Last month we wrote about a day in the life of a Financial Mentor (FM) and how no two days are the same because of the breadth of the services we provide as FMs.
When people hear the words ”financial mentor,” many think “budget”. In reality, FMs do much, much more. We sometimes don’t get round to doing a budget until the third or fourth time we meet someone.
FMs work alongside individuals and whānau to help them understand their financial situation, deal with the challenges arising from that and build greater financial wellbeing going forward.
Some myths about FMs
They tell you what to do.
The TRUTH - we work alongside people, giving them options, but it is up to each person to make their own decisions.
They take over your money.
The TRUTH – we don’t! We have no access to your bank accounts etc.
They are expensive.
The TRUTH – our services are free to clients.
They share our information with WINZ/IRD/their friends etc.
The TRUTH – we only share information with agencies the client gives us permission to contact. Agencies will not deal with us until they get a privacy waiver signed by the client.
They will tell me to stop smoking/drinking/gambling.
The TRUTH – we are non-judgmental. It is your money; all we do is put the information into a budget and let you see for yourself the effect of your spending on various things on your overall financial health.
They don’t know what they are talking about.
The TRUTH – all accredited FMs undergo rigorous training, and then work under supervision until their manager is confident they can work alone. Once qualified, training is ongoing; not just on finances but also on legislation affecting consumers, WINZ regulations, IRD, banking, insurance, funeral plans, telecommunications, power suppliers – the list goes on!
More than creating a budget
A budget is important, but financial mentoring isn’t simply about showing someone where they spend their money. A financial mentor starts by understanding the person’s circumstances. This will include looking at income, regular expenses, debts, bills, and immediate financial pressures. From there, the FM works alongside the person to identify their goals and explore realistic options.
In other words, the aim is to help people make informed decisions and feel more confident managing their money.
Helping people understand their financial position
To do this, the FM and the person will work through income and expenses, which leads to creating a realistic budget.
They will then record when the money comes in and goes out, leading to producing a cash flow statement, which will show when money is extra tight.
There needs to be a list made of all debts, which helps to identify priority payments i.e., not only rent and power, but maybe some loan payments must be given high priority. Together, the FM and client can explore ways to reduce financial pressure and set short-term and long-term financial goals.
These practical tools can turn a confusing financial situation into something that is easier to understand and manage.
AND... this sets out all that most people expect a FM to do! In part 2, we will go into some of the add-ons that we can provide to make the most of your time spent with your financial mentor.
And remember – we are here to help.
