Foundations of Financial Wellness Coaching
Expert-defined terms from the Certified Professional in Financial Wellness Coaching course at London School of Business and Administration. Free to read, free to share, paired with a professional course.
Accredited Financial Counselor (AFC) #
A professional designation given by the Association for Financial Counseling and Planning Education (AFCPE) to individuals who have completed certain educational and experience requirements and passed a certification exam. AFCs are trained to provide financial counseling and education to individuals and families in areas such as budgeting, debt management, and credit counseling.
Budget #
A plan for how to spend and save money over a specific period of time. A budget typically includes income, expenses, and savings goals.
CERTIFIED FINANCIAL PLANNER™ (CFP®) professional #
A professional designation given by the Certified Financial Planner Board of Standards to individuals who have completed certain educational, experience, and ethical requirements and passed a certification exam. CFP® professionals are trained to provide comprehensive financial planning services, including investment advice, retirement planning, and estate planning.
Credit #
The ability to borrow money or access goods and services on the promise to pay for them later. Credit is typically extended by a lender, such as a bank or credit card company, and is based on a borrower's creditworthiness, which is determined by factors such as their credit score and credit history.
Credit score #
A numerical value that represents a person's creditworthiness. Credit scores are typically based on information found in a person's credit report, such as their payment history, the amount of debt they have, and the length of their credit history.
Debt #
Money that is owed to a person or organization as a result of borrowing. Debt can take many forms, including credit card debt, student loans, and mortgages.
Debt #
to-income ratio (DTI): A financial ratio that compares the amount of debt a person has to their income. DTI is calculated by dividing a person's total monthly debt payments by their total monthly income.
Financial education #
The process of teaching individuals and families about personal finance, including topics such as budgeting, saving, investing, and credit management.
Financial goal #
A specific, measurable, and time-bound objective related to a person's financial situation. Financial goals can include things like paying off debt, saving for a down payment on a house, or building an emergency fund.
Financial planning #
The process of creating a plan for managing one's financial resources in order to achieve specific goals. Financial planning typically involves analyzing a person's current financial situation, setting goals, and developing a plan to achieve those goals.
Financial well #
being: A state of financial security and freedom from financial stress. Financial well-being is often characterized by a person's ability to meet their financial obligations, save for the future, and make financial decisions that support their overall well-being.
Financial wellness #
The process of improving one's financial well-being through financial education, planning, and decision-making.
Goal #
setting: The process of identifying specific, measurable, and time-bound objectives and developing a plan to achieve them.
Income #
Money that is earned or received from employment, investments, or other sources.
Investment #
The act of committing money or capital to an endeavor with the expectation of earning a financial return. Investments can take many forms, including stocks, bonds, real estate, and businesses.
Money management #
The process of budgeting, saving, investing, and otherwise managing one's financial resources in order to achieve financial goals and maintain financial well-being.
Net worth #
The value of all of a person's assets, minus the value of all of their liabilities. Net worth is a measure of a person's financial wealth.
Retirement planning #
The process of creating a plan for how to finance one's retirement years. Retirement planning typically involves estimating retirement expenses, setting savings goals, and developing a plan to generate income during retirement.
Risk management #
The process of identifying, assessing, and mitigating potential risks to one's financial well-being.
Savings #
Money that is set aside for future use. Savings can be used for a variety of purposes, including emergencies, major purchases, and retirement.
Spending plan #
A plan for how to allocate and manage one's income and expenses. A spending plan is similar to a budget, but it may be more informal and flexible.
Tax planning #
The process of analyzing and planning one's financial situation in order to minimize taxes. This may involve strategies such as maximizing deductions and credits, deferring income, and investing in tax-advantaged accounts.
Wealth #
The accumulation of financial resources, including assets such as money, investments, and property. Wealth is often measured in terms of net worth.