People at every income level benefit from financial advice; but usually only high-income or high-wealth individuals can easily access financial advisory services, such as a financial planner or wealth manager. Despite the need for financial advice and support, Low to moderate-income (LMI) households generally cannot access private market services. And this is where financial coaches fill this gap.
As financial experts services are often costly and not as familiar working with LMI households. Therefore less familiar with forming a “coaching” relationship and more inclined to focus on financial planning and not on changing behaviors.
And LMI individuals and families face multiple economic barriers that prevent them from achieving financial stability. These barriers go beyond only income but also due to a lack of access and experience with the complex financial services industry. While many LMI households lack access to quality financial tools, they also need to build their financial capability in order to make informed decisions about the use and management of money.
Financial coaches can help families and individuals regain their financial footing by helping them learn how to navigate financial system more successfully. Whilst also building habits that lead to financial security. This is a vital component to getting families back on track.
And since many LMI families have very little income available after paying for basic necessities managing limited resources and building savings is a constant challenge for them. But despite these challenges, low income and very poor families still save to start businesses, purchase homes or go to college in order to create a secure economic future for themselves and their families.
Financial coaches can assist LMI families to participate effectively in the financial mainstream. To combine solid financial knowledge and confidence with trusted and quality financial products helping them to prioritise paying down debts and building credit and savings for longer-term assets, such as a house or car and increase income.
Research has also shown that financial coaching has demonstrated the ability to enhance financial capability of LMI households. Through financial education, personal and household budgeting, credit counseling and general money management.