Tommy: We are going to discover so much in the next 25 minutes. What is the difference between a money coach versus a financial planner. Are you financially literate? What does it mean to be financially literate? We’ll talk about that. Let’s talk about first of all, the difference between a money coach versus a financial planner. You’re a money coach.
Lama: Yes I am a certified money coach. So the thing is, the ida is really widespread to have a business coach, a life coach, a health coach, but I feel, especially here in Quebec, the idea of a money coach is not really widespread. And every time I tell someone that I am a money coach, I feel like i have to give an explanation after that to explain what is that. Or no no no, I already have a financial planner – yeah, I have a financial planner too. The thing is you might have debt issues, or budgeting issues, and or just fighting with your spouse about money all the time. And you turn around and you’re not really sure who can help you. You go to your financial planner, and they are really just there to manage your investments, your RRSPs, to help you with your retirement plan, which is very good, but that’s what they are there for, they aren’t there to help you manage your financial life. You can go to your bank, again you’re going to sit there they will give you a consolidation loan, maybe they open a new account for you, open a line of credit, they aren’t there to manage your financial life.
Tommy: Not only that but there’s a conflict of interest. They are there to sell you a product, if they teach you to be very careful and never borrow anything they are out of business.
Lama: Yes, we can have another show on that. And then you can have like financial issues that are causing marital troubles. So you can go see your therapist. But in all these cases these people aren’t looking at your whole financial picture, and looking at how you’re spending your money, where is the money coming from. So this is one of the things that a money coach looks at, that I do. Is I look at what money is coming in, what money is going out, what are your short term goals, i’m not talking retirement, you know it’s very important to plan for retirement, but some people are thinking how am i going to pay off that credit card next month befor ethey think of retirement. Or you know, how can I save for an emergency fund. SoI really look at more short term goals then longer term ones. And the other aspect that I do is really more the psychological part of money. I’m not a psychologist but I am certified in the psychological part of monet, and not all money coaches are certified. Some people focus on the budgeting, but I do both parts of it. You can only count so much on your willpower to not go spending, not go shopping. But willpower is only going to get out so far. Unless you understand yourself from a money perspective, it’s going to be really hard to change your behaviour. And when I start digging into a client’s past, when I’m trying to understand who they are with money, we literally go back to when they were five years old. And we dig every single memory that they have around money. And This is where they start connecting the dots, and saying, Oh I never saw myself that way. Or never knew I did that because of that.
Tommy: And once they know this information it makes all the difference on how they relate to money from then on.
Lama: For sure. When you have an awareness of why you do what you do, and when you bring it all to the surface instead of keeping it into your subconscious mind it makes a big difference., You start acting more consciously, you can spend more consciously what I call the mindful spending.. You’re more mindful about what you’re doing.
Tommy: This texter wants to know who certifies money coaches.
Lama: The Money Coaching Institute. She’s actually in california and she certifies money coaches. There are different in studied and different people who certify them, but that’s one way.
Tommy: if you have any question for Lama Farran you can call us or text us your questions. Let’s talk about financial literacy, how would you define financial literacy?
Lama: People say that they aren’t good with money. Well guess what, you weren’t born knowing how to walk, and you’re not born knowing how to deal with money. But some people have this perception that I’m just not good at it, I’m never going to be good at it. It’s literally something that you can learn, and “Umn not talking about yo going to do an MBA in finance. One very very simple way is an amazing online course that I discovered a few years ago. IT’ s done by the government, it’s done by the Financial Consumer Agency of canada, it’s a free course. I can’t believe our tax dollars went into this and people aren’t using it and abusing it,because it’s such a great resource. It’s a 12 module course, you don’t need to sign up you don’t need to do anything, you literally go on to the website and it’s right there. It talks about saving, budgeting, investments, retirement, taxes, every single topic. So it’s like a crash coard of money 101/
Tommy: And where do you find this?
Lama: It’s the financial consumer agency of Canada, but on my website, maxworth.ca, under tools I have links that take you there.
Tommy: ah that’s the best way to get to it. Your website is maxwroth .ca and if you do’nt jot this down, we wll make sure that it’s on m y pae onb CJAD.com/\. So go to maxworth.ca, click on tools and you’ll have this link to get this crash course.
Lama: It’s this course and many other things. Because another way you can get financial literacy is literally to follow what is happening right. Now I know that there are a lot of new raz credits that people need to be aware of, it’s tax season. So, there s a lot of blogs that you can follow. What blogs am I going to follow? Again in my tooks there’s a lot of, I kind of did the research for people so they don’t have to worry about it. I put my favorite blogs, so just sign up for two or three and read the newsletter. That’s one way to understand what is happening in the financial works. You know look at it, pen the mail, read your statements. The investment statements people are kind of cared of because there are words that they don’t understand, what’s that return what are the percentages.
Tommy: If they look at the bill, the credit card bill arrives, and there’s a number of, many numbers on it, there’s the date, there’s the balance the full balance, usually I think on American Express they try to hide that and make that in small print, and in large print the minimum payment., which looks really small. And now thank goodness the banks have been forced to say how long it will take you to pay off the debt if you make the minimum payment each month, and sometimes you see numbers like 20 years or 40 years. But Lama I think when people see that they don’t believe that, they think it’s a mistake. They don’t believe that it will take 20 years to pay off.
Lama: You can google debt payment calculators and if you want to know how much your debt is going to take to pay off, not just that one card try to consolidate everything. Put it into a debt calculator and see how long it’s going to take you because you’re going to put the amounts, the interest rate on each debt and you’re going to be shocked on the figures,
Tommy: This is avery interesting, intriguing questions. My guest Lama Farran who is a personal finance expert,m a certified money coach her website as we mentioned maxworth.ca. This question, how do we trust a money coach when they are dealing with delicate issues, beyond the money issues. How to trust that we don’t be ridiculed in a condescending manner, making us feel like an idiot for having gotten ourselves into a financially difficult position.
Lama: So that’s the last thing I would do, I completely understand. When I sit down with people I’m not there to judge them. I don’t care how they got there, what I care about is how can you get out of there. So it’s really like the same way yo go see psychology and he tells you, do you ever see a psychology who blames you for being in depression or for being in the situation you are. Never, they are really there from a helping perspective. I’m not there to judge anybody, I try to connect with their pain, how they came about the circumstances in their life. The other thing people are hesitant about is confidentially, you literally have to open up your whole life to me. And I’m also very very keen on keeping my clients confidentiality and confidential information very safe.
Tommy: If you have any questions, personal finance expert certified money coach Lama Farran my guest, we will talk about boosting financial literacy.. You mentioned some of the differences between money coach and financial advisor. What are the discussions between you and your financial advisor?
Lama: Well I don’t follow the market, I’m really not interested in what’s happening in the market. When I do see him once a year, I look at my investments so I know where they are at. I ask if there are any new funds that I should look at/. How did my funds workout compared to other. I don’t really talk budgeting, it’s more like I don’t know what’s happening in the market, you tell me, it’s his job.
Tommy: So he’s your financial planner, but are you his money coach? To make sure that he’s financially, well he’s financially literate, but to make sure that he’ doesn’t get carried away.
Lama: No, he’s good, he’s in good shape.
Tommy: Text your questions or comment to 514-800. We will have all kinds of tops on how you can save money, and if how if you are not financially literate, and you don’t know what’s going on and you’re spending a lot of money that you don’t have to spend. Great questions for my guest Lama Farran, certified money coach, her website is maxworth.ca. Couple of questions, both pretty much the same type of question, how much doesit cost to have a money coach. And the other one saying do you give twenty years to pay for your services, and how do you charge? Is it on a per visit basis?
Lama: Okay, so how much does it cost, it really depends it can go from a couple of hundred dollars to a couple of thousand dollars, and the reason for that is that it really depends on what the issue is. Yo know I always compare it to if you have an issue with your car you take it to your car mechanic, you can’t tell your car mechanic tell me how much is it going to cost just by looking at it from the outside, he has to see what he issue is and how many hours it’s going to take. So it could be that you just need some tune up, it could be that you’re really in deep trouble and you can work with me for a couple of months or years. No, I don’t offer a 20 year payment plan, but I do offer a payment plans. So let’s say you’re working with me for a year, so the payment is over let’s say eight months or something. There was another question, I forgot.
Tommy: Well they are saying how much you charge.
Lama: Yes os it depends, I do an evaluation on my website. You fill out some forms, to give me an idea of where you stand financially and then we sit down for half an hour and I get a better understanding of where you stand and what package you need. I have clients where I answer the questions, can I afford this house? It’s there first time buying a house, they don’t know if they should buy for that amount that the bank approved them for, so i did that one exercise with them and that’s it. Some clients I work with them for 6 months, and after six months if they feel like they aren’t ready to let me go so they can extend. Some people feel they can just fly on their own after a few months of working with me. So it’s really on a case by case basis.
Tommy: And a lot of the advice they can pick on your website as well.
Lama: I have a blog, I have a lot of tools, I have a lot of things. But of course the coaching one on one I’m paying attention to your specific situation and your numbers and it’s very personalised.
Tommy: I’m sure when you’ve spoken to your clients you’ve heard this phrase I have no idea where the money goes.
Lama: It’s a big mystery that we solve together.
Tommy: So give me an example of how one would go about solving the mystery.
Lama: You literally sit down. If you have no clue right now, i suggest you download the last 3 months of your banking transactions and categorize them. That would be the first place to start. If everything you spend is cash it’ll be a bit harder to do, so maybe you can track for the next three months. Or if you’re a debit person kind of spender you can just go and categorize them, and just see and look at it. So that’ll be one way to track your money. You don’t have to know exactly where each dollar goes, but you can use it as an estimate to establish a budget. I don’t really care where every dollar is going right now, I want to know approximately that this is what is happening and then we go from there.
Tommy: What are some of the psychological elements that people have from where they are to getting ahead and getting a fix on their finances.
Lama: Well the psychology that I look into are archetypes. What archetypes are, they are absd on the work of Debra Price, she wrote a book called Money Magic. And once you understand your archetype then we try to work on strategies to move to a healthier archetype. I’ll give an example sp it doesn’t stay in the abstract world. One of the archetypes for example is the innocent archetypes. So the innocent who is the person who hasn’t matured financially. They might be a mature person, but financially they are still like a child. They are depended on others, they are dependent on other people’s opinions, they get very overwhelmed, so they are the types of people who don’t open their envelopes. A very innocent type of approach. So once you know that you are an innocent archetype and we understand how you came about to be that person, then maybe we can move you to the warrior archetype. The warrior is someone who is more goal oriented, disciplined, I’m going to take whatever it takes to figure it out. And we figure it out the steps, which archetypes are the dominants one right now, which ones we want to strengthen to move you from there to there.
Tommy: An unusual question for you Lama. Mark says, how do you deal with a couple when one of them decides that their money is their money and they decided to spend it. MArried, two kids with no debt, but one member has decided to spend all of their money.
Lama: When it come sto couple, it’s really important to do a values exercise. What are your values, and compromising and putting the money where both of your values are. Are they living okay without the other person contributing? It could be an issue. But i t’s really sitting down and saying okay it’s that portion that goes through and you spend how you want buy this portion stays in the joint account, for the household and for the kids and everything. So it’s reaching the middle point where not my money is my money kind of thing.
Tommy: This texture may be a bit of a joker. He says when m y wife asks for money, I tell her no problem just return the last purchase to the store and you have money.
Lama: Sound like the tyrant archetype.
Tommy: So tell me about the dangers of impulse buying because I know the retailers do everything to get to that impulse.
Lama: Well, they really count on you for being undisciplined for them to grown their business. If you do end up buying it, bring it home and keep it in the bag for three days, just sitting there with the receipt. And re process is, do I really need it? Come home and sleep on it, and then see if you change your mind.
Tommy: And you’re hoping we will take it back. Lama Farran, personal finance expert, money coach, check out her website maxworth.ca. She’s got some great blogs that is where I found that minimalist blog.