The Importance of Financial Self-Care

The Importance of Financial Self-Care

By

Marsha Walker Eastwood BsEd, MSHSV

Since the beginning of the Covid-19 pandemic the term self-care has taken on new meaning and a variety of definitions that include many dimensions and many layers within those dimensions.  If you simply Googled the term it would include taking care of one’s emotional, physical, psychological, and spiritual health,  The fact of the matter is that the first three are directly tied to your financial health as well.  According to Jennifer Navarro-Marroquin, a licensed financial professional and founder of Claiming Prosperity, "Financial self-care is a practice that needs to be crafted around principles of balance, sustainability and empowerment, The practice you create ultimately needs to move you toward your defined money goals while at the same time cultivating an overall good feeling about your money."  Let us begin with empowerment.

Contrary to popular belief, financial empowerment is not about being rich, but rather more about managing the money you have in the short term and long term.  It means being your own money boss and creating priorities on what and what not to spend money on, and the benefit(s) derived from those decisions.  In other words, the ROI or return on your investment. Think about it this way.  If you invest $1 in a candy bar, the return on your investment is the personal gratification derived from consuming the candy bar.  However, if that investment made you $1 short in paying an essential bill such as a utility bill or credit card, your failure to prioritize has now created a situation which could end up costing you far more in late charges, disconnections, or reduced credit availability.  You have created a financial hazard that will result in an ongoing game of robbing Peter to pay Paul.  While you may have lost your financial empowerment and your options to turn things around may require a myriad of sacrifices to get things back on track, all is not lost.  You will have to return to the drawing board and create an action plan that will not only restore your empowerment, but a plan that is sustainable.

When you think of sustainability you must consider all the steps required to create a sustainable action plan.  Two important characteristics are habit and personality.   A diet is a great example. You see what appears to be a great diet.  There are pictures of people holding pants now 5 sizes larger away from their body and bragging about those lost pounds.  On average most diets are doomed to fail because the new rigidity goes against the dieter’s norms.  A person who is overweight is in the habit of either consistently overeating or eating the wrong foods.  Their logic for failure includes excuses such as too tired, too much work, no time to read through the instructions, etcetera, etcetera, etcetera.  They lament the loss the money spent and will often state that the diet took money away from important things.  The reality is a few things happened. There was inattention to detail – reviewing what was involved in the diet plan and failure to prioritize financial responsibilities resulting in financial loss and a misplaced investment with no return on investment. 

While the way you spend money impacts your financial empowerment and action plan sustainability, how you handle business and personal matters can create perils you never even considered.  Here is the story of Jane.

Jane is a notorious procrastinator who is always going to get around to do doing things.  She usually misses routine health maintenance and doctor appointments which she rarely reschedules because she is too busy.    She has always had an issue with opening the mail, both delivered mail and e-mail. This personality trait has caused her hundreds if not thousands of dollars in utility reconnections, increased interest charges, late fees, and a significantly decreased credit score.  One day Jane noticed a letter from her insurance company but decided to deal with it later.  Unfortunately for Jane later was too late.  The letter informed her that it was time to renew her term life insurance policy that had been in place for 30 years.  Her inattention to detail resulted in the policy being terminated.  Now Jane had to find a new insurance company to deal with.

When Jane took out her Term Life Policy, she was a reasonably healthy 30-year-old who met the test for preferred insured rates.  If her premiums were paid on time no further proof of insurability was required during the term of her policy.   Before the policy lapsed Jane had the option of renewing her policy on a year-to-year basis until she was 95 years old, because most term life policies like hers had a guaranteed renewability feature that allowed her to extend her coverage and the current death benefit without having to go through a new underwriting process and getting another medical exam. 

 Over the ensuing 30 years Jane developed diabetes, and now she is a subpar applicant who would not be considered insurable by preferred and standard underwriters.  The significance of having her lapsed policy was that it would most likely would have been her only way to continue having life insurance due to a change in health. If someone has been diagnosed with a terminal or life-shortening illness, they may not qualify for a new policy that offers a substantial death benefit.

Jane will have to contact a new agent who will have to submit her application to a different type of underwriter who will do a complete risk analysis on her insurability and most  likely require results from a recent physical and/or a physician statement. The new premiums will be higher due to her health condition, thereby impacting her allowable dollars for life insurance coverage.  Jane will now have to create a new action plan that includes re-prioritizing her financial responsibilities and a measure of personal reinvention.

What happened to Jane happens to hundreds of people every day.   Avoiding the tasks, you hate to do can be costly.  Some people have sufficient financial resources to afford new life insurance policies and others will struggle with the change in policy and cost.  The purpose of Term Life Insurance is to provide a guaranteed death benefit if the policyholder dies before the term expires.  Once the term expires, the policyholder can either renew it for another term or convert the policy to permanent coverage or allow the policy to terminate. 

Insurance of any kind is a transference of risk, however, from a psychological standpoint it does much more than that.  It removes one more especially important elephant from an already crowded room of worry.  The same is true for timely payments of priority bills, monitoring bank account balances and other important tasks.  These should be the goals of your sustainability action plan. 

Reinvention can be a difficult but necessary process for anyone because it means creating a new roadmap to getting things done.  Jane has an avoidance issue and she will have to come to the realization that it is undermining her empowerment and her overall happiness and self-care program. Her new action plan must include all the tools and bells and whistles necessary to sustain it.  Setting weekly reminders in her cellphone calendar, along with reminder notes in key places in her home and office to read her mail on a daily basis is a start.  It may seem silly at first, but those reminders will prevent any interruption in vital services and important relationships, including the one with her insurance agent.

The takeaway for Jane and others is that there is no such thing as minutiae because every detail of a person’s life matters.  It is these details that allows them to take control of not only their financial empowerment, but empowerment over their lives in general. This is what helps to create the balance, or as Gretchen Pilar put it, “A good method of juggling different tasks is to always balance the short- and long-term tasks.”  For Jane, the short-term task is creation of a sustainable empowering action plan that allows her meet important deadlines that if ignored will create that domino effect of negative and costly outcomes. To determine the effectiveness of the new plan, the rule of thumb is to create a test period of 21 days, at the end of which she can make any necessary adjustments.  Her long-term tasks include retraining herself to always be present as opposed to procrastinating. 

Jane is not financially wealthy, but now she is rich in the knowledge of how to maintain her plan of financial self-care.  That same knowledge will serve her well in other areas of her life a well.  By following the plan, she will have fewer financial worries, and a significantly better understanding of herself. 

©Marsha Walker Eastwood

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