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6 key questions to ask your financial coach

Do you lack confidence in your finances? Many people are unsure of how they should be planning for their future and managing their current spending. The current cost of living crisis is putting this in sharp focus.  

Recent research commissioned by Unbiased revealed that three quarters of those aged 50 and over are worried about how the cost of living will impact their retirement with one in two (53%) fearing that they won’t have enough income to survive financially when they stop working. 

What’s more, 63% of Brits have no idea what a pension pot should look like when it comes to funding the kind of retirement they’d like. 

6 key questions to ask your financial coach

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Now is the time to take control of your finances 

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

This is a relatively new option and works like a personal trainer for your money. Financial coaches take a holistic view of your money and work with you to plan your financial goals and future. 

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

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 the essentials like groceries and bills are covered, you'll need an income of roughly £13,000 per year for a single person. If you're living with someone else, you'll need to bring in £18,000 between you.   

If you'd prefer a 'comfortable' lifestyle, which gives you a little extra for foreign breaks, leisure activities and the odd drink or two, you'll need £19,000, or £26,000 per year for two.

And to fund a luxury retirement, where you're free to embark on long-haul trips, purchase new cars and live life to the fullest, you'll need £31,000 for one or £41,000 for a couple. 

A coach can help you work out 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 to keep a spending diary for a couple of months to find out where your money is going.

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

Also identify any one-off annual costs (e.g. insurance premiums) and divide by 12 to get a monthly cost recorded. 

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

Am I ready to start investing?

There are a number of key things you should have covered before you begin investing.

From working out your investment goals to understanding your attitude to risk, a financial coach can help you get ready to start your investment journey. 

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How do I get out of debt?

If you have a few different pools of debt, combining them all 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 0% transfer credit deals. This means that 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 work out the steps you need to take to make progress. 

How much should I have in savings? 

A three-month savings buffer is best for peace of mind against unexpected expenses like car repairs or home emergencies. It’s also wise to have this in place before you start on any investment journey. 

Talk to a financial coach to work out what non-essential spending you could live without. Just a few small lifestyle adjustments could enable you to save more than £1,500 a year 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 recent decades.

In 1981, nearly one in three 16-24-year-olds was a homeowner. By 2016, it was one in 10. Meanwhile, the proportion of renters in younger age groups has increased by 14% among 16-24-year-olds since 1996.  

This trend may mean you’ll have to wait a little longer to become a homeowner. Since 2007, the average age of first-time buyer in the UK has increased by six years, with people turning 34 by the time they’ve bought their first property. 

However, with planning, research and a little know-how, one day you too can have a home that you own. From boosting your credit score to sorting out your deposit, a financial coach can help you put a plan in place to get you 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 expert guidance can be invaluable for getting your financial plans in place.

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We’ll find a professional perfectly matched to your needs. Getting started is easy, fast and free.

About the author
Kate has written for leading publications and blue chip companies over the last 20 years.