When I start a financial counseling session with someone, my initial goal is to determine which phase of financial counseling is best suited to their needs.
Let me clarify, financial counseling. We are not talking about which mutual fund to select, how to set up your estate or what ways you need to allocate your assets to best earn for 2028. We ARE talking about what you need to do to make sure your credit stays intact, your house stays “your house,” and what you need to do for 3-11-10.
There are three basic phases of financial counseling: Remedial, Preventative and Productive. I’m not crazy about the name of the last phase because I believe that all financial counseling is productive. Nevertheless, that is the phase name. Today’s post will summarize these and let you determine where you think you are.
Productive (Yes, we’re going in reverse order.)
In the productive phase people are not extremely concerned with debts or cash flow. Typically in the productive phase you do not see issues with paying monthly bills, paying debts off or general day to day concerns. The person in the productive phase places focus on making their money work smarter for them.
Preventative (Wow, there are a lot of people here.)
Monthly bills tend to be only a bit of issue. Typically people in this phase pay their bills on time but things are starting to snowball. Sometimes they have to borrow from existing lines of credit or deplete savings in order to pay monthly bills. Planning for the future is in their mind but is likely not happening based on their wallets. They make money and they have learned to spend it. If the snowball continues to roll down the slope it can easily get out of control.
Remedial (I agree – there could be a better name for that one too.)
Many people fall into this phase. Life is far from being about planning, unless we’re talking about how to pay next week’s car payment, utility payment or grocery bill. Often times the biggest issue is not with income or expense, but with developing a spending plan. Many people in this phase simply have no idea where their money goes or how to fix it.
Where are you?
Be honest – don’t just gravitate to the middle because it’s most comfortable. I’ll give you a hint. If you are not sure, you are likely a phase lower than you are guessing. My next post will delve a little deeper into these phases, potential causes and possible cures.
As always, consult a professional. You would never go into the doctor’s office and tell the doctor which shot you think you need…
About the Author: Donnie Peaks is the director, deposit services for Truliant and is responsible for all consumer and commercial deposit accounts and products (checking, saving, money market, certificates, etc.).
