Author: goldewj

Financial Coach: Guiding Your Path to Financial Success

Managing personal finances can be daunting, especially when faced with complex financial decisions and the increasing economic challenges of changing economic conditions. Many individuals need help navigating the intricacies of creating a spending plan, saving, investing, and planning for the future. The need for a financial coach has become more apparent in such circumstances. A financial coach is a professional who provides personalized guidance and support to help individuals achieve their financial goals and build a strong foundation for a secure financial future.

Customized Financial Guidance

One of the primary reasons to seek the services of a financial coach is the personalized approach they offer. Each person’s financial situation is unique, with different income levels, expenses, and long-term goals. A financial coach thoroughly understands their client’s financial circumstances and tailors their advice and strategies accordingly. This level of customization ensures that individuals receive guidance that aligns with their specific needs and aspirations

Creating a Solid Financial Plan

A financial coach is crucial in helping clients create a well-structured financial plan. This plan encompasses a wide range of financial aspects, such as setting realistic goals, creating a spending plan, managing debt, saving for emergencies, and planning for retirement. With the support of a financial coach, individuals can develop a comprehensive roadmap that will serve as a guide to making sound financial decisions at each stage of life.

Encouragement and Accountability

One of the challenges many people face when it comes to managing finances is staying disciplined and committed to their financial goals. A financial coach serves as both a motivator and an accountability partner. They provide encouragement, keeping clients focused on their objectives and reminding them of the benefits of staying on track. This accountability factor can be a game-changer in helping individuals overcome financial hurdles and develop healthier financial habits.

Overcoming Financial Challenges

Life is full of unexpected events that can impact one’s financial stability. Whether it’s a sudden job loss, a medical emergency, or a significant economic downturn, a financial coach can help individuals navigate through difficult times. They offer support, reassurance, and alternative solutions to tackle financial challenges effectively. By having a coach by their side, individuals can gain the confidence to face financial uncertainties and make informed decisions during challenging situations.

Enhancing Financial Literacy

Financial literacy is a valuable skill that empowers individuals to make sound financial decisions. A financial coach educates clients about various financial concepts, investment options, and money management techniques. This knowledge equips individuals to handle their finances independently with the skills needed to navigate their financial journey with confidence and intelligence. In the long run, it helps them build a strong financial foundation for their future.

Building Healthy Financial Habits

A financial coach is an accountability partner who encourages you to stay disciplined and committed to your financial goals. They keep you on track, motivating you to follow through with your financial plan and maintain healthy spending and saving habits. Over time, these habits become second nature, leading to better financial outcomes, and reduced financial stress.

Eliminating Financial Stress

Financial stress is a common concern that can negatively impact overall well-being. A financial coach works with you to address financial worries head-on and develop strategies to reduce stress. By providing clarity and offering actionable steps, a financial coach can alleviate anxiety, promoting peace of mind and mental well-being.

Maximizing Financial Potential

A financial coach helps you identify opportunities for growth and makes recommendations that maximize your financial potential. Whether optimizing investments, minimizing taxes, or exploring new income streams, a coach can provide valuable insights that can significantly impact your long-term financial success.  

A financial coach can be a game-changer in your financial journey. With personalized guidance, support during challenges, the encouragement to build healthy financial habits, and enhanced financial literacy, a financial coach empowers you to achieve your financial goals and dreams. By investing in a financial coach, you are investing in yourself and your financial future. Remember, the benefits extend far beyond just money; they contribute to your overall well-being and peace of mind. So, take the first step on the path to financial freedom by partnering with a financial coach who can help you unlock your full financial potential.

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Personal Financial Planning

In the economic environment of today, personal financial planning is a crucial function. We all can manage our finances better to meet our goals and objectives. Effectively managing finances results from an organized process called personal money management or personal financial planning.

So Exactly What Is Personal Financial Planning?

Generally, personal financial planning is managing your money to achieve personal economic satisfaction. The process allows you to control your financial situation. Every household is different and has unique financial goals and objectives. Therefore, financial activity needs to be carefully planned to meet specific needs and goals. The process consists of six logical steps designed to set you on the right path with your finances. They are based on your goals and objectives and once you reach step six, would start the process again. A financial counselor can help you with all these steps.

Step 1: Determine Current Situation

In this first step, you will determine your current financial situation concerning income, living expenses debt, and savings. Prepare a balance sheet or a list of current asset and debt balances to determine net worth. The net worth statement should be completed once a yer and the information in it will give a foundation for financial planning activities.

Step 2: Develop Financial Goals

Specific financial goals are vital to financial planning and developed in this step. Your financial goal can range from spending your current income to developing a saving and investment strategy for your future financial security. Analyze your financial values and goals. This involves identifying your feelings about money and why you feel that way you do. The purpose of this analysis is to determine needs and then wants.

Step 3: Identify Alternative Courses of Action

Based on your financial situation, alternative courses of action are developed in this step to meet goals and objectives. Creating alternatives is crucial for making good decisions because many factors will influence the available alternatives. The more possible alternatives you have, the more effective and satisfying decisions can be made. Be creative, creativity in decisions making is vital to effective choices.

Step 4: Evaluate Alternatives

Next, you need to evaluate possible courses of action, considering your life situation, personal values, current economic conditions, and financial situation. Every decision has a consequence, and every choice closes off other alternatives. Decision-making will be an ongoing part of your personal and financial situation. Thus, you will also need to consider the lost opportunities resulting from your decisions.

Step 5: Create and Implement a Financial Action Plan

In this step of the financial planning process, an action plan is developed to achieve your goals and objectives. This requires choosing ways to achieve your goals based on the data you collected in previous steps. As you reach your short-term goals, your next priority goal will come into focus.

To implement your financial action plan, you may need help from others, such as a financial coach or insurance agent. Your financial team should consist of professionals; you should choose them with care.

Step 6: Reevaluate and Revise Your Plan

Financial planning is dynamic and does not end when you take a particular action. Regularly you will need to assess your financial decisions based on changing personal, social, and economic factors. Life events such as a job change or the birth of a child will affect your financial needs. The financial planning process provides a vehicle for adapting to those changes. Regularly reviewing your plan will help you make priority adjustments that align your financial goals and activities with your current life situation.


Relevant information is required at each stage of the decision-making process. Changing personal, social, and economic conditions will need you to continually supplement and update your knowledge and plans. A financial counselor can help you.

Personal financial planning will give you increased control over your financial situation by avoiding debt and dependence on others for financial security. Additionally, freedom from financial worries by looking to the future and anticipating expenses. A well-planned and communicated plan could improve personal relationships. If done effectively, personal financial planning is a win-win for everyone involved.

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Manage Money Differently

One of the most well-known definitions of insanity is doing the same thing over and over again and expecting a different result. This statement applies to all aspects of life, but nowhere is it more relevant than in our personal finances. Many of us have financial habits or management practices that we stick to, sometimes blindly, without realizing that they may cause us to get the same undesirable results over and over again. We must manage money differently. Let’s examine why doing the same thing and expecting a different outcome is ridiculous, especially in our finances.

The Definition of Insanity

The famous quote, “Doing the same thing and expecting a different outcome is the definition of insanity,” is often attributed to Albert Einstein. However, there is no definitive evidence that he actually said this. Regardless of who said it, the statement holds true in many aspects of life, including our finances. If we continue to spend more than we earn, never save for the future, and take on more debt than we can handle, we will continue to experience the same negative financial consequences. You cannot expect to magically find ourselves in a better financial situation if we do not do the work and change our habits.

Why We Continue to Make the Same Financial Mistakes

One of the reasons why we continue to make the same financial mistakes is that we are creatures of habit. Once we get used to certain routines and patterns, and it can be challenging to break out of them. Additionally, we often make emotional decisions when it comes to our finances rather than logical ones. Perhaps you feel a sense of instant gratification when we buy something we want, even if we know we cannot afford it. You may also feel a sense of fear or anxiety when it comes to saving or investing, even though we know it is the right thing to do.

Another reason we make the same financial mistakes is that we often need more financial literacy and a complete understanding of the consequences of our actions. We may need to realize the impact that overspending or taking on too much debt can have on our long-term financial stability. We may need to fully understand the power of compound interest when it comes to saving and investing. With this understanding and financial literacy, we may avoid making the same mistakes, not realizing how they affect our financial well-being.

The Importance of Self-Reflection

To break out of our bad financial habits, we need to take the time to reflect on our behaviors and the impact they are having on our finances. Managing money is really about managing behavior. This can be a difficult and uncomfortable process, but it is necessary if we want to make positive changes. We need to ask ourselves tough questions, such as:

Why do I spend money on things I don’t need?

Why do I never seem to be able to save money?

Why do I take on more debt than I can handle?

By asking ourselves these questions, we can identify the underlying emotional or psychological factors driving our financial decisions. Once we understand these factors, we can develop strategies for managing and adjusting our behavior.

Breaking the Cycle

Breaking out of the cycle of bad financial habits requires a willingness and commitment to change and to make lasting changes. Below are some strategies to break the destructive habit cycle and improve your finances.

Create a Spending Plan

One of the most effective ways to break the cycle of bad financial habits is to create a spending plan. A spending plan helps us track our income and expenses, allowing us to see where our money is going and where we are overspending. By creating a spending plan, we can identify areas where we can cut back on expenses and redirect money toward financial goals, such as paying off debt or saving for the future.

Practice Delayed Gratification

Another important strategy for breaking the cycle of bad financial habits is to practice delayed gratification. This means waiting to purchase something we want until we can afford it and it fits into our spending plan. It requires a shift in mindset from instant gratification to long-term planning. One way to practice delayed gratification is to make a list of things we want to buy and prioritize them based on their importance. Then set a timeline for purchasing each item based on our budget and financial goals. I love this because you still get the thing you want, it’s just delayed for a while.

Educate Yourself

Improving your financial literacy and educating yourself about personal finance is another important strategy for breaking the cycle of bad financial habits. We can read books, attend workshops, or take online courses to learn more about saving, investing, and managing debt. With this new knowledge, we can make more informed decisions and avoid common financial pitfalls by increasing our financial literacy.

Seek Support

Breaking out of bad financial habits can be challenging, and it is crucial to seek support when needed. This can include working with a financial coach or counselor, joining a support group, or seeking the advice of friends or family members who have successfully improved their finances. By surrounding ourselves with a supportive community, we can stay motivated and accountable as we work towards our financial goals.

Track Your Progress

Tracking our progress as we work to break the cycle of bad financial habits is essential. This can be done by regularly reviewing our spending plan, tracking our savings and debt repayment progress, and celebrating our successes along the way. By monitoring our progress, we can see the tangible results of our efforts, celebrate, and stay motivated to continue making positive changes.

Doing the same thing and expecting a different outcome is ridiculous, especially regarding our finances. We must avoid making the same mistakes if we want our financial situation to improve. Take a hard look at our behaviors, identify the underlying emotional or psychological factors driving our decisions, and develop strategies for making lasting changes. By creating a spending plan, practicing delayed gratification, educating ourselves, seeking support, and tracking our progress, we can break the cycle of bad financial habits and achieve financial stability and security.

If you are searching for a financial counselor, The Association for Financial Counseling & Planning Education® (AFCPE®) is a great place to start. You can find an Accredited Financial Counselor® (AFC®) at the AFCPE website, https://www.afcpe.org/.

Treat your money like no one else. Click the link and check out other blog posts at GoldenRules here.

Three Types of Financial Coaching

Financial coaching is a personalized, goal-oriented approach that helps individuals and families manage their finances and achieve their financial goals. Like financial counseling, there are several different forms of financial coaching, each serving a unique purpose and addressing different needs. Keep reading to discover what a financial coach does and three types of financial coaching.

What is a Financial Coach

A financial coach works with clients to understand their unique financial situation and helps them develop a customized plan for achieving their financial goals. Whether its reducing debt, increasing savings, planning for retirement, or something else, a financial coach can help.

Although financial coaches know many financial topics, the client is ultimately responsible for taking the necessary actions to achieve their financial goals. Additionally, financial coaching is an ongoing process that provides ongoing support and guidance. A financial coach will work with their client over an extended period of time, monitoring progress and providing feedback and support along the way. Providing support and guidance to clients helps them stay on track and adjust their financial plans over time. Further, financial coaching is solution-focused, meaning that the coach and client work together to find practical solutions to financial challenges and obstacles. The focus is finding solutions that work for the client rather than providing information or advice for three types of financial coaching, personal, business, and retirement financial coaching.

Personal Financial Coaching

Personal financial coaching focuses on helping individuals improve their financial situation and achieve their personal financial goals. The client’s financial goals could include developing a spending plan, reducing debt, increasing savings, and improving the credit situation and score. Personal financial coaches work one-on-one with clients to create a customized plan for financial success and provide ongoing support and guidance.

Business Financial Coaching

Business financial coaching helps small business owners and entrepreneurs manage their finances and achieve their business goals. Additionally, business financial coaching might include developing a spending and financial plan, improving cash flow, and reducing debt. Business financial coaches work with clients to build a comprehensive financial strategy supporting their business objectives and goals.

Retirement Financial Coaching

Retirement financial coaching focuses on helping individuals plan for their financial future. They also help clients ensure they have the resources they need to live comfortably in retirement. This may involve developing a retirement plan, creating a will or trust, and planning to transfer assets to the next generation. Retirement financial coaches work with their clients to develop a customized plan for retirement that meets their specific needs and goals. Financial coaches will give clients the information and education to make informed decisions about goals for retirement. 

Working With a Financial Coach

Each form of financial coaching has its own set of techniques, strategies, and best practices, and financial coaches are trained to apply these effectively to meet the needs of their clients. By working with a financial coach, individuals and families can better understand their financial situation, develop a customized plan for financial success, and take practical steps to improve their financial well-being. You can find a financial coach at the Association of Financial Counseling and Education (AFCPE) website; click here.

Financial coaching is valuable for anyone wanting to control their finances and achieve their financial goals. Whether you’re an individual, a small business owner, or planning for retirement, a financial coach can provide the guidance, support, and practical tools you need to achieve financial stability and success.

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Debt to Income Ratio

The debt-to-Income (DTI) ratio is a financial measurement used to evaluate an individual’s ability to repay their debts and is a crucial part of your overall financial health. It’s calculated by dividing the total monthly debt payments by the total monthly gross income. The result is expressed as a percentage. Why does this matter?

Why Your Debt-to-Income Ratio Matters

Keeping your DTI ratio at a moderate level signals that you’re a responsible manager of your debt, which can improve your credit score and eligibility for financial products. A general rule of thumb is to keep your overall debt-to-income ratio at or below 43%.

It shows how balanced your spending plan is and assesses your creditworthiness.

A ratio below 43% is seen as a wise target because it’s the maximum debt-to-income ratio at which you’re eligible for a Qualified Mortgage —a type of home loan designed to be stable and borrower-friendly. A DTI ratio of 43% or lower is generally considered ideal for most borrowers. The borrower’s debts, including mortgage payments, credit card payments, car loans, and other debt obligations, should be at most 43% of their monthly pre-tax income. If the DTI ratio is higher than 43%, it may indicate that the borrower is overextended and may have difficulty paying debt obligations.

Keep in mind that the DTI ratio is just one factor that lenders use to evaluate loan applications. Other factors, such as credit score, employment history, and assets, are also considered.

Less Favorability in your Spending Plan and Borrowing Terms

When a significant portion of your income goes towards paying debt, you have less left to save, invest, or spend on things you want and need. Additionally, if you have a high debt-to-income ratio, you will be seen as a riskier borrowing prospect. When lenders approve loans or credit for risky borrowers, they may assign higher interest rates, steeper penalties for missed or late payments, and stricter terms.

A debt-to-income ratio over 43% may prevent you from receiving a qualified mortgage, limiting you to approval for home loans that are more restrictive or expensive.

And although it Is used a lot in qualifying people for mortgages, it can be used to manage money and debt better. As interest rates increase, decreasing and lowering your debt burden becomes more critical.

Different Types of Debt-to-Income Ratios

There are two main types of DTI ratios – front-end ratio and back-end ratio. The Front-end DTI ratio calculates the income percentage used to pay housing expenses, such as mortgage or rent payments. The back-end DTI ratio considers all debt payments, including housing expenses, credit card debt, student loans, and car loans.

Importance of Debt-to-Income Ratio for Loan Approval

A low DTI ratio is a positive sign for lenders, as it may indicate that borrowers have the financial stability to repay their debts. A high DTI ratio can signal to lenders that borrowers may struggle to repay their debts and may be at a higher risk of defaulting on their loans. As a result, lenders may only accept loan applications or offer more favorable terms to borrowers with high DTI ratios.

How do you Calculate the Debt-to-Income Ratio
  1. Add up your monthly debt payments (rent/mortgage, student loans, auto loans, and monthly minimum credit card payments).
  2. Find your gross monthly income (your monthly income before taxes).
  3. Debt-to-income ratio = your monthly debt payments divided by your gross monthly income.

Here’s an example:

You pay $1,900 a monthly for your rent or mortgage, $500 for your car loan, $300 in student loans, and $400 in credit card payments—bringing your total monthly debt to $3100.

Your gross monthly income is $6,500.

Your debt-to-income ratio is 3,100/6,500, or 47%.

A Debt-to-Income Ratio of 36% or Less

A debt-to-income ratio of 36% is considered a good debt-to-income ratio. With a DTI ratio of 36% or less, you have a healthy monthly income to put towards investments or savings. Most lenders will see you as a safe bet to afford monthly payments for a new loan or line of credit.

DTI Ratio and Credit

Credit reporting agencies don’t collect consumers’ wage data, so a debt-to-income ratio won’t appear on your credit report. Credit reporting agencies are more interested in your debt than income history. Although your credit score isn’t directly impacted by your debt-to-income ratio, lenders or credit issuers will likely request your income when you submit an application. Just as your credit score will be one factor in their application review process, your debt-to-income ratio will also be considered. A high DTI ratio can hurt a person’s credit options as it can indicate that they are overextended and may struggle to repay their debts. A low DTI ratio can help improve credit options as it shows that a person is financially responsible and able to manage their debts.

Improving your DTI Ratio

If you have a high DTI ratio, you can take steps to improve it. This can include paying down debt, increasing income, or a combination of both. Reducing monthly debt payments by paying off credit card debt or negotiating lower interest rates can also help improve the DTI ratio.

By regularly monitoring your DTI ratio, you will identify areas where they can reduce debt or increase income to improve their financial stability.

The DTI ratio also provides you with a good snapshot of your current financial health. If it’s below 36%, you’re in a good position to take on new debt and pay it off with regularity. But when it’s over 50%, you should try to reduce the number of debt obligations (by either working to pay off credit cards, find a more affordable home, or refinancing your current loans) or find ways to generate more income. When your DTI falls between 35% and 50%, you’ll usually be eligible for some approvals. Even so, your financing terms on lines of credit will be better if you hit the premium level of sub-35% debt-to-income.

The DTI ratio is useful for individuals to assess their financial situation and determine if they are overburdened with debt. It’s also a valuable tool for lenders to evaluate the creditworthiness of loan applicants and determine the risk of loan default. Maintaining a low DTI ratio can help individuals improve their chances of being approved for a loan and ensure that they are in a better position to repay their debts, and ensure they are on a path to financial security.

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