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| There are three stages of financial health -- Crisis, At-Risk, and Healthy. Your Financial Vital Signs will tell you which stage describes you now. Study the descriptions below to get a general idea of how to improve your situation, and what to work on next. |
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Description:
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People in CRISIS spend more money than they have. |
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Cause:
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You may find yourself in crisis suddenly -- due to job loss, expensive illness, or unexpected catastrophe -- or you may have painted yourself into a corner through years of bad habits and living beyond your means. Usually it's a combination of a unexpected crisis and bad habits. |
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Symptoms:
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You probably already know that financial crisis brings stress that causes sleeping problems, poor health, uptight emotions, and relationship tension. Productivity at work and happiness at home is ruined by calls from collectors, thoughts of bankruptcy, and the repossession of personal property. You may feel hopeless about ever improving. |
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Prescription:
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| It's going to take some work and some time to get yourself healthy. Commit now to making changes in your lifestyle so you can achieve the peace, independence and security that's missing when you're in crisis. You will need to do the following: |
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- Make a plan & stick to it
- Increase income
- Decrease spending/reduce living expenses
- Pay off your debts |
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Warning:
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Many people in crisis take a second job, use overtime work, or borrow money to stay afloat financially. Unfortunately, such efforts usually only postpone eventual bankruptcy, unless the person also changes their habits and gets professional help. Speaking with an experienced financial counselor will help you avoid making common mistakes, and get healthy as quickly as possible. |
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Description:
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There are two types of AT-RISK financial profiles: TIGHT and DISORGANIZED. |
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Cause:
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TIGHT people are surviving for the time being, and are still able to make payments on time and feel in control, but by overspending or borrowing too much, they've eliminated any "wiggle room" for emergencies, and created a lot of stress. Tight people usually have good credit scores and are conscientious about paying bills on time, but their financial situation could quickly spin out of their control.
DISORGANIZED people could be in good financial health if they tried. A lack of focus and organization causes them to miss payments and spend money on late fees and penalties, which lowers their credit score and cash flow. Disorganized people miss valuable opportunities to gain financial security because they don't put time or energy into understanding their money.
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Symptoms:
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TIGHT people feel a constant strain of worry about their finances, especially around bill-paying time. They may begin to develop bad spending habits to deal with this stress; some people spend more money to forget their anxiety.
DISORGANIZED people don't worry about it, because thinking about money isn't fun for them. They may regret paying penalties and late fees, but not enough to change their habits.
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Prescription:
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| For both TIGHT and DISORGANIZED people, it's going to take some work to get healthy. Commit now to making changes in your lifestyle so you can achieve the peace, independence and security that's missing now. You will need to do the following: |
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- Make a plan & stick to it
- Increase income
- Decrease spending/reduce living expenses
- Pay off your debts |
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Warning:
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Consistency is a key to success. Many TIGHT and DISORGANIZED people frequently make exceptions to personal rules, or overestimate their financial capacity or willpower. Set reasonable goals that you can successfully meet every week or every month. When you've mastered one financial skill, set a new and higher goal. Get friends and family to help you stay accountable. A financial counselor can help you stay on track. |
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Description:
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HEALTHY people live within their means, save, and plan for prosperity. |
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Cause:
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Years of good habits, prudent spending, and careful organization have brought you to financial health. Congratulations! |
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Symptoms:
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You feel confident that you have enough money to pay bills each month. You receive good rates and loan terms when you borrow money. You feel peace and security knowing that you are prepared for emergencies. You think about how to increase your earning potential so you can save more. |
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Next Step :
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| It's time to make a plan to achieve prosperity. A financial counselor can help you get the most out of your savings and investments. You need to start thinking about the following important items: |
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- Completely paying off mortgage & other loans
- Risk management / Life insurance
- Retirement savings
- Capital accumulation for future purchases |
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Advice:
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One important trick to maintaining financial health is to continue putting first things first. Live, and spend your money, so that your focus remains on whatever it is you value most -- time with family, satisfying personal achievements, or certain financial goals. |
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