Your Net Worth Statement Is.

Many of the people I talk to about money are obsessed with their credit report. And don't get me wrong, credit is important in some instances.  But if you are looking for your grown up money report card, it's not your credit report, it's your net worth statement.

Many people I talk to who are just starting to pay more attention to their money are obsessed with their credit score.  If you've been careless with your money or had a financial setback, it is understandable that your credit score may be low.  But if you are looking for validation that your are on the right track financially, let go of the credit report and get to know the net worth statement.

Don't get me wrong – your credit score can be important.  But remember why the credit report and credit score was invented.  It's not a report card for grown ups meant to tell us how we are doing and the game of adulting.  It was developed for financial institutions to share customer data so they could make better decisions as to who they should extend additional credit to.

So yes, if you are looking to take on more debt, your credit score is important.  If you need to buy a new house or car, your credit score will impact whether or not the lender decides to have you as a client and the rate they choose to charge.  In this scenario, a good credit score can help you make a purchase you want and to pay a bit less for the loan.

Credit score can also be important if you are looking to rent.  Many landlords check applicants' credit scores before deciding to rent to them.  Because the way you do one thing is the way you do everything, understanding your behavior patterns with your other bills help them to understand your likely behavior pattern in paying your rent on time or late. 

If you are job hunting, many employers will check your credit report as a part of their due diligence before hiring you.  In some ways this seems unfair – after all, if you've been out of work and unable to pay your bills, getting the job would automatically improve your credit, right?  However, a really low credit score shows the potential employer a peek behind the curtain into your life.  If your bills aren't getting paid, there are likely other areas of your life that are chaotic as well.  You may not be the trustworthy and slightly boring employee they are looking for.  This becomes especially important if you will be handling money in your new job. 

But unless you are looking to take on debt, rent, or look for a new job, you should be 0% interested in your credit SCORE.  You should, however, look once a year at your credit REPORT. 

Your credit report is the underlying data that banks, credit card processors (like the place I used to work), and other lenders send to the credit bureaus each month to let them know what you've been up to.  This data is the basis for your credit score.  Your credit report data is important for more than just the fact that it contributes to your score, though.  It's also important insight into how your name is being used.  Checking your credit report periodically can be a great way to know if you are a victim of identity theft.

Because every “trade line” (record of debt in your name) shows on the credit report, if someone steals your identity and starts opening credit cards, those new cards will show up on the report.  If this happens, you can then contact the credit bureau to dispute the item, and you can contact the issuing bank to let them know you did not authorize the account to be opened in your name.  You should also contact local law enforcement to file a police report.  It is your responsibility to make sure the data in your name is cleaned up.

In order to check your credit report, you should utilize the site annualcreditreport.com. By law you are entitled to get a free report from each of the 3 credit bureaus once a year.  Therefore, you can check your credit data once every 4 months at no cost to you.  There's no need to pay for an identity monitoring service or to pay to obtain your credit score.  By reviewing your report once every 4 months and challenging any incorrect data, plus paying your bills on time, your credit score should be just fine in the event that you ever need it.

 As I mentioned, your credit score is not your adult/money report card.  It was not designed to show who is good with money and who is not.  In fact, you could have two individuals with the exact same money behavior but quite different credit scores, as being “good with money” is not what is being measured. 

 As an example, my husband's credit score falls in the “excellent”category, and mine falls in the “good” category.  But here's the kicker – my husband hasn't paid a bill since the 90s.  So if “being good with money” were the only criteria, and the person paying bills for him and for me is the same person, we should have the same score, right?  WRONG.

 You see, at our last house the mortgage was in my husband's name.  He was working a day job (in addition to moonlighting for STS), so it was much easier to show regular, normal person income for him.  To make things easy for the bank, we put the house in his name.  Because he has MORE debt and is paying that debt on time, he has shown that he can handle more debt than me in a way the banks like.  You would think having more debt makes him more unable to pay his bills and therefore more of a risk, but that's not how the credit score is calculated.

 So if you are looking to clean up your credit score as a way to prove that you are adulting with money correctly, you are barking up the wrong tree.  Yes, your credit score can be important, and it is valuable to check your credit reports throughout the year.  But it is not your grown up report card. 

If you are looking to prove you are winning the money game, it's your net worth, not your credit score, that you should be focused on.  But that's a separate post.

 How do you know if you are winning with money?

 What is Blocking Abundance For You?

Coaches are trained to see our clients as naturally resourceful and whole.  I also see my clients as naturally abundant.  My job is to help clients discover what is blocking the natural flow of abundance and help them release that.

Each of us are born in touch with our natural selves.  We are naturally in touch with our inner guidance and clearly know our wants and needs.

It is important that as children we learn the ways of the world and how to get along in society from our parents, teachers, and peers.  But as children we lack the ability to discern which lessons are clearly valuable (such as learning a language) and which are bad data that will cause us problems later. We absorb everything as if has equal value, not understanding that our parents are people who have their own issues.

There are times as children our behavior is inappropriate and needs to be corrected.  But when we get the message that WE OURSELVES are wrong (whether because of what is said to us or because of what we make what is said to us mean about us) we learn to live in a way that violates our ability to connect with who and what we truly are.

By nature we have everything we need to live in financial abundance. Nature always provides.  Most land where people live is fertile and can yield more than enough food to support us.  Most of us have natural interests and talents that can be developed into skills and abilities that allow us to provide value to others.  We can then trade the excess fruits of our labor for those items provided by others that we want or need but do not have the ability or interest to create for ourselves.

 When we are told from an early age that our instincts are wrong, we can develop false beliefs and behaviors that get in the way of our natural abundance.  We might be told that only boys can become surgeons and that our parents don't have enough money to both their male child and female child to college (this happened to a friend of mine).  On a more subtle level, we might pick up the belief that money is a source of self-worth and then spend our adult lives trying to make it as a lawyer because it's a high paying job, even though we hate the work and life we are leading.

 Most of my work as a financial coach is to help clients find the areas where they have picked up unhelpful money beliefs as children, stored those beliefs in the subconscious, and run their lives as if they are true. Since for many of us money is a taboo topic, these incorrect beliefs never come to the surface to be examined.  Through journaling, coaching, therapy, or conversation, we start to examine those beliefs for the first time and, if we choose to, set them aside in favor of beliefs that will help us get to that natural abundance each of us desires.

Even the best parents can only prepare you for the world they are living in while you are a child.  Parents and teachers cannot see into the future to understand the world we will live in as adults.  There is no way that they, with their own issues, could have fully prepared us for this new reality.

Be willing to unlearn the scripts and behaviors you were taught as a child.  A great way to identify these is by noticing where you react without thinking and get into trouble.  Perhaps there's a fight you've had with your spouse about money over and over again.  Is this really a mismatch between unexamined scripts you are each operating from?  Is there a coworker who makes you absolutely nuts?  What are they triggering in you?  Is there a belief or past trauma they are touching on that's causing you to respond with fear or anger instead of with calm rationality?

Our work as adults is to understand that everything that happens to us is being processed through our own cognitive filters.  The more of those we can identify and clear, the more we will be able to respond appropriately and stay in the present rather than acting out unresolved drama of the past.

 Where do you get triggered with regards to money?  Does that tie back to childhood experience or subconscious understandings of the world?

Post updated September 2020.

 Wondering about being a Financial Coach?  You've come to the right place. 

As a Financial Coach I am frequently approached by folks who are interested in becoming financial coaches as well.  I wanted to put all my advice in one easy place for quick reference.  If after reading all this you'd still like to chat, I'd love to have you as a client in one of my programs.  After all, the best way to learn about coaching is to be coached.  In fact, I believe this so much I have a coach right now.

 I grew up in a world where money was taboo, and I learned what I now know about finances through trial and error, reading, getting coached,  and paying a CFP® a sh!t ton of money to help me out.  So when the time came to look for a side hustle, I figured why not pass on what I'd learned?  My clients would get the benefit of what is probably more than $100,000 in investment (not to mention the time) for a few thousand bucks, literally shortcutting what for me has been a twenty year process.

My first thought was that I might become a CFP® myself, but honestly, I think most Americans need help with the basics – getting out of debt, building an emergency fund, and taking advantage of free money at work to start building investments.  The CFP® was really designed for helping people who were beyond that point.  There are already a lot of people in the “helping the rich get richer” space, so I didn't see much there in the way of need or opportunity.  Plus, the idea of compliance and helping people manage investments did not appeal to me at all.

 I wasn't quite sure what job title went with this idea until I found this article due to the magic of Google and Kitces.  Garrett Philbin does an excellent job of explaining why he became a money coach and what a financial coach does.  Honestly, that article will likely address all your questions, so feel free to jump over to that site and take it from there.

Getting Started

If you are still in the “maybe” stage after reading that article, I'd suggest you join Garrett's Facebook group and the Financial Coach Academy's Facebook group for coaches.  You'll be able to see the questions others are asking and the answers that have been provided.  You'll also get links to lots of other resources, such as books that have been published on money topics.

 If you've done a bit of reading and are still interested, you can become a money coach right now today.  All you need to do is announce “I am a financial coach”.  There's no regulation and no rules to follow (as of now).  However, I wanted to (and I suggest you) go a bit beyond that and have some certifications and training, to prove to both yourself and others that you know what you are doing.  Here's what I invested in:

 1.  The AFC® from AFCPE®.   This is not an extremely well known credential, but for those who are familiar with it, it is well respected.  You will need to pass an exam and document 1,000 hours of work.  This proves that you do in fact know about finances and that you have experience. 

If I ever were to hire an assistant coach, I would require that candidates pass the AFC® exam before I interview them.   The experience will come with time, but there needs to be some sort of objective proof that you know about money before you enter into the field and start talking to people about money.  Each of us have blind areas where we lack personal experience, and passing the AFC® proves you are familiar with even those areas.

If you are networking with Financial Advisors or Financial Planners and they give you attitude about what qualifies you to have thoughts about money, this sort of credential goes a long way toward shutting them up.  I don't find clients much care about specific credentials – they just want to know if you can help them.

2.  Financial Coach Academy (FCA). This is an affiliate link, but my recommendation remains the same whether you use that link or not. 

If you have never done anything entrepreneurial before then FCA is a slam dunk for you.  Just do it.  I, however, was convinced it would be too basic for me, as we'd already started up and successfully run an IT consulting business and a vacation rental business.  I was wrong.  Yes, I had entrepreneurial skills, but I had not started up this sort of business before.  I had a friend who convinced me to go through the class, and it was absolutely worthwhile.   Why reinvent the wheel?  Let someone who has already worked out the kinks show you what they've learned and benefit from that wisdom.  Worth every penny you will spend.

I don't run my coaching practice the same way they suggest in terms of packages and offerings, but it's easier to take a template and tweak it than to start from scratch.

3.  Networking.  Honestly, this could be step 1, but whenever during the getting started process you choose to do it is fine.  In person is best, but if you live in a cabin 50 miles from the next neighbors then online is better than nothing.

 Why do you need to network?  To convince yourself that you are a financial coach, and to practice explaining it to other people.  Most of the people I speak with assume I'm a financial advisor and so will tell me that they like their financial advisor and do not want to have me manage their funds.  People don't know what financial coaches do, so you practicing telling them is a key part of getting started as a new coach.

You may meet potential clients or referral partners from your networking efforts (and I hope you do), but if you do nothing other than nail down what you do so that you believe it and it sounds smooth when you say it, networking will have been worth the time you put in.

4.  Coaching!  This also could be step 1.  Before you spend a lot of time, money, and effort on your business, it would be wise to actually help some people with their money to confirm you do in fact like doing what you are proposing doing.  If you want to do free appointments with beta clients, limit yourself to 3 clients.  Limit how many appointments you do for each client as well, perhaps to 3 appointments.  Don't expect the free people to continue on once you start charging them (although they certainly could, most of them will not, because they will feel they already understand what you do and you have already set the value at $0).

Take some time to think about what kind of coach you want to be, what kind of services you want to offer, and which clients you want to work with.  If you do FCA this will come up, but it will likely take several iterations beyond the initial work you do for you to really have clarity on this.  Sometimes the best way to figure out who your ideal clients are is to work with those who are not your ideal client by accident.

While we are on the topic of ideal clients, if you want to charge for coaching, your ideal client is someone who can and will pay for coaching (spoiler alert).  If you are concerned you may meet people who need help but who can't/won't pay you and you don't want to turn them away empty handed, start making a list of free and affordable resources those folks who can't/won't pay you can access.  Everyone does have the choice to learn this stuff the hard way like you did, and by providing them with a list of non-profits and/or library books you are providing them with more of a jump start than you likely got.

 So that's what I'd recommend in terms of prep work.  Pass the AFC® so you have some proof you know about money and practice by offering to help people with money.  Take FCA to get your business set up, and network in person to practice your belief and your explanation of what you do.  That's really all you need to do to get the ball rolling and to start making money.

Frequently Asked Questions

 1.  What I really what to know is, how much money do you make, Lisa?

Wow ok rude.  Didn't we just cover how I grew up in an environment where talking about money was taboo?  But in the interest of full disclosure, I'll answer the question.  The answer is that to date my business has had more in expenses than in revenue.  So I've been losing money.  But there are some things you need to understand here.  My focus has been on getting  my business set up, getting trained to get my skills where I want them to be, getting coached to work through some of my own money drama, and creating my course. A lot of that work (at least the coaching) I likely would have done and paid for whether I started this business or not – but thanks to this business, it's a tax write off.  I didn't have to invest as much as I have, but I wanted to really start from a position of mental strength, and that meant investing in my mind.  I'm also part time, as we still have our IT consulting business going.  I anticipate 2020 will be the year I shift from investing into the business and myself to really working within the business by taking on more one on one clients and launching the course, which will provide mostly passive income once it is created.

For the record yes, I do have current and past paid clients for my coaching. 

That's not really what you are asking though, is it?  What you really want to know is, “if I, the reader, start a business doing financial coaching, will I make enough money?”  If that's your question, you need a better question.  Do some research into what high end coaches make (a lot.  Tony Robbins doesn't work for pennies).  Do some introspection into what you believe your value and worth is.  And shift your thinking from employee mindset to entrepreneurial mindset.  You could invest significant time and money and waste it all.  Or you could end up a multi-millionaire.  The potential for both outcomes exists.  Your thinking will be what drives your results.

2.  I see you recommended the AFC®.  The AFCPE® also offer the FFC®.  Do you recommend that as well?  Not yet.  First, you need to have at least 3 paying multi-session clients, have a fully set up business (business cards, website, legal/government/insurance stuff, beginnings of some sort of marketing practice via networking and/or social media, etc.), and most importantly, you need to have reached a point of frustration with the clients you are working with.  THEN, you need to read the book Co-Active Coaching.  If you read that book and think “heck yeah this is awesome and I need more understanding of how to coach this way” then the FFC® is for you. 

I've found that many people who get into financial coaching are really imagining/offering something more like consulting.  I know I was at first.  The idea is, “hey, I've spent a lot of time figuring out how to handle my money.  Other people might pay me to tell them what to do” and if that's your plan, the FFC®  will just confuse you and slow you down. Don't do it now.

However, what I have learned over time is that people who struggle with money generally don't need more information.  In this day and age, information is freely available thanks to Google.  What the world needs is more wisdom, and that comes from thoughtful self-reflection.  If you decide that is something you want to facilitate for your clients, you are crossing over more into the world of life coaching and way from the world of being the bossy budget person.   Which do you want?

 If you decide you really want to be a mindset coach, then yes, once you are up and running the FFC® will help you develop that coaching mentality and the skills you need to be successful with that sort of work.  The first two days of in person training are truly life changing – although I think the whole 2 year program could probably be done over a three day weekend in terms of content. 

 3.  What other training have you done that has been helpful?

In addition to the AFC®, the FFC®, and Financial Coach Academy, I've taken Leisa Peterson's Mindful Millionaire program, which was helpful in working through some of my own money mindset issues. 

I've also done 4 Theta Healing classes – Basic, Advanced, Dig Deeper, and Manifesting and Abundance.  It is very woo-woo, so if you are a spreadsheets and facts only person, this is not for you.  I've found it to be VERY helpful in rooting out limiting beliefs and changing them instantly, but again, you and the client will have to be open to it, so it's not for everyone.

I'm currently starting training with The Life Coach School.  It is EXTREMELY expensive, but I've been very impressed with the mindset of people who have been through the training.  I think it will be helpful to me as I expand out of just financial coaching and into business coaching.

Hopefully that's lots of helpful information for you.  I wish you the best of luck on your journey toward becoming a Financial Coach and helping the particular clients you resonate with end their financial suffering.