Contrary to appearances, financial emotional crises do not only affect people in debt or poverty. It often happens that someone is objectively not in a particularly bad financial situation or is even wealthy, and yet is experiencing emotional crises related to the sphere of finance, which I described in the article Financial emotional crises.

It happens that the very fear of losing even a small part of money leads to a mental breakdown. Sometimes, suicide attempts are made by people who, although they have lost some of their money, They still have substantial assets and are financially secure.

Another issue is disputes about money (especially spending, earning, saving and willingness to take risks) and about the approach to financial matters. They are the cause of many conflicts in families, including well-off families. I touched on this topic in the article: Financial Conflicts in Relationships.

Our beliefs about money, destructive habits, comparing ourselves to others, and overly high expectations of ourselves often cause tremendous psychological distress and can lead to patently wrong financial decisions.

What are the areas of financial coaching?

As part of financial coaching, we work on many aspects — depending on the needs of the client and the problems with which he comes for help. Most often during meetings we deal with the following issues:

• Understanding by the Client how their life experiences, family home patterns, personality traits and beliefs can support or hinder a healthy approach to money e.g. saving, spending, earning, investing, etc. If you are interested in this topic, please refer to my article on 9 areas of financial management — what do they look like for you?
• Assisting the Client in rational and systematic planning of personal finances.
• Implementation by the Client of beliefs, habits and actions that facilitate the achievement of financial security and the elimination of those that hinder it.
• Providing the Client with knowledge about what psychological pitfalls (e.g. cognitive errors and heuristics) can negatively affect financial, purchasing and business decisions.
• Assisting the Client in understanding his “psychological” profile of financial identity and attitude towards money and in translating this into effectiveness in achieving goals and building a stable financial situation. I wrote about this in the article: Financial identity and its impact on life
• Assistance in the healthy setting of financial goals — taking into account the key values of the Client and the so-called ecology of the goal (according to the assumptions of coaching, if the achievement of a given goal harms this person, then the goal is not ecological and should be reformulated).
• Support in maintaining motivation and consistency in action.

Crisis financial coaching additionally requires the coach to have knowledge and skills in the area of crisis coaching confirmed by a certificate. Thanks to this, we can additionally work with the Client to deal with emotional crisis and stress, the source of which is money/financial situation. In such a process, we teach the Client methods of stress reduction, work with their own emotions and mood, as well as actively support them in implementing constructive ways of dealing with emotional crisis. We also share knowledge (psychoeducation), we give emotional support, empathic listening and feedback.

The role of the Crisis Coach/Financial Mentor within the framework of the method promoted by psychologist Piotr Łabuz is based on two main tasks:

• Customer support in crisis, the source of which is money (Financial crisis coaching),
• Support in setting, planning and achieving financial goals (Financial mental training).

When working with the Client as part of this method we pay a lot of attention to the psychology of happiness, well-being and taking care of mental energy. We support the Client in developing such an approach to the financial sphere so that he does not fall into toxic materialism, workaholism, selfishness or anxiety inappropriate to the situation.

We also analyze, whether there are any internal conflicts that may prevent the Customer from achieving the goal. For example: when the Client, on the one hand, wants to maximize his income and works beyond measure, and on the other hand declares that the most important value for him is the family or when someone at the level of beliefs (even unconscious ones) believes that “money is the source of evil”, so he subconsciously takes such actions that make it difficult for him to achieve his financial goals. We also create with the Client a list of broadly understood support resources that can help him achieve financial goals and get out of problems.

The above examples are not exhaustive of all the areas that can be the subject of work in the framework of financial coaching.

I would like to make it clear that some psychological problems require working with a psychotherapist or even a psychiatrist and cannot be the subject of work with a coach e.g. addictions (including shopaholism or gambling addiction), mental disorders, clinical depression.

Financial Coaching vs. Financial Counseling

Financial vs coaching is not financial or investment advice! A financial coach does not have the authority of an investment advisor and cannot even recommend specific financial products to the Client - for example, having a savings account in a given bank or taking out a loan in a certain currency.

The coach can provide only basic advice on the concept of investing, building a financial cushion or financial psychology, but he is not allowed to advise how the Client should manage his assets or what financial decisions he should make.

On the other hand, an investment advisor according to Polish law is a regulated profession, that is, in order to legally practice it, must have a license issued by the Financial Supervision Authority. Investment advisors usually work in mutual fund companies, brokerage houses, banks and other institutions related to the financial market. As the investment advisor, Marcin Reszka, writes:

“Unfortunately, among people most often not related to the financial market, this profession is confused with the profession of financial advisor. The financial advisor does not go through any qualification procedure. He does not need to have any education, training, passed exams. Anyone can become one — you just have to call yourself that. An investment advisor is a person with extensive knowledge confirmed by examination and license. You may not use this title without a license (this professional title has legal protection).”

According to Businessinsider: “The task of a financial advisor is primarily to help an individual or corporate client make a good financial decision. It usually helps you achieve financial goals such as a loan, loan, life insurance or pension fund in a safe way.”

However, keep in mind that this is not a regulated profession, so a person who calls himself a financial advisor , so it will be more difficult for the client to verify her level of knowledge in the area of finance.

[1] https://www.sii.org.pl/15065/znizki/oferty-specjalne/doradca-inwestycyjny-jakie-zarobki-jak-zdobyc-licencje.html
[2] https://businessinsider.com.pl/poradnik-finansowy/doradca-finansowy-czym-sie-zajmuje-i-jak-nim-zostac/kzlbx2y