6 key questions to ask your financial coach

Many people are unsure about how they should be planning for the future and managing their current spending.

Whether you're in your 20s, 30s or 40s, a good starting point to assess your financial health is a financial coach.

A financial coach works like a personal trainer for your money. They take a holistic view of your money and work with you to plan your financial goals and future. 

While financial coaches can’t advise you on products, they can help clarify your goals, find relevant information and explore some of your options.

Here are six key questions people commonly ask financial coaches. 

How much should I be saving for retirement? 

As a rough guide, to fund a basic lifestyle where all essentials like groceries and bills are covered, you'll need an income of roughly £14,400 per year for a single person, according to the Pensions and Lifetime Savings Association (PLSA).

If you're living with someone else, you must bring in £22,400 between you.   

If you'd prefer a 'moderate' lifestyle, which gives you a little extra for foreign breaks, leisure activities and the odd drink, you'll need £31,300, or £43,100 per year for two.

To fund a 'comfortable' retirement, where you're free to embark on long-haul trips, buy new cars, and live life to the fullest, you'll need £43,100 for one or £59,000 for a couple. 

A coach can help you determine what that means for your retirement pot and the options you have to achieve it. 

How do I stick to a budget?

The first thing to do is keep a spending diary for a couple of months to see where your money is going.

Split it into bills (rent or mortgage, utilities, council tax, TV licence, phone and internet), groceries, essential transport, subscriptions and non-essential spending, including eating out and clothes.

Also, identify any one-off annual costs such as insurance and divide by 12 to get a monthly cost.

Once you have a better understanding of your outgoings, you can work with a coach to identify where you can save and what a realistic monthly saving goal looks like. 

Am I ready to start investing?

There are many key things you should have covered before you begin investing.

From working out your investment goals to understanding your risk appetite, a financial coach can help you prepare to start your investment journey. 

If you're looking for recommendations regarding investments, you should talk to a qualified financial adviser.

How do I get out of debt?

If you have a few debts, combining them may make your life easier and help you pay less in interest.

There are two main ways to do this.

Firstly, you can take out a new loan and use it to pay off your existing debts. You will now only have one payment (and interest) to worry about.

Alternatively, you can look at a 0% balance transfer credit card, so you won’t be charged any interest on transferred debts for a set period.  

Whether your goal is to reduce or eliminate debt, a financial coach can help you determine the steps necessary to make progress. 

How much should I have in savings? 

A three-month savings buffer is best for peace of mind against unexpected expenses such as car repairs or home emergencies.

It’s also wise to have this in place before starting any investment journey. 

Talk to a financial coach to work out what non-essential spending you could live without. A few small lifestyle adjustments could enable you to save more money and build a comfortable emergency fund.  

How do I get on the property ladder?

There’s no doubt that buying your first property has become increasingly difficult over the last few decades.

However, with planning, research and saving, one day you too can have a home you own.

From boosting your credit score to building your deposit, a financial coach can help you develop a plan to transition from renter to owner. 

Remember, a coach isn’t the same as a financial adviser and can’t recommend specific products or platforms.

However, their guidance can be invaluable for getting your financial plans in place.