Who is a candidate for financial coaching? The answer is everyone. That is because the first job in attaining financial literacy is a knowing just how financially literate can be. The financial literacy test is whether you can make your self behave rationally with your money. Money is rational and operates with rigid rules. Financial coaches can teach you these rules but only if you are willing and able. We want to help you make the connection between your rational self and the rational mechanics of money so that you can manage your personal finances to endings that should make you happy. This is the prime focus of financialliteracyusa.

The Psychology:

You need to realize that your finances and the psychology of your life are entwined. In our discussion of financial psychology we outlined the 6 areas of psychology that help us analyze human interaction with money. We have identified 3 insights into the psychological factors that focus what can addressed by financial coaches. Any coaching has to be done with these demographics in mind. Financial coaching cannot be a one size fits all approach.

• Developmental psychology/Freudian psychology – Your capacity to think rationally evolves from youth to maturity. Rationality is the element of human behavior that defines maturity. We have outlined the developmental process and how it affects how you manage your money. This means that what you should expect from yourself at the different stages of psychological development changes from one stage to the next.
• IQ 85 to 115 – Contrary to the bias that we are all created equal, we are not when it comes to the rational management of money. This is just a fact and acknowledging this fact gives you power to be coached accordingly. Knowledge is power and accepting the level of your intelligence will give you power to manage your money in a way that you will not be manipulated into parting with it unfairly. Some very smart people in the 1% use their gift to take from those less gifted. The 99% do have tools to level the playing field but most not be manipulated out of using them.
• Cognitive psychology – there are 106 ways that we lie to ourselves about why and how we manage money so irrationally. We will show you all 106 of these. Knowledge is power and if you catch yourself using one of these rationalizations you will know that you are not managing your money to get what you want but what someone else wants.

At financialliteracyusa we believe that the key to financial coaching is in the developmental psychology demographics. If you follow the developmental psychology you will gain a great deal of understanding of what you should expect in your relationship with your personal finances.

• School age to young adult – Freud described that at this time in our lives we are driven by primal/survival needs. For survival you need food, water and protection from dangers. On a social level it is "king of the castle". It is very much a “me first” mode of thinking. You seek prestige, attention and want everything for yourself. However parents and family do have a strong influence on behavior and this does stay with individuals through their development. This is the "ego" defined by Freud. This is why introducing financial literacy education is so important in this first demographic.
• 15 - 25 -hormones and emotions phase - Anyone who has lived through and then parented more than 3 children through this phase needs no more said. Rationality is rare from this age group. Family influence is most often rebelled against unless you have an exceptional child. Those who were or have a prodigy child or even one who does not engage in full rebellion, realize that this is not the norm.
• 25 – 35 – the nesting phase – The urge to procreate is at its peak. The simplicity of it is that we are driven to procreate. The species survives because we procreate like bunnies not because we behave rationally. Emotions are the dominant psychology in decision making. Review your life and remember this time if you are in an older demographic. If you are in this demographic understand that the coaching you get will be so that you do not waste your financial resources like previous generations did during this phase in their lives.
• 35 – 45 – the crash and burn demo – This is the age demographic where both the mean and the average spikes for divorce and bankruptcies emerge. The proof is there in the numbers. On a psychological level any counselor will tell you that your rational self is awakening. It comes alive and you rethink past decisions (made with emotions as your guide) and decide which are “keepers” and which need to be changed. The feeling is that you wake up one morning and you say to yourself that you “just can’t do this anymore”. You cannot continue to engage in irrational behavior to sustain status quo. Things must change to become acceptable to the emerging sane and rational part of your personality. There are some casualties but it usually works out for the better.
• 45+ - rebuild and plan for retirement – Hopefully you have shed the burden of irrational behavior and you can now use the Big 3 financial tools to rebuild your life and your personal finances. You are at your peak earning years and hopefully the kids are becoming independent. You can make the sprint to the finish and mold your finances to support your financial needs in retirement. You have the experience to know what works and does not work and a mind relatively free of primal drives. Your early financial literacy education starts kicking in and you actually apply it. This allows you to take care of your finances better than at any time in your life.

The Finances:

Finance is very rational. The challenge in the early phases of personality development is to minimize the financial damage. To do that your focus needs to be on the Big 3 financial tools to try to maintain some rational contact with them. To even understand and implement the budget goal of spending less than you make is quite an accomplishment for those in the youth demographics. To understand that you need a positive and growing net worth on your balance sheet is even more exceptional. To find a mate that understands these goals and who will help you is a form of financial heaven. Hopefully you find the life goals chart and use it so that the rest of your life matches up when you hit the crash and burn demographic.

When a sporting team is on a losing season they make changes. One of the most common reasons cited for a team rebounding from a bad start is that “they just got back to basics”. In personal finances, the basics are your budget and your balance sheet. Your budget is about your income and your spending…your cash flow. Your balance sheet is about the relationship of your assets to your liabilities…your net worth. Successful personal finances include a positive cash flow and a growing net worth. You need to spend less than you make each month and set the surplus aside. That will allow your balance sheet to increase in value when you learn to properly manage your assets to achieve growth in the value of your net worth.

Who are Financial Coaches?

• Financial Planners
• Lawyers
• Bank Account Advisors
• Bank Managers
• Accountants

I have talked to lots of people who qualify as financial coaches. The common theme is that they pitch the financial line and they can see that their financial coaching does not catch the elevator to the penthouse on their client. Both parties need to be aware of what capacities people have to learn basic financial concepts and then find ways to cut through the psychology to get to financial basics.

It takes time to research financial tools and it takes time to develop the skills to use them properly. Financial growth takes time and you must be patient as your financial coaching starts getting some traction. The longer you let money work the harder it works when you manage it properly. It works best over decades and can be taught by one generation to the next.