Empower your PARTICIPANTS with comprehensive financial education

6 Recurring Themes in Financial Coaching

comprehensive financial education

How are the coaching sessions going?

I get this question at least once a week from customers. It makes sense. They’re genuinely interested in the well-being of their employees and personalized coaching gives unique insights.With that in mind, our coaches created a list of six themes that have emerged from our client sessions. Some are far from what we would have expected when we started this journey.

1. The Future is Bright (even though today often looks bleak)

People are better off than we thought. Stories that suggest 70% of families are living paycheck to paycheck or can’t cover a $400 emergency are accurate, but incomplete. These stats are self-reported. They’re a good representation of how people feel about their financial stability, but don’t fully reflect the numbers. For example, a family with $150,000 in retirement savings but no emergency fund may feel like they can’t cover a $400 emergency despite having more than enough assets. Similarly, a family with two young children in daycare will feel like they’re living paycheck-to-paycheck no matter how much money they’ve saved. For retirement readiness, the same holds true. Most online calculators fall short by either 1) failing to account for social security/pension or 2) making it challenging for users to account for all of their assets.

We conducted a retirement readiness study across our clients and are encouraged. 50% are on track, 30% are close and 20% need intervention. Point being, the future is bright. Sure, they need support, but auto enrollments, matching, auto escalation, HR initiatives and social security are working. It’s a positive story.

2. Math is hard

I recently suggested a client pay his daughter 5% interest per week on her savings to teach her compounded interest. She had saved $50. Still, he didn’t know how to calculate 5% of $50. This man was remarkable in so many ways, yet math was a foreign language to him. Math is hard for most, and for better or worse, financial decisions require math. We must embrace the lack of math aptitude when working with families and developing solutions.

3. People feel judged and struggle to shake the past

Everyone has made a bad financial decision. Most have made several. Still, many clients are embarrassed by their financial situation and it takes time for them to accept it and look forward. Whether it’s blaming others or being hard on themselves, clients are searching for the “why.” In some cases, they’re haunted by it. Ultimately, they must shift to “what now” to make progress.

4. Fearful = good, OK = bad

A young woman started her coaching session by apologizing. She was sorry for not saving enough, spending frivolously at times and potentially making her future more uncertain. I asked for her numbers. She had saved $200,000 (cash), had no debt and was 31 years old. People who do not believe they’re doing well are often on the best path. And, those who brash an air of confidence are often not nearly as financially fit as they think.

5. Awareness creates value

Budgeting is at the core of every financial suggestion. I wish we all budgeted consistently. We don’t. We won’t. It’s not realistic. Instead, we’ve found that simple awareness is powerful. In our Budget Bootcamp, clients see exactly where their money is going for 28 days. It’s eye-opening. They immediately see opportunities to save. They understand what expenses are in their control and how they can change. While they may not actively budget every month, periodic jolts of awareness are powerful resets to get back on track.

6. You don’t need to solve the problem to lower stress

Imagine seeing a sea of taillights in front of you. You’re in traffic and your phone died. How long will you be in the traffic? Is there an accident? What if all lanes are blocked? You don’t have answers or a path. That’s stressful. Then, your teenage child flips on GPS and tells you that there’s an extra 9 minutes of traffic. The stress subsides. You know the situation, how long it will take and can plan accordingly.The same holds true with money. Clients are often sitting in financial traffic when paying off debt, saving for retirement, paying off student loans or simply getting through each month. Many don’t have a path or a plan. They don’t know how long the process will take or if they will even make it. This uncertainty causes stress. Accordingly, working through the numbers and providing a clear plan mitigates the anxiety, even if solving the problem will take years.