At Goodwill Industries International, we believe that having a job is not enough. The path to self-sufficiency and financial independence requires more than just a paycheck. We aim to help people reach this vision through improved outcomes for employees and participants including: reduced debt, increased assets, healthy credit management, financial goal setting, and the ability to manage spikes and dips in cash flows.
We also see Goodwills ensuring program participants have access to financial coaching, education, and counseling, either on-site or through strong partnerships with other capable community organizations.
One of our primary focuses, financial coaching, has taken the asset building world by storm in the last decade. Recent studies report a very weak link between increased financial literacy and improved financial behaviors. In contrast, early research on the impact of financial coaching suggests that it leads to increased savings, reduced debt and improved credit scores.
Unlike financial educators, coaches do not adhere to a rigid curriculum. Coaches adjust their meeting topics to meet individual clients’ needs. Unlike financial counselors, who address their clients’ immediate financial issues with recommendations, financial coaches let clients drive their program by framing conversations around clients’ personal goals and interests. Coaches combine expertise in personal finance with interpersonal skills to create healthier financial behaviors.
Clients put their new financial knowledge into practice immediately, reinforcing concepts and creating healthy financial habits. Regular meetings during long-term relationships, often lasting for a year or more, help coaches adapt plans based on what is working for clients.
Getting this unique blend of financial expertise and relationship building right is highly personal and the field of financial coaching is new. As a result, there is not a uniform process for training financial coaches, nor is there a certification for financial coaches. However, there are several characteristics associated with a successful coaching relationship:
- Trust – Opening up to another person about your financial worries and dreams isn’t easy. Having an accurate picture of a person’s current financial situation is imperative for coaches to develop a realistic plan. Being able to build trust in a relationship is an essential coaching skill.
- Patience – Clients may not have the vocabulary to describe their financial goals when they begin. They may miss meetings as the program continues. Making behavioral changes that seem small to others can prove to be daunting for clients. Coaches must be willing to work through the process at a manageable pace for clients to achieve their goals.
- Flexibility – The power of coaching lies in letting clients drive the process and in checking in on clients’ progress regularly. At their meetings coaches and clients need to be ready to adapt their plans based on what is working and what is not between sessions.
- Perseverance – Both coaches and clients need to be able to stick with the process for a year or more. Successful coaches follow up with clients who cancel meetings to reschedule them.
Successful clients commit to engaging with their coach even if they are struggling to stick with their plan to find a better option. The client must be self-motivated, and the coach must be willing to boost the client’s motivation when it takes a hit.
As the financial coaching field matures, we will continue to learn about the impact of these characteristics. For now, evidence suggests that the extra investment required to deliver financial coaching programs does pay off with greater financial well-being for participants.