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Is your financial house in excellent, good, fair, poor or dire condition? Often, circumstances beyond our control or unexpected life events, such as divorce, job loss or a death in the family can ruin one’s finances. But in this chapter, I want you to consider also all the things you have done – both positive and negative – that have put your financial house in its present state.
Your Finances & the Laws of Cause and Effect
As a Money Coach, I teach a workshop called “Get Financially Fit Now!” One lesson that I tell participants is:
Your current financial situation is directly tied to your own actions (or lack thereof), because your finances operate according to the laws of “cause and effect.”
What this means is that we have to first look in the mirror and determine what financial mistakes we have been making and what actions we might have taken to cause or continue our financial troubles. In some cases, it may not have been what we’ve done, but what we’ve procrastinated about, or failed to do, that has led to financial difficulties.
Again, there are certainly events that happen – such as illnesses or accidents – that are no fault of our own. But what I’m talking about are the financial problems we face that can be directly attributed to actions we have taken, or have neglected to take. Let’s stop talking money for a minute and look beyond the economic world. Instead, let’s examine other areas of life: the physical, natural and mechanical realms. Each area illustrates the laws of “cause and effect.”
Physical Realm
When obesity occurs, frequently it is caused by improper nutrition and a lack of exercise. Barring some medical condition that causes one to gain weight, doctors agree that they best way to restore oneself to a proper weight and good health is to eat right and exercise regularly. If you fail to do this, obesity results.
Natural Realm
You don’t need a green thumb to know that dying plants or a weed-filled garden are often caused by lack of water, insufficient sunlight, or inadequate pruning. To get that garden back in good condition, you must tend to it and give it proper care.
Mechanical Realm
The reason auto manufacturers suggest you change your car’s oil every 3,000 miles is because a lack of maintenance or excessive wear and tear will cause your vehicle to break down. You get regular checks at the doctor right? Well, using the same logic, your car should also get regular checkups at the mechanic.
In What Condition Is Your Financial House?
Whenever something is neglected or abused – no matter whether it’s your body, your garden or your car – that thing will suffer. And the first order of business to get into good condition is to apply some care and attention.
The same principle holds true in the economic realm. When you neglect or abuse your financial house, the result is that it is in disrepair. And it won’t get into tip-top condition until you start taking positive steps and stop doing the things that are detrimental to your financial condition.
So, here’s your next action item: Make a list of what you have done right, and where you have clearly gone astray in conducting your personal financial affairs. Evaluate your past behavior as far as handling credit, paying bills on time, and managing your money. Whatever your present circumstances, I’d like for you to also think about how long your situation has been this way. Has it been less than a year, more than a year, two to five years, five to 10 years, or as long as you can remember?
Take 10 minutes or so and fill in the worksheet on the following page. It will guide you in your thinking and help you to face the truth about your current situation.
Next – Day 13: Face the Truth About Your Situation (Part 2)
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Lynnette is a personal finance expert, author and speaker.