All You Need to Know about Financial Counselor
A financial counselor can guide you in making informed decisions to enhance your financial stability and overall well-being. They specialize in essential areas like budgeting and debt management.
Here’s a closer look at what a financial counselor does and how they can help you get your finances on track.
What is a financial counselor?
A financial counselor assists individuals and families with key financial tasks, offering advice on how to improve their financial situation. Unlike financial advisors who may focus on broader areas like wealth management or specific topics like estate planning, financial counselors typically concentrate on essential aspects of personal finance, such as budgeting and debt management.
While anyone can call themselves a financial counselor without formal certification—much like financial advisors—some may be more focused on selling high-cost services. To ensure expertise and ethical standards, individuals can obtain an Accredited Financial Counselor (AFC) certification through the Association for Financial Counseling and Planning Education. This credential requires meeting education standards, passing an exam, and completing 1,000 hours of relevant experience.
What does a financial counselor do?
A financial counselor typically assists individuals with a range of essential financial tasks, such as:
- Learning core financial literacy concepts, including money management
- Managing and paying off debt
- Creating and sticking to a budget
- Setting financial goals and developing a financial plan
- Building good credit and improving credit scores
- Understanding the basics of investing and wealth growth
- Identifying financial risks and strategies to mitigate them
- Establishing healthy saving habits
- Navigating basic tax filing and credits
- Changing poor financial habits
Some financial counselors may also specialize in helping clients access public assistance programs, such as income support, debt management, or housing assistance.
In essence, financial counselors help clients solidify fundamental aspects of their financial well-being, though their services typically do not extend into areas like investing and wealth-building, which are often handled by financial planners or wealth managers.
Financial counselors often charge by the hour or a flat fee for their services, though many offer free assistance through public programs. For example, the U.S. Department of Housing and Urban Development (HUD) works with housing counselors nationwide who provide free or low-cost advice on topics like home buying, foreclosure prevention, credit issues, and reverse mortgages. You can find HUD-approved financial counselors in your area through this HUD search tool.
Financial counselors vs. financial advisors
Financial counselors typically concentrate on the “nuts and bolts” of personal finance, such as fostering good financial habits and managing day-to-day financial tasks. In contrast, financial advisors generally focus on strategies for growing wealth and providing investment advice.
Financial advisors usually help with areas like:
- Retirement planning: Maximizing retirement accounts like 401(k)s and IRAs
- Investment management: Growing wealth through well-chosen investments
- Estate planning: Ensuring assets are passed down efficiently while minimizing taxes
- Goal planning: Creating detailed financial plans to achieve long-term objectives
Although their roles differ, both financial counselors and advisors often assist clients in creating budgets and managing overall spending plans, where their expertise may overlap.
In Conclusion
If you need assistance with managing debt, creating a budget, or controlling your spending, a financial counselor could be a great option. The best part is that you might be able to receive financial counseling for free through certain organizations.
