It was the Christmas bills that did it for Cindy McMullen.
In January, 2007, as she was opening the credit card bills that showed, in black and white, just how much money and she and her husband had blown during the holidays, Ms. McMullen decided it was time to do something about the cash crunch that had become a constant part of their lives.
Although she tracked their household expenses closely, Ms. McMullen says she and her husband just couldn’t get on top of their debt load, which had climbed to “several tens of thousand of dollars” and included a bank loan, a line of credit and back income taxes.
They had no savings or investments.
“My husband and I both make pretty good money but we never had enough; we were always short,” she says. “I could see that we were spending more than we were bringing in, but I was paralyzed by our situation and knew we had to do something to get out of it.”
Ms. McMullen, a Vancouver-based government consultant, had read an article in a local paper about a “money coach” named Sheila Walkington. So she picked up the phone and soon after, she and her husband signed up with Ms. Walkington.
Today, Ms. McMullen and her husband are debt-free and have money put away in savings and investments. They’ve even managed to use up all their allowable RRSP contributions.
“We’re in a different world,” says Ms. McMullen. “Sheila helped us see the big picture and take control of where our money was going.”
Ms. McMullen and her husband are among a growing number of Canadians who are turning to money coaches for help in managing their everyday household finances. Unlike financial planners, money coaches don’t sell products such as RRSPs, mutual funds or insurance policies. Instead, they help their clients learn how to budget, pay down debt and save.
While there are no statistics that track this demand, money coaches and personal finance experts say more Canadians are asking for this type of service.
“There's no question about it, our member agencies are seeing an increase in people seeking advice on budgeting and money management,” says Patricia White, executive director at Credit Counselling Canada, the Toronto-based national association of not-for-profit credit counselling agencies.
Ms. Walkington says she sees about 20 clients a month – a significant increase from the six clients she started with in 2004. Depending on factors such as marital status and how many in-person meetings a client wants, Ms. Walkington charges a flat fee that ranges between $1,200 and roughly $2,250 for a four-meeting package.
Karen Collacutt, a former financial adviser who recently joined Money Coaches Canada Inc. – a network of money coaches launched earlier this year by Ms. Walkington and a business partner – says she receives three to five referrals a week from financial planners and mortgage brokers who feel their clients could improve their day-to-day money management skills.
“More and more, I’m hearing people saying, ‘We want to put money into RRSPs and RESPs, but we don’t have the cash flow,’ even when they’ve got good income,” says Ms. Collacutt. “So what we do as money coaches is really teach people about putting the horse before the cart – learning to manage your money before you invest.”
So how, exactly, do money coaches do this?
The first step is usually a consultation where the money coach and potential client feel each other out. Then once both parties decide they want to work together, they set a schedule to meet in person or by phone several times over a period of four to six months.
