Explore the benefits of working with a financial coach.  Potomac’s financial coaching program will help lower your financial stress while allowing you to successfully manage your journey to financial independence.

What is a Financial Coach

What do professional athletes and many successful people have in common that contributes to their success? They have coaches and mentors to guide them to their goals.


Recent research from Kabbage sought to uncover just how important mentors are to small business success. In a survey of 200 small business owners, almost all (92%) of respondents found a mentor to be critical to their success, even though only 22% were mentored when they were a start-up.


When asked about survey results, Amy Zimmerman, Head of People Operations at Kabbage, says “mentors expand your viewpoint, helping you see multiple perspectives to solve problems and from my experience give you the ability to collaborate and workshop ideas with a trusted source.” Further adding “I liken mentors to coaches, it’s a relationship to which many of us can relate.”


If small business owners experienced this level of success with mentors, what can you realize with a financial coach?


What is a financial coach?

A financial coach will focus on fundamental financial issues or habits to change behaviors surrounding money. They will help you organize and simplify your personal financial situation, broaden your viewpoint, provide encouragement and keep you focused on your goals.


The focus isn’t on how much money you have, but rather helping you to keep and grow the money you make. At the same time, they should simplify the entire process.

Tasks that financial coaches perform include:


  • Simplify access viewing your financial accounts

  • Learn your risk tolerance for investments and insurance gaps

  • Calculate your net worth

  • Help you identify your financial goals (needs, wants, and wishes)

  • Work with you to prioritize your goals

  • Provide a process to pay off debt

  • Assist in understanding employee benefits you may have.

A good financial coach will look at your current financial situation and create a plan to meet your financial goals. They will go about changing a habit or behavior that is in the way of you realizing your financial goals. After all, habits and behaviors are the building blocks of successful goals.


A financial coach is typically the lead member of your personal financial team. A coach doesn’t just give you a plan with individualized steps. They will assist you with direct course correction, and reminders along the way acting as a financial sounding board helping you in making smart financial decisions. Communication should go both ways and it should not cost you extra to ask a question.


How is a financial coach different from a traditional financial planner?

Both a financial coach and traditional financial planner can help you create a plan, but a financial coach is much more invested in your success. They provide you with guidance, emotional support and encouragement to go about changing your behavior surrounding money.


In contrast, a planner may lay out steps on how to reach your financial goals. However, it is often up to you to figure out how to execute your plan.


One of the most valuable things that a financial coach can provide is emotional support. In times of weakness, we all question whether we are doing the right thing. It is too easy to get frustrated, just give up, and fall back on old spending behaviors.


A financial coach can provide encouragement to help you push through in times of doubt to ensure that you remain true to your plan.


I liken a financial coach to a personal trainer. If the trainer is doing their job, results should soon follow in the form of weight loss, muscle gain and/or improved aerobic performance based on the goals set with the client.


In the case of a financial coach, small wins should be in the form sticking to a budget or spending plan, paying down debt and positive changes in behavior towards money.


With your coach, the responsibility for your success is shared throughout the year. In contrast with a traditional financial planner, the responsibility for success is your own until the next annual meeting.


No question is silly if it causes financial stress. A financial coach can help you create, implement, and monitor a plan to lower or remove that stress from your life.


What keeps you awake at night?
  • Are you tired of the stress from too much debt, but don’t know how to fix it?

  • Do you have multiple retirement accounts (403b, 401k, or IRAs) from former jobs and don’t know how to simplify your investments?

  • How do you determine how much you need for retirement?

  • Does a 2nd mortgage make sense for paying off credit card debt?

  • How do you prioritize competing goals…is my kid’s college education more important than my retirement?

If these questions sound familiar to you, a financial coach can provide process and support to improve your financial situation.

Price is what you pay, value is what you get… at least it should be.

Mentor Quote Graphic


When deciding to work with a financial coach, make sure you have a way to determine the value that they are providing. In other words, how are they helping you meet your goals?


Good financial advice and support costs money. The value that a financial coach provides should exceed their cost.


Because the compensation models for financial coaches and traditional financial planners do not necessarily distinguish their services, we have included potential biases with each form of compensation.


compensation models



4 things to look for in a financial coach

When selecting a financial coach, it is important to determine that they ‘are walking the walk’ right there with you. In other words, are they themselves following their own advice?


If you are entrusting your financial situation in part to somebody else, you have every right to confirm that they themselves are doing everything they are asking you to do.


I would recommend starting with the following questions:

  • Can they simplify your financial world? They should be able to provide tools to make it simple to see your progress toward being financially fit. One example is automatically calculating your net worth, or showing all your major account values of both assets (cash and investments) and liabilities (loans, credit cards, etc.) in one website or mobile app.

  • What is their credit worthiness? They should be able to provide you with proof they are in the kind of financial shape they are telling you to be.

  • What is their accessibility? Unless you want to be stuck driving to their office every time you have a question, you should make sure they work virtually through phone calls and webinars or other media. Don’t forget to ask if they charge more for every contact or meeting.

  • Are they following the same coaching process they are offering to you? Again, they should be able to offer you proof that they use the same products as well as the same process they are recommending. Examples would be their own statement or application of tools for their own personal use.

How Potomac can help

While your financial situation can be complicated, working with Potomac doesn’t have to be. Since opening our doors in 1987, we are and always have been fiduciaries. Putting clients’ needs in front of our own is all we’ve ever done. We adhere to the financial principles and advice that we share with our clients.


If you are excited about taking control of your financial future, then schedule a conversation with us…

Schedule a time to talk

What to expect

Working with a financial coach is only going to produce results as good as the information given. Honesty about your current financial situation is the first expectation of your relationship.


A reality of working with a financial coach is that we need to know the truth about your specific situation in order for you to realize the maximum benefits from financial coaching.


Have you ever heard of the saying "garbage in, garbage out"? If the relationship doesn’t start out with honesty about your financial situation, you will most likely not achieve the results you want or need.


Would you believe that 60%-80% of patients lie to their doctors even though we know doing so will hurt us. What is it that prompts us to knowingly hurt ourselves by lying? For many of us it is to avoid embarrassment and our fear of being judged. For others, it is not being willing to admit we don’t understand the doctor’s instructions or terminology.


These findings are not just limited to physicians. They also apply to financial professional relationships like financial coaches, planners, investment advisors, accountants, and tax attorneys. The quality of care and value clients receive from any financial coach is directly proportional to the quality and accuracy of the information they provide.


Once we are honest with each other, we can begin to discuss other expectations regarding your personal financial goals and wellness.


Working with your new financial coach

Much like working with a new doctor, working with a financial coach may be intimidating at first. It’s common to be nervous about laying out your financial situation in front of a stranger for fear of being judged. This is completely understandable. It’s your perception and that is valid, whether real or just a fear.


A good financial coach will not judge. Their purpose is to help you reach your financial goals. And the first step is to get a good assessment on where you have been and where you want to go.


Potomac provides processes and solutions to simplify, organize and improve your financial life, as outlined below. As you continue to read, you’ll become less stressed about the process and expectations! Knowledge is power over fear!


What else to expect from working with a Potomac Financial Coach?

In addition to honesty, there are 4 additional expectations that we need to have in our process of financial coaching at Potomac.

  1. Communication – How frequently can you expect to communicate with your financial coach?

  2. Coverage – What kinds of guidance can your financial coach provide?

  3. Cost – How much does it cost to use Potomac as your financial coach?

  4. Results – What deliverables can you expect from your financial coach?

It doesn’t matter if you need lots of help, or just a little direction and support. The purpose of sharing the Potomac Financial Coaching process is so that you know and understand what we will uncover and work through together during this process of improving your personal financial situation.



Communication is the foundation of any relationship and working with your Potomac Financial Coach is no different. When we say we act as your accountability partner, that accountability is applied in the form of communication.


Since a financial coach is trying to change habits and behaviors toward money, communication should be very frequent. It should also be in a format that works best for you, typically in the form of phone calls, emails, and app notifications.


At Potomac, there are several phases in the coaching process, each phase with a different objective.


The initial consultation

The purpose of the initial consultation is to see if you and the Potomac Financial Coach want to work together. Think of it like a first date or initial job interview where you are trying to find a good match. Even if you’re a little intimidated, you must take that first step in a relationship.


At Potomac, the initial consultation is at no cost or obligation. It is simply a conversation to see if we could work well together.


In our first meeting, you should ask questions to determine if the financial coach is worthy of your time and expense. There are no stupid questions! Potomac will not begin any planning until we understand your current financial position, needs, wants and where you want to be.


If you don’t think that we are a good fit, we part ways. No harm – no foul.



You’ll save tons of time not driving through traffic to get to some stuffy office. A phone, computer and/or mobile device is all you need as we do most of our meetings virtually! Since we are licensed in all 50 states, you won’t need to change financial coaches if you travel frequently or plan to move.


The first 2-3 months

Congratulations - You’ve agreed to begin the financial coaching program! At this point in the financial coaching process at Potomac, you will sign a financial coaching agreement, so we can legally bill for our services. We’ll discuss this more in the section about costs.


The Potomac financial coaching program starts with 3 virtual meetings to learn about your needs, plan for improvement, and discuss implementation.


This process is detailed and important in that it enables us to fully analyze and comprehend your financial details and gaps. We start simplifying and organizing your finances immediately. This step takes time. If it was easy, you would already have already completed it on your own.


In these initial meetings, we build upon the trust in our relationship as we work together to gather data and provide access to the Potomac portal.


By the end of the these first 3 meetings, we’ve created a full financial plan for you that includes generating your personal financial statements, including your real-time net worth.


The goal of our financial strategy is to break down your financial plan into small actionable steps. Deliberate, repetitive, actionable steps can become habits over time with focused effort.


Remember, it is difficult to change financial behaviors that have been in place for years. We call these action steps “tasks” and you will be sent electronic updates and reminders as you progress.


You need to walk before you can run. Over time, your finances will be simplified as your behaviors begin to change and your financial fitness improves.


Remainder of year 1

The frequency of your communication will depend upon your needs and financial goals.


After 3 months, there is typically an additional meeting to make sure that you are successfully completing the tasks that are necessary for your unique situation. Thereafter, 1 – 2 additional meetings are scheduled to finish out the year.


The goal is to set you up for success and make sure you can see and feel your progress!


We fully expect the need for an occasional call, email or webinar when you need emotional support, make a big purchasing decision, have a question about the process or anything else that requires our support. There is no additional cost for this communication.


Subsequent years

At the second-year anniversary of working with your Potomac Financial Coach, the number of meetings drops to between 1 and 3 meetings per year. The exact number of meetings will depend upon your needs.


We believe it is important for us to be available to discuss any major purchases because they can have a disastrous effect on your net worth and financial wellbeing if decisions aren’t made wisely. We are here to support you in whatever way needed to help you eliminate your money mess and become financially fit.


After working with your financial coach for a few years, the process of simplifying your finances and improving your financial situation should be well underway or even completed.


What is expected of you, the coaching client:

The financial coaching process requires teamwork. You are expected to provide your information to us, share your thoughts, and reach out to us when “life happens”.


We start as educators and as you become more successful, our role changes to that of a mentor. This can only happen if you are actively engaged in the process. Therefore, we do expect that tasks are marked completed and you communicate with us as you need our help and support.


Nearly all meetings with Potomac take place virtually. If you have a phone and a computer or mobile device, you can be successful in building confidence in yourself as you achieve your financial freedom.



The topics that your financial coach covers will depend upon your financial goals and objectives. However, there is a basic structure and process that we follow. Let's look at the overview below.


If you’re like many when it comes to finances, you find it hard to follow or frankly: BORING! So here is the quick answer of the things we work on with you to accomplish. We like to call this our “FAST 5”.


“FAST 5” = Financial Action STeps

  1. Know your Net Worth - You can't get where you're going if you don't know where to start.

  2. Understand Cash Flow - Make a Spending Plan not a Budget. If we are going to prioritize goals, we must know where to put the cash effectively!

  3. Eliminate/Lower Debt  The less you owe, the less you must save, and the less investment risk you need to take, because you will need less in retirement. That’s called a Win-Win-Win-Win.

  4. Contribute the Maximum  Compounding is your friend – unless you don’t use it to your advantage, then it becomes your worst enemy. (See IRS limits on contributions.)

  5. Invest Wisely  Avoid catastrophic losses. (Learn Why Investors Need to Discuss Risk.)

Let’s dig into this process in more detail.


Potomac has been a Registered Investment Advisor or “RIA” for over 30 years. The section below is the list of major areas taken straight from our ADV Part 2 that must be filed with the Securities Exchange Commission (SEC) every year, as an RIA.


What is an ADV Part 2 and why is it important? It means we are a fiduciary and are required to put the needs of our clients before our own in all things we do. Whether it be financial coaching or our investment management services, our clients ALWAYS come first. It’s the law!


As a fiduciary, we are your accountability partner for your benefit – NOT just to make another sale of some commission laden investment or insurance product.


Our role is to educate you and provide processes and tasks to help you succeed.


Create – Implement – Monitor

Financial statement preparation and analysis
  • Cash flow analysis and budgeting
  • Net worth statement
  • Debt / spending management
Retirement & goal planning
  • IRA and taxable
  • Education (529, cost of college/private school tuition, etc.)
  • Social Security / Medicare / long term care
Investment & insurance risk management
  • Risk assessment
  • Use of employee benefits (insurance options, contribution options, etc.)
Employee benefits
  • Contribution options for retirement accounts
  • Employer insurance options
Income tax planning & preparation
  • Annual tax prep and filing (included)
  • Purchase planning (buy vs lease, new vs used, build vs buy, own vs rent, etc.)
  • Life changes (plan for children, job changes, death, caring for elderly parents, etc.)
Estate planning
  • “Cycle of Life” planning (medical POA, assisted living decisions, etc.)
  • Guardian / beneficiary
Unlimited Phone and Email support

You can contact us anytime you need help, education, or to simply get an answer to your question. By becoming your financial coach, we become a team in this process. We’ll be with you side-by-side with reminders and tips, to improve your “Financial Fitness”.

Membership (002)


“Nothing in life is free.”, “There is no such thing as a free lunch.” - you’ve heard them all before, but here is the reality that we’ve learned from over 30 years of experience.


If it didn’t cost you anything, would you really feel the need to work hard for it? What perceived value do you have for something that is given to you for free? FREE usually means there’s a “catch”.


Potomac is very transparent about the cost of our financial coaching services. We are only compensated by the monthly subscription fee for financial coaching.


If we manage your investment accounts, then our investment management fee will be disclosed as part of that separate agreement. Our coaching services do not require we manage any of your investment accounts.


Potomac’s Financial Coaching program is simply $199/month.

You get a full financial plan, a financial coach, and our support.

  • No annual commitment.

  • No upfront fee.

  • Cancel any time.

  • Unlimited phone and email support.

  • Web and mobile access 24 hours a day to your account aggregation platform.

If we don’t provide you excellent service, support, and progress – just cancel and walk away.


We are not living in the stone ages. You deserve great service and electronic access to be able to track your financial improvements 24/7. With Potomac, you will have both!



At Potomac, the results that you can expect to achieve are clearly laid out, complete with timelines for their specific situation as part of the financial plan.

Remember, you either get what you pay for or walk away with no further obligation. If we don’t provide value, you have no commitment to stay with our coaching program. You are not locked into anything. This is a no-risk proposition for you.


Results that you should expect from Potomac’s Financial Coaching program:

  • Your financial details have been simplified through aggregation and automation.
  • Your coach can act as the lead for your team of professionals as needed (attorney, CPA, Insurance agent, etc.) if you already have some of these relationships in place.
  • Your coach will create a full financial plan based on your needs, wishes and wants.
  • Specific tasks and reminders will be provided to guide you through the process.
  • Your basic taxes will be prepared as part of the Potomac program.
  • Your net worth will improve as you progress through the program.
  • You will have more confidence and less financial stress as your coach helps you improve your financial fitness and achieve your financial goals.

All of this is possible if you work with a financial coach and complete the steps we create together.


It’s time that you had someone to help you organize and simplify the financial process so that you can have confidence in knowing you are financially fit (or working on it) and well on your way to achieving your financial freedom.


It is easy to adjust a plan, when “stuff hits the fan”. Without a plan - you just have a wish no better than the one you made before blowing out the candles on your last birthday cake.


Whether your goals involve paying for your child’s college education, eliminating your debt, saving for a major purchase, investing for retirement, or some other dream, your Potomac Financial Coach is here to help you find solutions to remove the financial stress from your life.


Dream big. Work hard. Hire a financial coach and be financially successful.


Where do you go from here?

We’ve discussed what you should expect working with a financial coach at Potomac including communication, coverage, cost and results.


We’ve been putting client needs first as a Registered Investment Advisor since 1987. That’s over 30 years if you are counting!


Complete this form if you are ready to learn more about our financial coaching services and how they can benefit your unique situation.

Schedule a time to talk

Simplify your finances

What Science Can Teach Us About Creating Wealth: The Role of Simple


The National Center for Biotechnology Information reports that “Science is valued by society because the application of scientific knowledge helps to satisfy many basic human needs and improve living standards”. So important is simplicity in the philosophy of science that there is principle guiding its application. Occam’s razor states, all other things being equal, the simplest theory is most likely true. In other words, simplicity is a meta-scientific criterion by which scientists evaluate competing theories.


The genius of some of the greatest minds in science was in their ability to explain difficult subjects in a simple manner. Albert Einstein himself said, “the definition of genius is taking the complex and making it simple”.


Does the concept of simplification apply to finance, and specifically creating wealth?


We believe the answer to that question is “yes”.


The Process of Simplifying Finances to Create Wealth

While science can be very complex, simplicity plays an important role in the philosophy of science. The same can be said of personal finance and wealth planning. In most cases, creating wealth is not about creating more income but rather reducing expenses and simplifying the day-to-day financial process.


While there are many wealth-creation and financial independence movements being marketed, they all share the concept of simplification, or making things simpler. Some of the more common movements include:

  • Minimalism – Rid yourself of life’s excess in favor of focusing on what is important so you can find happiness, fulfillment, and freedom. If you enjoy standup comedy, check out the skit on “stuff”, stated so eloquently by the late great George Carlin.

  • Financial Independence Retire Early (FIRE) – Popular amongst millennials or people in their 30’s, FIRE promotes increasing savings, downsizing lifestyle and investing aggressively.

Simplify Quote Graphic - 770x400_Page_3

  • Live below your means – A more generic mindset that the key to becoming wealthy is to live on 60 to 80 percent of what you earn, applying 20 to 40 percent to savings.

Clearly, the movements mentioned above are eliminating extra expenses, big or small. Don’t sweat the small stuff, right? Most people waste money without realizing it. Dinner out and a movie for two can easily run over $100.


However, it is the big stuff that can bite you in the butt. It’s the big purchases that will potentially waste thousands of dollars if you don’t understand the finances involved in the costs of big loans like school loan debt, a mortgage and car loans.


What you don’t know can hurt you!


The main issue is controlling money instead of letting it control you. Creating a spending plan is an interesting way to decide what 3-5 things are most important and what things are REALLY required. Everything else on your list can be stopped, changed or altered to minimize or avoid those expenditures. This creates more money in your pocket to invest, achieve your financial goals, and lower your financial stress.


Every situation is unique which is why you should have a professional help educate you on the options and put you on a path to success.


We like to call this improving your “financial fitness”.


Simplify Your Finances with Aggregation


Most of us have our mortgage with one financial institution, a bank account with another, credit cards with a third, retirement accounts with a forth, a car loan and so on. The easiest thing to start simplifying is account aggregation.


Start by documenting your financial relationships, including business and custodian relationships being sure to include the website where you can access your information. This will be needed if you want to use an account aggregation tool, or even just to document in a spreadsheet. Be sure to keep this information in a safe and secure place if you are doing this on your own.


What’s an account aggregator? If a picture is worth a thousand words, the picture below says it all.


Simplify Quote Graphic - 770x400_Page_1


An account aggregator is a tool that lists all your account information in one place.


There are several benefits to consolidating all your financial information and organizing your finances.

  • Lowering your financial stress.

  • Easier to monitor your account activity.

  • The ability to see the impact of financial decisions across all accounts.

  • The psychological benefit of seeing net worth increase monthly.

Remember: “Garbage in-garbage out” – the quality of the financial decision is only as good as the data that goes into making it. Especially if you are using a financial coach, the more accurate the information, the more equipped they are to help you make better financial decisions.


What is Your “Net Worth” & Why You Should Care


While there are many benefits to aggregating your account activity in one place, the functional goal is to determine your personal net worth.


It’s a critical number to know if you want to improve your financial situation. Surprisingly, this is a number that many people don’t know.


Simplify Quote Graphic - 770x400_Page_2 cropped


Your net worth is the value of your assets (cash, investments & stuff), minus the total of your liabilities (loans, credit cards & other debt). You can fill out a sample calculator from Bankrate to get an idea of how this equation works.


A positive number means you have more assets than liabilities, but a negative number means you have more debt than assets. For example, having an investment portfolio valued at $200K but a negative net-worth means you have a huge mortgage or school loans – debt that is still hanging out there.


Effectively, if you sold off everything, you would still owe somebody more money!


With a negative net-worth, your money controls you. With a positive net-worth, it is much easier for you to take control your money. Much like your blood pressure, your net worth conveys a great deal of information about your health, in this case, your financial health.


When you visit the doctor for a check-up, one of the first things they do is take your blood pressure. Within a matter of seconds, the doctor can assess your health. If your blood pressure is too low or too high, it is often indicative of a larger problem. The doctor can then run additional tests to come up with a diagnosis for your condition and devise a treatment plan return you to good health.


As with high blood pressure, a negative net-worth can open the door to many bad things including bankruptcy, divorce and health issues because of financial stress and the money mess you have created. With a little bit of help and changes to your spending habits, you can turn things around over time and not stress over money.


Your financial coach can devise a plan to improve your financial health and lower your financial stress. Most importantly, they can help you change the habits that brought about your financial situation.


Remember, there is no need to beat yourself up over past decisions. Most people have never been trained how to successfully navigate their personal finances. Simply put - financial coaching relieves financial stress.


Take a positive action step…


Calculate your net worth to figure out where you are financially. Whether you are building a spreadsheet or using an automated aggregation system with your financial coach, it is the easiest number to track improvements with your financial fitness.


Simplify your Finances with Automation


The next step we recommend is to simplify the process of paying bills and creating automatic savings transactions between accounts to pay yourself first.


Sticking to your financial goals requires a lot of willpower and motivation. Putting a process in place that automates the bill payment process and the moving of money between accounts removes temptations, increasing the likelihood that financial goals will be met.


Your monthly financial activities can be broken down into five different areas. These five areas include:


1. Checking account: This is the center of your financial activities as your checking account funds everything you do. Hopefully, income from paychecks and investments is received by direct deposit.


Make sure you keep a certain amount of money in this account to avoid overdraft fees in case you make a small error. $500 to $1,000 is a good goal to shoot for. It can serve as part of your emergency fund, although we do recommend that be a separate account for the bulk of that savings.


2. Pay yourself first: Since you are doing all the work, it makes sense to pay yourself first. Start by funding your accounts, including:


a) Checking account – If your account fell below your minimum because of a short-term problem or need, fill it back up with your next paycheck.

b) Emergency funds – For life’s unexpected events (4-6 months of living expenses is a good goal)

c) Retirement accounts – 401K, 403B, IRAs, and any taxable long-term savings.


3. Your required expenses: These are your monthly household expenses, including:


a) Housing

b) Groceries (You can still eat out too, it just needs to be part of your spending plan.)

c) Utilities (gas, utilities, etc.,) – keep an eye on your cable bill as they have been increasing across the board. Reality check…cable television is not essential to your survival.


4. Other goals (expenses): These are other financial goals such as birthday & holiday gifts, vacation, and college funds.


5. Everything else (discretionary expenses):  These are other expenses that are often entertainment-related. Examples include eating out, movies, etc. This is not a requirement, but everybody needs to have a little fun along the way.


How do you go about simplifying the areas listed above?


Automate your bill payment and check distribution process. Most banks and financial institutions will let you open several accounts that you can ear-mark for different goals or purposes. Some banks and credit unions may offer some of these services. However, they often come with many fees. A product that we prefer is the Fidelity Cash Management option.


Fidelity, TDA, and others may have similar cash management (think checking / savings) features like no-fee ATM (they reimburse you for any bank fee that comes from the ATM owner), an app that lets you make a deposit with a picture of the check, and automated distribution to your household accounts (Emergency fund, holiday gift savings, IRAs and personal retirement accounts not handled by the HR department at work.).


There is simplicity in having your checking, multiple savings accounts, and credit card accounts through the same financial custodian or bank. If that custodian also holds your IRA or other retirement accounts…PRESTO – life simplified.


Mortgages, rent, and utilities can be paid using electronic drafts or your credit card which is paid from your checking account.


Do NOT pay using your credit card unless you are at the point where you can pay off the balance IN FULL every month. Using your credit card is a simplification strategy for an advanced coaching client who has broken bad spending habits.


Financial Coaching Relieves Financial Stress


All too often, whether it be taxes, your credit score, school loans, etc., it’s the information you don’t know that will get you in trouble. There is a process to getting your financial house in order step-by-step over time so that you don’t get overwhelmed.


We work together with our clients to “create | implement | adjust” their financial plan to meet their needs, wants and wishes. Thereby, lowering their financial stress by eliminating the money mess.


As science has shown, often simple is better.


Let us help you create a plan to simplify your personal financial situation. We will help you implement our processes with tasks, emotional support, and educational advice to change bad spending habits and increase your odds of success.


Of course, “life happens”. When it does, we’ll be there to adjust as necessary, whether it be assisting with a big purchase decision or simply adjusting your goals or approaches.


If you’re getting excited about taking control of your financial future, then schedule a conversation with us.

Schedule a time to talk

Increase your net worth

How do you increase your net worth in the next 12 months? This is a straight forward question. Yet, it is one that many people can’t or don’t want to answer. The truth is, it is not their fault.


There’s a lot of pieces to this puzzle, so let’s be clear about what we are going to discuss:

  • Assets and Liabilities (components of Net Worth)

  • How to calculate your net worth

  • Why your net worth is important

  • The five things that hurt your net worth, and

  • The five things that help your net worth

As we begin to learn about net worth, let’s address some common mistakes that distract people from growing real wealth and achieving financial freedom.


Unfortunately, most people see “things” and assume they equate to wealth. Merriam-Webster defines “wealth”, as an abundance of valuable possessions or money.


Experts sell us their systems to create wealth, and another “Top 10 richest” list is released every other day. The problem is that all these messages pertaining to wealth are only telling us half of the story.


We are exposed to between 4,000 and 10,000 ads each day according to a recent study. Marketers bombard us with messages and images telling us how rich we would look if we buy their products.


When we borrow money to buy something such as real estate, cars, or investments, lenders actually buy the asset on our behalf while we make payments to them for making our purchase.


Therefore, only the portion of the asset we have paid for adds to our wealth.


Much of the advertising and messaging that we are bombarded with each day show us images of wealth, but not the obligations that come with taking on debt or the consequences to our credit.


This is dangerous!!!


To understand why, we need to examine the relationship between wealth and net worth.


Wealth Explained


As previously mentioned, the oversimplified definition of wealth is an abundance of valuable possessions or money.


Wealth = Assets


Assets are made up of 2 primary categories:

  1. Cash & investments – Your retirement account, bank accounts, savings, and other investment accounts.

  2. Stuff – Cars, houses, horses and other things we buy.

Shouldn’t there be more to the equation?


A liability is an obligation payable to another entity. From an individual’s standpoint, this is debt to be paid back using our cash flow (paycheck). Money borrowed can be used to buy real estate, cars, investments, or whatever is outlined in the loan documents or promissory note.


A possession such as a home or a car can be an asset, a liability, or both if you are actively making payments on that item. The value is considered an asset. The amount owed is a liability. If the value is higher than the amount you owe, it has a net positive effect on your net worth. Once the entire loan is paid off, the full current value of the asset contributes to your wealth.


In a developed economy or where credit is in abundance, a better definition for wealth is an abundance of valuable possessions or money under your ownership or control. This can be stated mathematically as:


Wealth = Assets – Liabilities


This is also the definition of net worth! Net worth is a measure of value or worth of an individual, a company, or a government. It is the correct measure of wealth.


Wealth = Net Worth

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Your net worth is an important number. Tracking it over time can be a real eye opener to uncover whether you are creating a money mess or building wealth.


Now we know the relationship between wealth, your net worth, and the math behind it. The question is why should you care?


“Financial freedom is not being worried about when you get paid next.” – Jeff Goodnow


Why does your net worth matter?


Your net worth is a snapshot of your financial health. It is used by many institutions for many different things. Not being in good financial health is guaranteed to keep you paying more throughout your entire life and keep you from achieving financial freedom!


The system is rigged against those who don’t understand it!


Building wealth is about having more assets than liabilities, owning more than you owe. This is the one time you don’t want “balance”.


You want to tilt the scale as best you can towards assets (cash and investments, paid off property such as home and cars).


Your net worth is what you would receive if you sold everything you owned – would you still owe somebody money? Would you have enough money to live on?


Your stage in life will often determine your initial net worth when you are young. Did you just finish college? If you are like most – you’ll have school loans and a BIG NEGATIVE NET WORTH.


If this describes your situation or the situation of one of your loved ones, there is more cause for concern. Young adults just starting out are just not saving much. Additionally, they’ve accumulated just half of the wealth of what their parents had amassed at the same age.


If you are a little older, working hard and building a family, that new home purchase just made your net worth shoot craps. You have a big asset, but own very little, if anything. Focus on making decisions that eliminate debt or at least minimize debt while increasing your assets to be more financially fit and build wealth quicker.


Fortunately, there are things you can do to take control of your financial situation so that it does not control you.


The 5 things that hurt your net worth

Building wealth is not easy and it takes time. Making poor financial decisions increases the money mess and financial stress. You can start by avoiding these things when possible.

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  1. Not investing to create more assets – When you are young, time is on your side. Use it. Improving your financial fitness by growing assets takes time and money. Start now!

    Tip: Debt is the side of the net worth equation that can be addressed much faster than increasing your income and investments.

  2. School loans – Many students have no other choice than school loans to fund their education. Because of the large amounts of tiered debt, school loans can be the second biggest form of debt for many behind a mortgage for an individual or family.

    We get it! School loans may have been the only way to afford college. However, just because you aren’t required to pay these off quickly (sometimes decades) doesn’t mean you shouldn’t have a plan and process to pay them off early and save thousands of dollars!

  3. Credit cards – Duh! Stop buying stupid things. Instead of going out with friends to grab an $8 specialty craft brew at a pub, have a beer at home with your buddies until you can get your finances under control.

    We know it is not you, it’s other people, but consider the facts below from Experian:

    Networth Quote Graphic - 770x4003-1

  4. Multiple car loans – It is smart to avoid having more than one car loan at a time. What if you lost your job? One car loan is much easier to handle than two. Commit to only one car loan, or better yet pay cash. 

    If the family needs another car, buy it after the first one is paid off. Of course, buy used if possible. A vehicle loses more value the first 2 years than nearly any other possession.

  5. An oversized mortgage – Just because you are approved for a larger loan amount (or the monthly payments that the broker pitches you), doesn’t mean you have to buy a house that size. 

Additionally, consider the number of payments with a 15-year mortgage vs. a 30-year mortgage. this can be the biggest financial impact in your investing career. 

The 5 best ways to improve your net worth


It is time to stop being stressed about money. We like to say, “It’s time to clean up the money mess.” Take control and simplify your finances with automation backed by good financial decisions. When you calculate your net worth, you have a starting place from which to build wealth from.

  1. Automate – Set up automatic transfers to move your money to savings accounts so that you don’t have to remember to do it. 

    The more you can set up automatic transfers from your checking account (where your paycheck is deposited) to various savings, IRA, and other investment accounts. This strategy leaves you with less money in your checking account to spend frivolously.

    NetWorth Quote Graphic - 770x4004

    We are all guilty of “impulse” purchases. Just look at the local checkout counter at the grocery store and how much cookies, candy, pop, and cheap magazines are waiting for you while you are stuck in line.

  2. Invest  Forbes reported that “on average, employees leave $1,336 in matching funds on the table each year by not saving enough into their retirement accounts”. 

    Investing over time allows for compounding and increasing the “asset” part of the net worth equation.

  3. Build up an emergency fund – This keeps you from using your credit cards (debt) every time “life happens”. This is not a quick or permanent way to improve your net worth, but it keeps you from going further into debt. 

    Additionally, your emergency fund should be a few months of living expenses and not be a big bucket relative to your overall net worth. Here is a great article from with suggestions about how much you should have saved at different ages.

  4. Live below your means – Don’t squeeze into a house you can’t really afford. Saving for a larger down payment increases your net worth and avoids the PMI expense. 

    A smaller house may also enable you to afford that 15-year mortgage (instead of a 30-year) saving you thousands of dollars and putting money back in your pocket in the long run.

  5. Eliminate debt, or at least as much is possible – You are probably seeing the big picture by now that debt is not bad if you are able to use it as tool rather than as a crutch for not having enough money. 

    As you get paid, focusing on paying off debt will drastically improve your financial fitness and increase your net worth. There are processes and methods to do this effectively without hurting your credit score.

How can I track changes to my net worth?

Tracking your net worth on an ongoing basis has been a very powerful motivational tool for many people. Seeing your wealth increase over time has kept many people focused on their long-term financial goals rather than being caught up in the throes of daily life.

How do you track your changes to your net worth? Basically, this is where ‘simplification’ and ‘organization’ come together.

You can track your net worth by using an online calculator or create an Excel spreadsheet. The math is pretty simple:


Net Worth = Assets - Liabilities

Make a list of assets and liabilities, then subtract the two. You can make different tables for quarterly reviews (monthly may be better when you are starting out to get excited about positive change).


There are also apps available that can track this for you such as Mint, Personal Capital, and others.


However, they may bombard you with ads or a constant push to manage all of your investible assets with their cute ‘robo’ solutions.


TIP: Be wary of ‘robo’ solutions as most use bonds as their risk control. We have only recently started seeing interest rates rise. The last time we saw significant rising rates was 30+ years ago. Read more about “the risk of rising rates now or suffer the consequences later”.


Any good financial coach should have a solution for you that will track your net worth automatically. They will also be able to help you with additional tools that get you on the path to achieving financial freedom.


Keep it simple…


We have established that the media and society are only telling us half the story when it comes to wealth. They are not talking about liabilities and the consequences of debt.


So far, we’ve discussed:

  • Assets and Liabilities (components of Net Worth)

  • How to calculate your net worth

  • Why your net worth is important

  • The five things that hurt your net worth, and

  • The five things that help your net worth

This is a lot of information to keep on top of, especially if you are working on your career, raising a family and living life.


A financial coach can help by visually combining all your accounts for banks, investments, loans, credit cards, mortgage, etc., so that your net worth is automatically calculated every day.


Watching your net worth grow can be the motivation you need to keep working hard paying off debt, filling your emergency bucket and investing for your financial goals.


Better yet, if you have children, realize they are watching. You are teaching them one of the best lessons - how to build wealth.

Are you ready to increase your net worth in the next 12 months on your own?

This is a ton of information and frankly is overwhelming to many people. That’s exactly why most people don’t take these steps on their own and why it can hold them back from their financial dreams.


If the idea of a financial coach to simplify, plan, and support you sounds like a reasonable decision, take the first step and schedule a time to discuss your specific situation.
Schedule a time to talk

Set up an emergency fund

What To Do With Unexpected CASH?


What is the best way to prepare for life’s unexpected financial surprises? Set up an emergency cash fund that you can turn to when the unforeseen hits.


How do I set up an emergency cash fund? This is often the first question we ask when we are serious about getting our financial house in order.


We have all been there when a little extra cash comes our way.


During the holidays you may get a card from grandma with some money tucked inside. Then birthdays roll around and a card from Great Uncle Chuck comes with another bit of cash. Or maybe you get a surprise bonus at work.


One of the best things we can do with a small cash windfall is use it to build an emergency cash fund, if we don’t already have one. Despite what we all rationally know is the right thing to do, most of us will often spend our small windfall on things we don’t really need.


Why is that?


The problem: It's too easy to blow.

It's far too exciting to spend that money quickly. After all, it was a gift, right? It is “FREE” money!


However, blowing that money is a short-term gain in lieu of the ability to protect against long-term pain. You really should consider the bigger picture.


Did you know that four in ten adults would have to borrow, sell something or would not be able to pay if faced with a $400 emergency expense, according to a recent Federal Reserve report?


Don't be caught unable to cover your expenses in a rough period. Think about it this way: If you don't have $400 available to cover a simple expense like a new set of tires for your car, then you'll likely use a credit card or worse yet some form of payday loan service.


The result is that you'll be adding insult to injury by now being forced to pay interest on top of the fact that you couldn't afford the original purchase to begin with...and so the downward spiral out of control begins.


Starting an emergency fund can be your first step to taking control of your money for the rest of your life!

Blog Image 1 Emergency Cash

What should we do with all this CASH?


Yes, it's fun to think about spending it as part of a vacation, a new fishing rod or a pair of diamond earrings. Our world is full of fun and exciting things to separate you from your money.


But what are you left with? Just more stuff! It's time to change the narrative.


Start SIMPLE. You should take that unexpected fortune and consider starting an emergency fund instead. This first 'deposit' into a separate bank account can be your first step to financial freedom, lower stress, and true independence.


Just as we all experience small cash windfalls, we also experience unexpected financial surprises. The best thing we can do to get through life’s next surprise is to be prepared for it.


What's an emergency fund?


An emergency fund is a separate account with cash immediately available for you to cover up to 4-6 months' worth of expenses should you run into any problems like a health issue, losing a job or whatever else life throws at us.


Hopefully, you never need to use it for more than replacing the washing machine or fixing the fridge just before the big party at your place! When you are forced to use some of it, simply begin to save money and replace what you used.

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You are now borrowing from yourself for free instead of paying interest to some other lender. This is the start of saving money and taking control.


How do I set an emergency cash fund?

Once you have set up an account that is separate from your main bank account, it is time to determine how much you need to fund your emergency cash fund. Most financial coaches, planners and advisors recommend between 4-6 months of your monthly expenses.


To find this actual dollar amount, review your finances and add up all the things you cannot do without. Make sure you review 3 months' worth of expenses because only looking at the last 30 days, may not catch everything.


This includes groceries, mortgage/rent, car payment(s), school loan(s), credit card(s) and your utilities. If it is too difficult to complete this exercise, it is likely you need help aggregating your finances.


Did you notice I used "(s)" after some of those expenses? If you need to use that plural form, that's another red flag that you may need some extra guidance in this area. However, don't feel bad. Unfortunately, this describes the situation of most Americans.


Looking at the image below, from CNBC, you'll notice that the average household with credit card debt is paying 3 times more in interest than they have in their savings account per the Federal Reserve reference earlier. Recognition is the first step to a better financial you.


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The circle of over-spending cash works like this:

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  • The more expenses you have,

  • Then the more emergency savings needed,

  • Which means you have less cash for retirement, investing and other financial goals like saving for your child's college, vacations, a new home, etc.

The opposite is true for under-spending cash:

Blog Image 3 Emergency Cash-1


  • The fewer expenses you have,

  • Then the smaller amount of emergency savings needed,

  • Which means you have more cash for retirement, investing and other financial goals like saving for your child's college, vacations, a new home, etc.

It all comes down to 3 simple questions.

If you can't easily answer these, it may be time to get some guidance.

  1. What is the minimum amount of money you need to survive on a monthly basis? (No fancy restaurants, entertainment or vacations - I'm talking MINIMUM!)

  2. Where is your extra money going now? (Probably fancy restaurants, entertainment or vacations. Don't forget Hulu, Netflix, and Amazon Prime.)

  3. What is your long-term plan to consistently improve your Net Worth so that you can achieve your goals and be financially independent?

Schedule a time to talk

A good financial coach can review your financial situation and provide short-cuts to make effective changes. These changes may help free up the cash for you to set up your emergency fund.


Not everyone needs a lot of help. Although, the numbers and reports tend to show most people are lacking a good financial process.


Others simply want to make sure their own D.I.Y. personal plan is really on the path to success.



Big changes are easier when you start small.


Take some of that gift money, bonus money, or whatever you can scrape together and start an emergency fund today. Begin to automate adding a small amount to that account every time you get paid until your reach your goal.


Pay attention to the stress relief that comes from knowing the major road bumps that come to most individuals and families aren't going to derail your long-term plans.



What’s next?


We’ve discussed the how and why to set up an emergency cash fund.


The only thing left is for you to act! Start your emergency fund or reach out to a financial coach for guidance.

Book a Free Consultation

Additional details about the benefits of Potomac's risk-based investment management can be found at

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