Featured Customer

What is money coaching?

Explores how money coaching works and why it's effective in helping improve financial wellbeing.

Written by
Josh Vernon

Money coaching is increasingly recognised as one of the most effective ways to make a genuine difference to someone’s financial wellbeing. By combining aspects of psychology, behavioural finance and practical financial guidance knowledge, money coaches work with a coachee to set goals and develop plans to achieve them, as well as stay accountable.

How does money coaching work?

While there are a range of different money coaching services on offer, most money coaches focus on understanding money attitudes, setting goals and creating action plans that a coachee can act on. Coaching usually takes place in a confidential one-on-one environment, be that in person or online.

A money coach has expertise and training in financial guidance and relies on coaching frameworks, such as Sir John Whitmore’s GROW model, to listen, ask informed questions and hold coachee’s accountable. 

A money coach’s role includes:

  1. Making sure goals are realistic, measurable and attainable - research in self-determination theory finds that autonomous goal setting is of crucial importance to behavioural change.
  2. Helping a coachee see options and take appropriate steps - a money coach can help a coachee to overcome their self-limiting beliefs and explore the options available to make positive steps.
  3. Keeping a coachee accountable - research finds that monitoring progress is critically important to help maintain focus on tasks that require a sacrifice in the short-term for a long-term gain.

Does money coaching improve financial wellbeing?

A trial by the US government agency responsible for consumer protection in the financial sector Consumer Financial Protection Bureau (CFPB) found coaching had positive results, helping different individuals improve their financial wellbeing in different ways, based on their particular needs and goals. 

The trial found those who had access to money coaching were:

  • More likely to use a budget and pay bills on time
  • More likely to set aside emergency funds and less likely to borrow from friends and family
  • More likely to increase their savings levels and credit scores.

Those who were offered coaching generally said they had increased confidence and less financial stress.

Another trial by Citibank found people who initially didn’t feel they managed their money well or were in control of their finances, believed otherwise after coaching (47% and 38% respectively). 

Why is money coaching more effective than financial education?

The effectiveness of money coaching is particularly clear when compared to results of financial literacy interventions, which have had negligible effects on behaviour 20 months or more after being delivered. 

Traditional financial education programs typically over-emphasise knowledge and fail to account for the cognitive and behavioural biases that contribute to real-world decision making. But the OECD has identified that when behaviourally-informed, straight-forward and easy to understand financial education is combined with personalised goal setting and coaching, individuals are better able to overcome behavioural change barriers such as procrastination and forgetfulness. Plus, with immediate practice of skills learned, individuals can establish financial behaviours that will enable them to succeed.

Is money coaching the same as financial advice?

Money coaching is different to financial advice. Financial advisors are regulated to provide specific product recommendations based on individual needs. Financial coaches don’t sell or recommend products, but offer guidance and help coachee’s with financial fitness through behavioural coaching.

What’s next?

Are you or your organisation interested in offering your employees money coaching? Find out more about Humanforce Thrive's money coaching. We offer 1:1 confidential money coaching sessions from the Humanforce Thrive app to help employees create action plans to reach their financial goals and set up healthy money habits. 

Continue Reading

Roundtable recap: Helping employees through the cost of living crisis

Retail and hospitality employers talk about helping employees deal with cost of living increases.

People of Humanforce Thrive: Emma Morgan

A conversation with Emma, our Engagement and Content Lead, who's an expert in financial wellbeing.

Is access to earned wages a responsible thing to offer your employees?

Explores three important considerations when it comes to offering access to earned wages.