What Financial Health Means to Me

Being able to make the changes that really count

As a money coach specializing in family dynamics, I have worked with people across every income level, from poverty-stricken women in Africa to families with over $1billion in assets. In my work I’ve experienced again and again what CFSI’s study on Understanding and Improving Consumer Financial Health’s findings demonstrate — that our habits about money, regardless of our level of income, play a significant role when it comes to our financial health.

Some examples (names changed) include:

• Wilma, a widow on a fixed income, was over-spending to such a degree that she was in danger of becoming destitute.
• Ingrid, an inheritor who was unprepared for her responsibilities, began making charitable donations in ways that were jeopardizing her own livelihood.
• Carol and Charles were afraid they might have to call off their wedding because of how poorly their prenup conversation was going.
• Sharon, a single mom who was working two jobs while raising two sons, was swindled out of $10,000 by a man she met online.

What all of these people have in common is that their behaviors (and the emotions behind them) were derailing their financial health. Knowing how to successfully change behavior assists people in making healthy financial decisions.

For the logical mind, the steps to financial health are simple — CFSI spells out the 8 key indicators here. These indicators are all achievable and simple to do. So why don’t more people do them? Because of the other part of our brain that is not rational.

Chip and Dan Heath, authors of the book “Switch”, highlight these two parts of our brain with an analogy that is easy to understand:

The rational, logical mind is like a “rider” on an “elephant” that represents the emotional part of our brain.

https://www.youtube.com/watch?v=qmmwWxVzSsw

How do you make it so that the rider and elephant are moving in the same direction of consistent, healthy financial habits? Motivate your “rider” with a clear path and concrete behaviors because, according to the Heaths, “clarity dissolves resistance.” Also make sure the benefits to being financially healthy are clear, because “change is easier when you know where you’re going and why it’s worth it.”

At the same time, you must also motivate your “elephant” by tapping into your feelings about money and how being healthy with money will empower you and give you more freedom, security, and ease.

https://www.youtube.com/watch?v=JhBzxy7CneM

The most effective way to motivate both sides of your brain to make healthy changes is to give yourself a sense of HOPE! Hope, combined with immediate gratification for making healthy financial decisions, will give you a feeling of progress towards larger goals such as saving for a down-payment or paying off credit card debt. When you have regular milestones that show you that your goal is actually within reach, you’ll be continually motivated to keep making healthy financial choices.

Bringing their riders and elephants onto the same path allowed Wilma to stop overspending and have a secure future; gave Ingrid the courage to build her competence with developing a philanthropic plan; brought Carol and Charles to a place of peace and mutual agreement about how both of their needs could be met; and empowered Sharon to look out for her own best interests. Being financially healthy starts with being willing to make changes — and with the right motivation, you CAN!