Why you should hire a budget coach.Oct 31, 2023
A friend recently confided in me, "I'm really overwhelmed; my best friend just told me she's in $40k worth of debt and thinks because my financial situation is ‘better’ than hers, I can help." As her friend told her the plan, which included liquidating a Roth IRA, depleting her HSA, and eating ramen noodles for 6 months, my friend agreed supportively. "How was I to know these were bad ideas?" she asked me.
Sure, you can spend hours on WebMD diagnosing that rash on your leg, but to actually get effective treatment, you ultimately go to the doctor. And you would trust an account to resolve any tax issues, right? Yet when it comes to personal finance, we demand advice from parents who, most of the time, aren't equipped to give it, or from friends whose circumstances are grossly different from our own. We live in a culture where we're expected to just "get it" when it comes to our finances. Could it be time to bring in a professional?
After working with more than 300 clients and helping them save well over $2.5 million and pay off almost 1 million in debt, I have learned something surprising: some of the biggest hurdles standing in the way of building wealth and getting out of debt have nothing to do with money. Here are some of the most common roadblocks that trip up clients before they truly begin on their path to financial wellness.
- There is SO much information out there. People don't know where to start, which usually means they start at step 15 without ever doing 1-14. While free information is the gift of the 21st century, most of us don't have the time to sort through all the noise and find the best solution for ourselves.
- The people around you don't always have your back. Now, hear me out: I truly believe that the majority of people have good intentions, but most people are limited by their own beliefs when it comes to success, wealth, and earnings. I have worked with countless clients who didn't get a promotion or raise simply because their boss or manager didn't have the courage to advocate for them. It wasn't that their boss didn't value them or think they did great work, but because their boss didn't know how to advocate for themselves, they couldn’t advocate for their employees, therefore keeping them small.
- Most people don't understand business, and a lot of business owners don't know how to run a business. I remember when I got promoted at my yoga studio manager job. I was going to be managing a newer, bigger studio. My studio brought in $30k a month in revenue, and this new studio brought in $80k. So I naturally thought my salary would increase by $30k (LOL). I didn't understand that, despite the bigger studio bringing in more revenue, they also had more debt and expenses. I was lucky to get a $5k bump. As employees, we don't always see the whole picture, which can lead to us making assumptions that make us feel resentful, underpaid, and undervalued.
- It’s hard to find someone to hold you accountable when it comes to personal finance. Asking a friend to hold you accountable rarely works. Why? Because a big reason you love and trust your friends is that you usually do things together. Immersing your friends in your personal finances invites them to scrutinize every purchase you make—do you really want someone close to you judging your 2 iced coffees per day habit? And let's be honest: when you see a friend who constantly complains and worries about money making a purchase you think is frivolous, you judge them! It doesn’t make you a bad friend; it’s something we all do subconsciously.
- Your family members are not professionals. According to fool.com, forty-nine percent of American adults cannot afford a $400 emergency bill, which tells me that most adults don't have the financial literacy to know how to set up a retirement account, ask for a raise, or buy a home. The first thing many of my clients tell me on our first call is, "my parents never taught me how to manage money." Once they complete the money wounds exercise in our signature program, often they realize their parents couldn’t teach them. We are left with the burden of learning about money management ourselves, perpetuating the cycle that you must sort through all the noise to find the right information.
- It's personal. Remember my friend from earlier? She has a steady job, an inheritance, and a partner. l/Her friend in debt, has a dog, a kid, and she just started a new job. Everyone's financial situation is different, and there is no “one size fits all” when it comes to budgeting, debt repayment, or building wealth. The goal is to face your reality and find the solution that's best for you. Which, frankly, can be overwhelming!
- Finally, your relationship with money is not logical—it's emotional. (Link 5 emotional archetypes that cause us to spend). The way we handle and treat money reflects conscious and unconscious emotional reactions that cause us to spend. Having support around the emotional piece enables you to gain control over your financial landscape, allowing you to make strategic financial decisions.
Your relationship with money is deeply personal and emotional, and it deserves the same unconditional love and attention that all the other pillars of your life do. Part of being ready to face the reality of your financial situation is understanding that it’s an investment of your time, money, and emotions. I always tell my clients that it's a short-term sacrifice for a long-term gain. Getting your finances in order is a journey that requires time, love, and support. It’s essential to ensure the people around you are the best resource for your long-term success. It’s vulnerable work, but you do not have to do it alone.
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