What Is a Financial Counselor?
If you are struggling with your personal finances, you may think that you need a financial counselor. Or you may not be so sure whether you need a financial counselor. Likely you have questions about what a financial counselor does. And whether a financial counselor is the professional you are seeking to address your financial challenges and worries.
This post will help you make that decision.
Definition of a Financial Counselor
To begin, let’s define what is a financial counselor. We looked online to find a job description and here’s what we found:
According to Study.com, a financial counselor is “dedicated to helping people reduce debt and manage shaky finances. While working with a client, financial counselors review the debt and the savings a client has and make proposals on how to create assets and decrease debt. In addition to working with families to pay down overwhelming debt, financial counselors teach people how to manage their money effectively and responsibly in order to avoid future financial problems.”
Let’s Highlight a Few Points of the Definition
We feel the definition above is a good summary. The highlights to consider are:
- Debt reduction
- Increase savings
- Learn how to improve money management
- Make better financial decisions
Looking at the short list above, are any or all of them matters that you want to address? If that is so, then you are looking for a professional financial counselor.
Titles Can be Misleading
Not all financial counselors call themselves financial counselors. And some people call themselves financial counselors when there are not financial counselors.
Rather than relying on a title, ask whomever you contact whether they perform the four types of services listed above. What they offer and how they will help you with your financial challenges is more important than what they call themselves.
Why We Use the Term ‘Money Coach’
After being in business for 10 years, we have used different titles and terms over the years. We settled on ‘money coach’ as a way of conveying that we coach our clients and help them learn how to make the best financial decisions for themselves. We also ask all of our clients to be engaged in the process of improving their financial situation.
In addition, over the years, we found that using a more descriptive term such as money coaching met with less misunderstanding than using financial counselor.
We stress all of the four points:
- Debt reduction which ultimately leads to debt elimination
- Increase in savings by learning how to prepare spending plans
- Teaching skills needed to better manage one’s money
- Which leads to better financial decisions
In Summary
It is less about what someone calls their service. It is more important to make sure they are offering the services you need.
One last thought: financial counselors are compensated by their time. Fees are typically collected ahead or at the time of your meeting. Most will offer packages that include several sessions. Be wary of any business that offer financial counseling for free unless they are a not-for-profit.