A common question I get is “what is the difference between a financial planner and a money coach?” 

One way to think of it is that financial planners primarily focus on the future and a person’s larger asset picture (long term savings and investments). They try to help people save/invest enough to retire and reach other large goals by giving advice on how and where to invest money. They also help people manage investments during retirement. And they may also manage large portfolios if a client has trust income.  These are incredibly important functions and a trusted financial planner is worth her weight in gold. I’ve referred many clients to financial planners.

A money coach, on the other hand, is involved with teaching people how to manage their current income and outgo- their cash flow. Money coaches address practical money matters as well as the emotional components that often fuel financial behaviors. Often times, my clients describe this work as their “final frontier”— while they’ve done work on many areas of their lives, money remains frustrating and confusing. Money coaches give you relief in the day to day of “dealing with money” and provide hope for the future.

For many, the key is to escape the “money fog”. The process of emerging from this fog helps clients tackle issues such as financial avoidance, emotional spending, debt, retirement funding and making more conscious decisions about their lifestyle spending. With this work, people begin to feel in control of their finances and they feel better about their money choices overall.

Some of my clients come into money coaching already working with a financial planner. However, many are distressed because while they may have an investment plan in place, they are still full of anxiety in their daily life around money. They want to use money to create a life they love in the now, as well as in the future. They don’t know how to “budget” or plan their spending. They may feel guilty about spending, sometimes struggling with credit (paying credit cards in full each month until suddenly, they can’t…) And they may feel pressure from their planner who tells them they should be investing more to “be on track”, but they really want to spend money remodeling their kitchen…  

The numbers are relative. For example, in one scenario a family may make $350,000 a year in income but they spend, or suspect they spend, $400k. They hate opening up their credit card statements, and sometimes feel like they have to sell more corporate stock then they wanted to, to cover everything. They may be getting emails from their investment planners, who are worried that the investment plan is underfunded. And yet, the tuition bills continue to arrive and their friends want them to join them on expensive vacations. How to navigate all of this? This is where money coaching comes in.

Other scenarios are people who just divorced and suddenly everything is different.  While a financial planner can help them feel less fearful about their future retirement, this is generally not the person to help them chart a new relationship with money. They may be working with less money, fear needing to go back to work, and /or worry about keeping a house.  And if they were not the person who managed the family money during their marriage, the task of money management can feel very daunting indeed.

And in yet another scenario, perhaps someone is already retired and has a great financial planner overlooking their investments, but they need to be careful about not spending beyond their projected retirement distributions. Money coaching can help them learn how to plan their spending and live happily within their means. 

One way to think of it is that money coaches are the “family doctors” of finance. Financial planners are specialists (retirement investing for example) as are CPA’s (tax advice). Money coaches:

• Help people who may struggle with overspending (spending can be very emotionally driven) 
• Help people who may struggle with not earning quite enough. (Negotiating with employers can be stressful. Raising your fees for clients can feel very hard). 
• Work with couples who may be in conflict with their spouse over money. (Different money styles tend to marry…)  
• The list goes on.

Will a money coach talk with you about retirement? Absolutely! We cover the entire life cycle of money needs. We work with people on understanding their net worth, and we help them find the money to start, or increase their retirement investing. Financial planners love it when their clients work with a coach. When I refer a client into a financial planner, that planner knows that this person knows what they spend, and knows what they can afford to invest and has a way to stay in touch with their money when life throws them a curveball.  Without this coaching work, a planner can help someone come up with a great plan for the future, only to have the person call them the next year and tap their retirement account for the kid’s braces…

A quick word on certifications. I generally recommend people look for a CFP when they want to find a financial planner or are focused on finding “retirement planning help”. This stands for Certified Financial Planner and is the gold standard of their industry. Money coaches have a variety of designations, as it is a newer field. My original certification was with the Financial Recovery Institute as a Financial Recovery Counselor and Coach. I then earned my AFC. (Accredited Financial Counselor.) I am also a member of the Financial Therapy Association. As with other things, interviewing your professionals and/ or getting good personal recommendations is hugely helpful.

With a topic as important as money, people need a good team around them. A money coaches is a key advisor. Yes, it takes a while to learn how to manage cash flow and then build a balanced lifestyle. And yes, support is invaluable when healing from financial trauma. Creating a new healthier relationship to money does not happen overnight. However, one benefit of having a coaching relationship is that after you move through the more time-intensive aspects of coaching, you can check in with your money coach for years to come on all sorts of money related topics. It feels great to have someone you can really talk to about money who truly understands you and supports your happiness- both now and in the future.

From dental bills to vacationing in Mexico- one woman does it all

June is a great time to adjust your annual spending plan, whether by yourself or with a money coach. (Talking through your thinking with someone can be very helpful!) It’s about getting ready to enjoy your summer. 

So what are your summer plans? Are you taking a vacation? Doing some large home projects? Hosting family?

Monthly spending plans are about managing your cash flow and keeping your stress down- they keep you in touch with your spending and your larger plan. And indeed- cash flow in the summer can get pretty crazy with expenses like travel putting pressure on your accounts. But annual plans are about decision making, visioning and how you want and need to live your life for the year. (Your monthly plans are what enable you to live out your annual plan.)

Freshening up your annual plan in June and July (mid-year) will give you peace of mind and help you see if you need to change anything, to make sure you can be financially stress free when you travel and work on your home projects. The last thing you want to think about is money, when you are off enjoying the summer sun. Give yourself the gift of financial clarity. My clients often report that one of the great gifts of money coaching is enjoying vacations more- and not worrying about coming home to the credit card bill.

One of my clients, when we were adjusting her annual plan, was worried about a trip she really wanted to take, because she was hit with high dental bills recently. Turns out she needed some emergency crowns, due to cracking a molar back in February… 

However, as we sat there working with her annual plan, we saw that if she waited on buying some living room furniture, or considered buying the table and chair set at consignment instead of new, she could easily go off to Mexico with friends this summer. She practically floated out of my office.  (She did not want to reduce the new higher retirement savings she had recently started. So we adjusted a few smaller things as well to give her some breathing room.)

The key is knowing what you want to protect. For her, time with friends and time away from work, was more important than buying brand new furniture.

Enjoy the summer,

Mikelann

Want some joyful inspiration for your money life? Here is an amazing podcast interview I did on how to live your financial life in alignment with your core values- so you can spend on what truly gives you JOY, while also protecting your future. This interview also looks at how to unhook your self-worth from your net worth. And then  it addresses the metaphysical question of money as energy and how to feel truly abundant. Give a listen- I think you’ll be truly inspired.

Listen here

The lovely woman who interviewed me was Seline Shenoy – an author, entrepreneur and seeker of truth on a mission to inspire others to live fully and authentically.  She is the founder and writer of the blog, The Dream Catcher, and the host of The Dream Catcher Podcast. Find her here: www.thedreamcatch.com

If you want to avoid that January spending hangover and December stress, find 15 minutes, a pad of paper and a cup of tea.

Remember, a plan lets you know when you’ve completed your shopping. It tells you when to stop — if you don’t have a finish line, you are going to keep shopping as long as the stores are open. (Or until the “guaranteed delivery dates” from online shopping move to December 26.) Knowing what you have already ordered and have left to buy — and how much more you want to spend– will save you a ton of money. You will finish your shopping earlier and you will have fewer impulse buys.

TIP: Create your plan in whatever form will be easiest for you to bring with you when you go shopping or sit at the computer. If you are a pen and paper person, use that. Keep everything on your phone? Make it digital. The best plan does you no good if you don’t bring it with you.

Make Three Columns

1. First column: List People —Think of everyone you are planning on giving a gift to, and list them in the left column. Don’t put down gift ideas yet. Only brainstorm people, and make sure you get everyone. One of the biggest pitfalls is gifting a lot more people than we originally intended. Consider creating three sections: family, friends, and service providers (babysitter, hair stylist, etc.)
2. First column: Now add other holiday expenses: after you list the people, write down: holiday cards (and photography?) holiday decorations, holiday clothes, holiday party costs and holiday travel.
3. Second Column: List Gift ideas and other things that cost money — Now that you know who and what is on your list, write down gift ideas for people.  And also write down the gifts you’ve already bought/ ordered. Write down holiday entertainment you are contemplating. (Going to see a holiday play? Need a new Christmas tree this year?)
4. Three column: Money— Last, enter amounts of money in the final column. Do the best you can – a guess is better than nothing. If you have already purchased the gift, put down what you think you spent. Let me be clear- if the money has already left your account for ordered gifts, or gifts purchased long ago, list these amounts. Then list the amounts of money for gifts you have not purchased yet. What will the play tickets cost? The tree? Circle these unpurchased gift/ item numbers. 
5. Totaling Up and Adjusting — Now add up your total. If it includes gifts already purchased (back in August?) you may be surprised at the actual total. And then total up the remaining items to be bought- the numbers you circled. How do you feel about the amount? Does this seem reasonable? Really think about it. Can you afford this? Is it worth going into credit card debt to be able to give a gift to everyone you know? What are your other options? If your total plan seems too high, go back and make some adjustments and then re-total. Keep doing this until you feel better about the total.
6. Tracking — As you spend money on the remaining gifts, jot down the amounts on your plan. Add up what you’ve spent on a weekly basis, or more if need be. Where are you? Remember, part of creating a plan is seeing what will happen before it happens! If you don’t like what you see, take the time to work on your list.

The good news is, trying to stick to a plan (regardless of how successful you are with it) will cut down on impulse buying, which is a major problem during the holidays. Without a plan, people buy more things and spend more money on each item they purchase. The temptations can be overwhelming when you are out shopping.

If you have gone through your plan and don’t know how to make this work, consider getting more creative. What if you changed your holiday gift-giving ritual? I used to give gifts to friends, but now we all go out and enjoy a play together. This came out of doing my own first holiday spending plan. I felt a little guilty when I approached them with my idea, but discovered they were all relieved.

My colleague Karen McCall wrote an amazing post on how to have a joyous and debt-free holiday. She covers not only how to do a holiday spending plan, but also helps you examine your feelings and beliefs about the season to see how they impact your behavior. Check it out: The 10-Step Plan to Have a Joyous and Debt-Free Holiday Season (financialrecovery.com)

And last, a final quote for you from Dr. Seuss: “Maybe Christmas, the Grinch thought, doesn’t come from a store.”

I wish you joy,

Mikelann

Fall- my favorite time of year. Curious where I’ve been? Here’s my update, with thoughts you may find useful on creating rental income and financing your child’s college. Speaking of college- here is a picture of me and my son Zander at the big high school graduation party. Hallelujah!

What’s Mikelann the money coach been up to?

Creating rental income: This summer I finished building a second home—on my property–  and then rented it out! I wanted to diversify my investment and retirement portfolio. We all have to put together our financial lives in different ways so we know we will be able to “retire” someday and have what we need.  For me, to get where I wanted to go, adding rental income became a key piece. Now, both my houses are on twenty year payoffs, so I know when I will be mortgage free. Will creating rental income work for everyone? Of course not. But part of money coaching helps us see what we need to live a good life. From this we see what we need to earn. And then you take it out even further- you see what lifestyle you want to have in the future, and how to make it happen. Personally, I think of it like “designing” a life with various puzzle pieces that form the picture we like. And it’s been a heck of a learning process…

How I financed my kid’s college: Last month I sent my son off to college. This has been my proudest achievement for many reasons. On the money side, I will share this- the month he was born, we began saving $100 a month into a 529 plan. That’s it. Fast forward to today and we have his tuition, housing, and meal plan fully funded for over the next two years at Western Washington University ($39,000). To this we added a $5,000 GET account from his grandmother. He will have scholarship money that is the equivalent of one year’s costs. We are cash flowing the rest. Starting last month, we stopped funding the 529 and now my ex-husband and I each put $225 into a dedicated savings account. Each month. We estimate this will cover our son’s fourth year. Every family is different. I simply share it to give you one way to think about college funding.

Whew!!! No wonder I haven’t sent a newsletter out in a while! I’ve been a bit busy. Oh- and I added another financial certification- now I am an Accredited Financial Counselor (AFC ®) The certification is for professionals who guide clients through a holistic counseling framework of life-cycle financial education–  Say what??? Meaning- helping people realize their money goals and achieve lasting financial well-being.

Does it change what I do? No. As a money coach I work with amazing people who want to heal and transform their relationship to money.  But it was a lot of study and I’m proud of it. We all have to stay on top of our professional game.