Financial Coaching
A Proven Approach to Building Consumer Financial Capability
Many Still Struggling to Achieve Financial Well-Being
Financial Freedom to Make Choices Greatly Limited for Many Families
Control over day-to-day finances
→ HH income poverty rate 14%,
→ Underemployment 12.5%
→ 1 in 4 jobs in US is low wage
Capacity to absorb a financial shock
→ 44% of American households are “liquid asset poor”
Be on track to meet financial goals
→ Homeownership rates down at 63.5%
→High student loan debt
→ Only 45% of workers saving for retirement
A Complicated Picture
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Living paycheck to paycheck
Less likely to need the most complicated services
Few financial assets
Eligible for public benefits or special private programs
Credit management
Lack experience with financial institutions or products
More pressure on their time and resources
Check out www.usfinancialdiaries.org/households
Education + Coaching + Access = Financial Capability
Creating positive
financial actions
and healthy
financial behaviors
Increasing financial
knowledge and
confidence
Financial
Capability
Applying financial
knowledge and
skills
Increasing access to
financial products
and services
•
Set of tangible outcomes
•
Interrelated behaviors
•
How people manage
resources + make decisions
•
Holistic
•
Behavior change (what a
person does) + knowledge
gain (what a person knows)
54%
Clients with no savings
started to save
Median
savings $668
48%
Clients with some savings initially
increased savings
Median
increase $938
Clients with unsecured debt
55%
decreased debt
47%
Clients raised their credit scores
Median
decrease
$3,005
Mean increase
of 59 points
Key Findings: Knowledge
96%
Clients who did not know how to obtain a credit report
gained that knowledge
97%
Clients who did not understand a credit report gained that
knowledge
77%
Clients who didn’t know how to build or improve their
credit attained that skill
47%
Clients who initially didn’t feel they managed money well felt
more confident
38%
Clients who initially didn’t feel in control of their finances felt
more capable of doing so
62%
Clients who reported feeling stressed about their financial
situation no longer felt that way after participating in
coaching
30%
Clients became more confident in their ability to weather a
financial crisis should it occur
Key Elements of Program Design
•
Financial coaching is a flexible, adaptable approach
•
Coaching can be used in a range of different programs
•
Organizations should choose an approach that:
- Supports their mission
- Matches their program and staff resources
- Strengthens existing service offerings
Key Elements of Coaching
 Focus on long-term outcomes
 Ongoing, systematic, collaborative
 Supports new behaviors
 Buildings knowledge and skills
Steps
1. Goal Setting
2. Action
planning
3. Monitoring
Counseling vs. Coaching
Counseling
Definition: Service aimed at
providing specific information and
guidance intended to solve a
defined event or problem.
Focus: Addresses specific issues
or events through knowledge
transfer and skill development.
Characteristics: Practitionerdriven process that provides a
framework to educate, offer
expertise and feedback.
Coaching
Definition: Service aimed at
helping clients focus on behaviors
to achieve self-defined financial
goals
Focus: Achieving clientdetermined goals an long-term
outcomes through behavior
change.
Characteristics: Client-driven
process. Provides a framework for
goal setting, assessment, action
planning and accountability.
Primary Traits of a Good Coach
• The ability to establish and
build trust
• The ability to communicate via
active listening and powerful
questioning
• The ability to follow through
and monitor progress
• The ability to encourage and
motivate
• University of Wisconsin Extension, Center for Financial Security
What is one short-term
financial goal you have?
Where are you now in relation
to your financial goal?
What are some
action steps
you can take
now to move
you toward
your goal?
A Coach Facilitates the Client’s
Journey by…
• Helping clients to articulate “there”
• Helping clients to explore and
discover “here”
• Designing a roadmap and planning
incremental steps to get from here
to there
Asking Powerful Questions
• Be genuinely curious
• Ask powerful, open questions
• Avoid leading questions
• Use closed questions strategically
Coaching Models
Best Practices from Around the Country
Coaching Program Models
• Coaching following financial education
• Coaching linked to eviction prevention
• Coaching integrated across multiple programs
• Group coaching
Coaching Follows Financial Education
• NHS Phoenix triages customers coming for home ownership
classes.
• Customers who are more than 6 months from purchasing home
referred to financial education classes
• In workshops, customers do budget worksheet and goal setting
• 1:1 coaching to focus on personal circumstances: goals and action
planning
Financial Coaching and Successful Renters
Example: Community Housing Works (CHW) in San Diego
• Residents with eviction notices due to late rent payment referred to
financial coach
• Crisis is opportunity for coach to build trusting relationship with resident
• Coach and resident develop repayment plan, approved by property
management
• Coach and resident continue meeting until rent is fully paid
• Many residents continue with Financial Health Club and coaching to
reach other financial goals: eligible for a matched savings program if
they continue in the program.
Coaching Integrated into an Existing Service
• EXample:
CDC of Long Island, Centereach, New York
• Coaching offered as part of “Financial Fitness” classes
• Small coaching staff
• Partner with Credit Union and Greenpath Credit Union
Group Coaching
Example: The Neighborhood Developers in Chelsea,
MA
• Developed a Financial Health Club
• Incorporate Coaching approaches in Financial
Education classes
• Partnership for Career Coaching
Working Together for Strong Communities
NeighborWorks
Center for
Homeownership
Education and
Counseling
Financial Capability at NeighborWorks America
 Take part in Financial Capability training and certification
Learn about Success Measures financial capability outcome
evaluation
Learn more about financial coaching as an effective approach
to building financial security through our project brief series
http://www.neighborworks.org/Homes-Finances/Financial-Security