Financial Counseling: What Is It And Is It Right For You?

Blog | October 7th, 2021

If your family is experiencing financial distress, it can be a challenging time. You may be worried that you’ll never get your finances straight or that there may not be a way out of your situation.

While figuring out your finances is never easy, a financial counselor can help you strategize and give you advice on the best ways to manage your money. 

Read on to learn more about what financial counseling is and if it’s right for you.

What is Financial Counseling?

Financial counseling is a service that helps people who are struggling with money to get out of their bad financial situations and make wise decisions moving forward. People who visit financial counselors are usually struggling with budgeting or saving or may be in over their heads with debt.

A financial counselor helps people strategize how to use their money more wisely and develop plans for getting out of debt and setting a realistic budget. Counselors can help with other financial goals like understanding and raising credit scores, finding tax credits, and getting help through public assistance.

Some financial counselors also help people figure out housing. They can help people find affordable housing and get mortgages even if they’re not qualified for a conventional loan.

Financial Counselor vs. Financial Advisor

A financial counselor typically helps people who are in lower-income brackets who are trying to create better budgets and get out of debt. An accredited financial counselor typically has at least a bachelor’s degree and has passed certification exams.

A financial advisor works with people who earn middle to high-level incomes. They help them manage their money, such as making budgeting decisions, saving for retirement and their children’s college, and investing. Accredited financial advisors have at least a bachelor’s degree (although many have a master’s) and have passed exams.

It’s important to note that only certified financial counselors and advisors are required to have specific education and certifications. Be sure to check into your counselor or advisor’s experience and education before the meeting.

Typical Costs for a Financial Counselor

The cost of seeing a financial counselor varies. In some cases, such as if you’re in the military or college, your base or campus may offer financial counseling free of charge. Some services provide low-income families with counseling.

If you do pay for a counselor, they’ll often offer a consultation for free. Subsequent meetings may be a flat fee, hourly, or through a monthly subscription. The fee is often based on your income level, and a certified counselor is required to keep their fees at a reasonable level. 

They’ll also have to tell you their payment policies upfront.

Benefits of Financial Counseling

There are many benefits to getting financial counseling.

Debt Help

Debt is one of the most difficult situations. If you’ve borrowed more than you can manage, the problem can keep compounding along with your interest. Credit card debt in particular can be challenging to overcome, especially if you’re barely making the minimum payments.

A counselor can help you figure out the steps you need to take to get yourself out of debt. They can also help you figure out how to avoid going into debt in the future.

Budgeting and Saving

Counseling can help you come up with a budget based on your income and expenses. Your counselor can help you limit your spending and build up savings.

Credit Help

If you’re struggling with your finances, there’s a good chance your credit score has suffered as well. A counselor can help you to understand your credit score and what caused it to drop. You can also come up with a set of strategies to help boost your score as quickly as possible. 

Housing Help

Your counselor can help you make the best financial decisions when it comes to housing. They can help you move towards getting a mortgage so that you can stop renting.

Financial Counseling Isn’t a Cure-All

A financial counselor is there to give you advice on how to manage your money and make decisions about improving your financial situation, but ultimately the decisions are yours. You can’t rely solely on what your counselor says, since you know your situation better than anyone else.

There are no guarantees when you visit a counselor. You can follow their advice to the letter and things may not work out. Money can be unpredictable, and things may not work out the way you’ve planned. 

You likely won’t fix your situation after a couple of sessions. Instead, you have to make a commitment to making wise decisions about your finances. 

Still, a certified financial counselor is trained and has experience dealing with a variety of challenging situations. They can often give you sage advice or point out things you may not have considered. You should keep their advice in mind as you make your decisions.

Resources for Finding a Financial Counselor Near You

If you’re ready to see a financial counselor, you have many options. One of the best places to start is the AFCPE (Association for Financial Counseling and Planning Education) website. You can search by state to find a local counselor, or you can get matched with a virtual counselor.

The site also has a few options for families who are experiencing financial struggles due to Covid-19. They’ll match you with an online counselor who can help you free of charge.

Parting Thoughts

Financial counseling can be highly beneficial if you are having financial issues, such as debt or budgeting problems. A counselor can help you understand where you should focus and what improvements you can make. 

They can also help you set a budget so that you can begin to move toward financial stability.

Related: Comparing Successful Strategies For Rapidly Paying Off Debt!