A financial counselor can help you make smart decisions that improve your financial security and overall financial position. This kind of counselor can help you with core financial topics, such as budgeting and debt management.

Here’s what a financial counselor is and how they can help get your financial house in order.

What is a financial counselor?

A financial counselor helps individuals and families with core financial tasks, providing them advice and information about how to improve their financial lives.

While other types of advisors may focus on broader financial areas such as wealth management or narrower areas such as estate planning, a financial counselor generally sticks to fundamental areas of personal finance.

An individual may call themselves a financial counselor without any type of certification, much as financial advisors can. That is, financial counselors may be working in your best interest, but also may be salespeople looking to sell you a high-cost debt-reduction plan, for example.

However, individuals can undertake a program through the Association for Financial Counseling and Planning Education and earn an accredited financial counselor (AFC) certificate. Individuals must meet education requirements, pass an exam and have 1,000 hours of related experience.

What does a financial counselor do?

A financial counselor typically helps individuals with the following financial tasks:

  • Learning core financial literacy concepts such as money management
  • Managing debt and paying off debts
  • Budgeting and keeping to a spending plan
  • Setting financial goals and creating a financial plan
  • Establishing good credit and improving your credit score
  • Understanding the basics of investing and growing wealth
  • Understanding financial risks and how to mitigate them
  • Developing good saving habits
  • Understanding the basics of tax filing and credits
  • Changing destructive financial habits

Other more specialized financial counselors may help clients navigate public assistance programs, including income assistance, debt management or housing programs.

In short, a financial counselor can help clients get all the fundamental financial elements in place to be successful. However, their scope typically excludes such elements as investing and building wealth, leaving these areas to a typical financial planner or wealth manager.

Many financial counselors charge an hourly fee or a flat fee for service. However, some financial counselors are available at no cost through a variety of public sources.

For example, the U.S. Department of Housing and Urban Development (HUD) works with financial housing counselors across the country who provide free or low-cost advice on buying a home, foreclosure avoidance, credit issues and reverse mortgages. You can find a list of HUD-approved financial counselors in your area by using this HUD search feature.

Financial counselors vs. financial advisors

Financial counselors tend to focus on the “nuts and bolts” of good financial habits and practices, while financial advisors may focus on investment advice and building wealth.

Financial advisors tend to focus on the following areas:

  • Retirement planning, including how to effectively use a 401(k) and IRA
  • Investment management, including how to grow your wealth and pick the right investments
  • Estate planning, including how to pass down your assets and minimize taxes
  • Goal planning, including detailed financial plans to reach your goals

While these two types of professionals may do mostly different tasks, one area where they may often overlap is in developing budgets and overall spending plans for their clients.

Those looking for the expertise of a financial advisor should use Bankrate’s financial advisor matching tool to find an expert in their area.

Bottom line

If you need help digging out of debt, preparing a budget or keeping your spending in check, a financial counselor may be the right choice for you. And the good news is that you may be able to access financial counseling at no cost if you work through the right organizations.