients to Community Financial Coaching Services:
Unless you already have training in Financial Coaching, Credit Repair, or other related fields in addition to your NCDA certification, you will likely need to refer out for these services in keeping with the NCDA ethical standards (NCDA, 2015). Here is a checklist for this process of referral:
- Who are your local, reputable non-profit/free financial coaching resources? Get to know your service providers. Try out the services and learn more about them. These will often be housed with nonprofits and should be free of charge. There is not one go-to source yet for finding financial coaches, though the Association for Financial Counseling & Planning Education is a growing resource and provides a directory (some coaches listed may charge fees).
- Have specific names of referrals ready, and be willing to speak in a comfortable way about the possible benefits of financial coaching. Remember, financial coaching is new for many clients and especially lower-income clients, and money can be a sensitive subject. So, if you can speak confidently about it, it could make a difference.
- This could be part of your Community Asset Mapping process (Belser, 2019).
- Make appropriate referrals by giving clients information to self-register for services or providing a “warm hand-off” if necessary, with client permission (remember to follow all NCDA client confidentiality guidelines). Follow up as appropriate.
Stay up-to-date on services around the community and get client feedback. If there are partners who are working especially well, maintain and strengthen these partnerships.
The Impact of Holistic Help
Connecting clients with financial coaching can set clients up for success and take a practice from good to great. As a career professional, you will be able to see the powerful impact of these results as clients begin to move in a holistic way to better financial well-being with their new job and a road map of their financial future. Client outcomes may include credit scores going up, additional money in savings accounts, and even more important, feeling less worried about their finances and developing more financial stability.
Babcock, E. D. (2014). Using brain science to design new pathways out of poverty. Crittenton Women’s Union. Retrieved from https://www.empathways.org/researchpolicy/publications/2014-using-brain-science-pathways-out-of-poverty
Belser, C. T. (2019, September). Bolstering resources, partnerships, and community engagement for career practitioners through community asset mapping. Career Convergence. https://careerconvergence.org/aws/NCDA/pt/show_detail/250028?layout_name=layout_details&model_name=news_article
Collins, M. J. and & O’Rourke, C.M. (2012). The application of coaching techniques to financial issues. Journal of Financial Therapy, 3(2), 39-56. Retrieved from http://newprairiepress.org/cgi/viewcontent.cgi?article=1032&context=jft
Consumer Financial Protection Bureau. (2016). Financial coaching: A strategy to improve financial well-being: Research brief. Retrieved from https://files.consumerfinance.gov/f/documents/102016_cfpb_Financial_Coaching_Strategy_to_Improve_Financial_Well-Being.pdf
Elsdon, R. (2007, March). The growing divide calls for advocacy. Career Convergence. Retrieved from https://ncda.org/aws/NCDA/pt/sd/news_article/5296/_PARENT/CC_layout_details/false
Goodwill Industries International, Inc. (2019). Social good: Could your success begin with a coach? Retrieved from https://www.goodwill.org/blog/news-updates/could-your-financial-success-begin-with-a-coach/
Kitces, M. (2017, March). What is financial coaching, and best practices for becoming one [blog post]. Retrieved from https://www.kitces.com/blog/financial-coaching-what-it-is-and-how-to-become-one/
Lodoño-McConnell, A. (2014, July). Advocating, educating, inspiring: The expanding role of career professionals. Career Convergence. Retrieved from https://careerconvergence.org/aws/NCDA/pt/sd/news_article/62880/_self/layout_details/true
National Career Development Association. (2015). 2015 NCDA code of ethics. Retrieved from https://ncda.org/aws/NCDA/asset_manager/get_file/3395?ver=738700
Roder, A. (2016). First steps on the road to financial well-being: Final report from the evaluation of LISC’s financial opportunity centers: summary. Retrieved from https://economicmobilitycorp.org/first-steps-on-the-road-to-financial-well-being/
United Way of Pierce County. (2019). Centers for Strong Families. Retrieved from http://www.uwpc.org/strong-families-1
Gale Hemmann, CCSP, is a non-profit mentor and Family Self Sufficiency Coordinator working with low-income clients at the Pierce County Housing Authority in Tacoma, WA. Her team is part of the United Way of Pierce County Center for Strong Families initiative to help local families “earn it, keep it, grow it.” She previously worked at Goodwill of the Olympics and Rainier Region as an Employment Specialist. Gale is an NCDA Certified Career Services Provider, a HERO Community Development Certified Financial Counselor, and a trained facilitator of The Pacific Institute. She is passionate about credit repair and financial empowerment and its power to transform lives. She can be reached at GEHemmann@pchawa.org.