What a Financial Counselor Can Do for You

what can a financial counselor doThere are many reasons that you may be considering seeing a financial counselor: for many the first and foremost is often when they are in debt that seems to have become unmanageable.

There are nonprofit organizations like the National Foundation for Credit Counseling and Consumer Credit Counseling who help clients get out of debt with a detailed plan of action.

Taking Action: First Things First

The first step is to set up an appointment: don’t put it off. You may want to start by checking with the NFCC or ACCC to see if there is an accredited office in your area.

When you arrive at your first appointment, bring documentation that covers your income and all your expenses. In order to get the best advice, take some time in the days prior to your first appointment to put together as accurate a list of income and expenses as possible. Bring names, addresses and creditors statements, as well as your credit cards. Don’t stress about this though, you will be advised of what to bring when you book your first appointment.

Your counselor will analyze this information and calculate how much more you earn more than you spend, or vice versa. From there, he or she will devise a plan to help you maximize income while cutting debt and expenses.

What Happens at the Meeting?

Your financial counselor will look over finances and suggest solutions that are appropriate to your personal situation.  You will be shown smart money management habits and learn how to save more of your income.

One thing everyone should do but many don’t is write a budget (or “spending plan”) and stick to it.  Your counselor can help you with this. They can show you easy ways to track income and expenses so you have an accurate picture of your financial situation. When you see your finances in black and white, it’s easier to work out where adjustments need to be made. Some people just don’t notice how much the little things add up and how much money can be saved with simple cutbacks: don’t make this mistake. Financial counselors can also show you how to rebuild good credit.

Debt Management Programs

If you decide on a debt management program, your financial counselor will call your creditors, and negotiate things like lower interest rates, lower monthly payments and even settlement agreements. And with companies like Consumer Credit Counseling, you will no longer receive debt collector calls. Once this is done, your counselor will give you a figure to pay to their company each month. You pay the financial agency, and they distribute the money amongst your creditors until you are debt-free.

Note that a debt management program is not the same thing as debt consolidation, which involves taking a new lower interest loan to pay off high interest debt like credit card balances.

Looking to the Future: Investments and Retirement Plans

Other things they can do is teach you how to save effectively and  – to a degree – how to invest. They can instruct you on the different types of savings accounts available from banks and credit unions, and the benefits of each. They can also talk to you more about employer plans like 401K and individual plans like IRAs. In addition, they can introduce you to investing in stocks, bonds and Certificates of Deposit (CDs).

While a financial counselor is a good place to start when seeking basic information on investments, you’ll need the services of a qualified investment professional if you want to begin investing money in the stock market. Investment professionals can also help you max out the benefits of life-insurance plans that offer investment benefits. The more you know about your money, the more it will work for you rather than the other way around!

Resources

In the United States: National Foundation for Credit Counseling & Consumer Credit Counseling
In the United Kingdom: Free Expert Advice on Debt
In Canada: Association of Nonprofit Credit Counseling Agencies
In Australia: Free Financial Counselling Services