How A Money Coach Differs From A Financial Advisor, And Why You Should Consider Hiring One

With the rise of social media and influencer culture, you can find someone with expertise on any topic with a swipe on your phone. Everything from workout advice to makeup tips to buying a car, there's an influencer, or two, or twenty, to follow. You can even get financial and investment advice from experts and influencers on social media — like TikTok's financial cleanse trend – and financial advice is something that a lot of people need.

A survey found that 57% of Americans were financially literate, meaning they had a basic understanding of things like budgeting, interest rates, retirement savings, and inflation, according to Annuity.org. That leaves a lot of people without the knowledge to be able to make smart money decisions. That isn't to say that all financially literate people make good choices with their cash, but the opportunity for success is there. In fact, states across the country are increasingly adding financial literacy classes to their high school curriculum.

Instead of returning to high school, you may want to brush up on or develop your financial literacy. And while you can just follow financial experts on TikTok or Instagram, if you want to get serious about understanding and feeling in control of your finances, you should look into working with a professional. However, not all financial professionals are the same. It's important to learn the difference between a money coach and a financial advisor and find out which one is the best fit for your financial situation.

A money coach is someone to turn to for help with issues of day-to-day money management and meeting short-term goals with your cash. They can help make you financially literate and inspire you to think about your money differently. It may be time to hire a money coach if you're looking to do things like finally tackle your credit card debt, figure out how to build up an emergency fund, and understand different types of accounts, like credit versus debit or checking versus savings and how they can work for and against you. Other financial literacy topics a money coach could help with include breaking down the differences between retirement account types — 401K, Roth IRA, and traditional IRA — and how to boost your credit score.

Just like a coach for an athlete, a money coach will give you tailored advice to your situation, support you as you start to make changes, and help hold you accountable. It's like having a life coach, but for your cash. They can help you better understand finances in general, as well as help adjust your relationship with your money. However, they can't make any decisions or changes for you. You'll have to take the advice and actually use it if you want to see changes.

It's important not to confuse a financial coach with a financial advisor. The coach may be able to give you a better knowledge base about things like investing and retirement, but as far as specific investments to make, that's the purview of a financial advisor. You can also think of the difference between them as short-term versus long-term, as financial advisors are the ones who will help with long-term goals when it comes to things like stock market investments, retirement, and estate planning.

A financial advisor is an umbrella term that covers those whose titles include broker, wealth manager, and certified financial planner — each of which has its own specialties. Overall, a financial advisor will likely cost more than a money coach with either a flat fee or a percentage paid to them based on the amount of money they're managing for you. And depending on the financial advisor's specialty, there may be a required amount of money you have to invest with them to get their services.

So if you feel pretty solid with your financial literacy and have a chunk of money you'd like to make into more money, check into getting a financial advisor. If you want to get your day-to-day finances more under control, go for a money coach.