Why You Should Treat Your Finances Like Your Health

by | Jul 20, 2022 | Financial Planning

“A good doctor treats the disease, but the great doctor treats the patient who has the disease.” (Unknown)

Most of us understand why it’s important to have regular medical check-ups. We also recognise that, as we get older, what we need from them changes too.

While it’s important for babies to have special health and development checks, older people’s needs are much different. In our later years we need to be screened for issues like cancer or heart conditions. 

Our finances aren’t that different. The think tank New Financial recently proposed that the way we think of having regular physical check-ups should be a model for what it called “financial health checks”. 

“These financial health checks borrow from the established practice of physical health checks, which are used in many countries to help spot or prevent illness at an early stage and encourage people to take some simple steps and develop good habits to improve their health,” New Financial wrote.   

The big moments   

 A scheduled meeting with a financial adviser at least once a year is a good place to start. But not everyone has a long-term relationship with a financial adviser. And, secondly, sometimes something significant happens that really needs us to take stock of where we are. 

There will always be a number of these important moments in our adult lives – times when we are making decisions or changes that will have a lasting impact.

One obvious example is getting married. It can seem like an easy decision to make when we are in love, but it has many practical ramifications with potentially life-altering consequences later in life.

“Every one of these big moments involves big decisions with big and often long-term financial implications for individuals and their families,” New Financial noted. “Somehow, we are expected to know how to make the right decisions at the right time about confusing and complicated issues (often full of jargon) as we go along – with no formal training and no clear source of simple and impartial information and guidance. It’s often hard to feel that we are taking control of our money rather than being controlled by it.”

You should get that checked

Each of these moments presents an opportunity for a check-up. And that will help us to make better decisions.

Not many people think of seeing a financial adviser with their spouse-to-be before they get married. But if they did, it’s possible that they would do things differently.

“Taking the right decision at the right time – with a little bit of help – can lead to far better outcomes in the long term,’ said New Financial. “Better financial well-being. More financial resilience. Less worry. Better mental and physical health. Taking the wrong decision – or more often, not taking a decision at all – can have profound consequences that might only become clear when it is too late to do anything about it.”

The same is true of starting your first job or moving to a new one, buying a house, having a child, a major emergency or getting a divorce. At each of these points, there are decisions that need to be made, but often we don’t even consider the financial consequences. If we do, we may only consider the best outcomes, and neglect to think of worst-case scenarios.

A trusted professional can however assess where we are and to help us plan for the future.

Asking the right questions

Until we visit the dentist, we don’t really know what state our teeth are in. In the same way, we probably don’t appreciate the fullness of our financial position and the potential implications of different decisions until we check in with a financial adviser.

As New Financial noted about financial health checks: “they would nudge you to think about how to ask the right questions about your money and to consider your options – and provide you with just enough information at just the right time to help you think them through.”

This will have far-reaching benefits:

“Financial health checks would lead to higher levels of financial well-being and resilience, better financial literacy, more trust in the financial services industry, and higher levels of participation in financial services. More citizens would feel more in control of their money.”

If you need a financial health check, speak to a professional.

Disclaimer: The information provided herein should not be used or relied on as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your professional adviser for specific and detailed advice.

© FinDotNews

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