Avoiding Financial Sickness to Achieve Financial Health

"Attributes of Financial Disease" and "I am not sick, but I am not well."

The previous two articles set forth twelve attributes of Financial Health. We have to know what is optimum health in order to know when we are not achieving a healthy lifestyle. Our former counseling firm required a quick diagnostic tool to identify a family's position on the "financial health" front so as to make recommendations for an improved state. When you examine the current state of a family to determine where they may be healthy, and not so healthy you must break it down for further examination and diagnosis. This allows you to give immediate attention to what is most pressing.

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Do you know anyone that is financially ill? Bet their situation looks a lot like the following:

As an example, a family that is financially ill will demonstrate their condition with the following attributes:

Spend more than they make.

Live with dependence on debt to make ends meet.

Purchase automobiles with credit.

Leave the family ill equipped for death or incapacitation.

Cannot write a check for $5000 for a necessary expenditure.

Giving to charity seldom exceeds one percent.

Few detailed plans for retirement accumulation or funding for educational requirements.

Entertains mortgage commitments of thirty years and is excited about equity lines of credit.

Depends on first dollar risk coverage when they buy insurance, but frequently overpay and are under covered.

Pays a premium to invest their monies if they invest at all.

Is in bondage to the degree that most if not all of their earned income is committed before it is received.

A family that is not sick, but not well will have the following attributes:

Spend what they make. Whatever their income is, this is their outgo.

Live with dependence on debt to absorb any unplanned for expenditures.

Purchase automobiles with credit.

Have sought simple and inexpensive answers for death or incapacitation.

Can write a check for $5000 for a necessary expenditure but cannot take a vacation if they do.

Giving to charity occurs, but as an afterthought rather than a priority.

Few detailed plans for retirement accumulation or funding for educational requirements that are not provided by their company or people trying to sell them products.

Entertains mortgage commitments of longer than fifteen years and is frequently upgrading their home and their furnishings.

Depends of first dollar risk coverage and buys expensive insurance products out of insecurity rather than knowledge.

Pays a premium to invest their monies.

Have a tendency to always raise their lifestyle with each new raise in income. They buy "toys" that are used infreqently, and memberships that are seldom utilized.

The process of obtaining health is focusing on curative measures applied to those aspects of our financial management that are causing us pain. Sometimes, the person does not change their approach until the pain is incredible. Ever know someone who refused to go to the dentist until the pain was immense? It is the same in the financial arena. Every family can, and every family should, under normal circumstances be able to achieve and maintain financial health. It doesn't happen by accident, but it can certainly happen.

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Next Article: We live in a dynamic world. Plans must be flexible!

Adapted from the I Must Prosper Tutorial
Donald Clark, Chrysalis Consulting, Inc.

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