As a personal financial counselor, I am often asked to give an overview of the services I provide to Soldiers and Airmen in my area. Although I am grateful for the opportunity, I often find it difficult to persuade service members that they can benefit from financial counseling. Most of them think they are doing fine because they can make ends meet from month to month. To get them to think beyond the next month, I ask them to do a self-evaluation of their personal finances. Below are the four questions I ask the group. The four questions that can lead them to financial freedom.
1. Do you have a written budget that you maintain and follow every month?
“A budget is telling your money where to go, instead of wondering where it went.” I make sure service members know a budget is the foundation for everything they do with their personal finances. There are many tools and resources available to help create and maintain a budget, but they must pick and choose what works best for them.
2. Do you have enough money in savings to cover six months of your living expenses?
I usually hear giggles when this question is asked because so many service members feel this is an impossible task. To help service members see this as an actual need, I ask them, “What would you do if you had to get out of the military tomorrow and you no longer had any income?” Many service members are terrified by this question because they don’t know what they would do in this situation.
3. Are you completely debt-free or do you have a debt elimination/debt management plan in place to help you control your debt?
Many of them already know what it feels like to be overwhelmed by debt or know someone who had been consumed by debt. At this point, I just make sure they understand that debt will take control of them, if they don’t get control of it. know if they don’t get control of their debt, it will eventually take control of them.
4. Are you contributing enough money monthly into your retirement account to help you reach your financial goals?
I point out that everyone eventually gets to a point where they can no longer work and we will all need money during retirement to cover our monthly expenses. The earlier we start, the better, and this is because of the effect of compounding interest.
If everyone answers yes to all four questions, I tell the group good job and keep up the good work. But I remind them that they can still benefit from financial counseling if they want to discover what they can do even better.
If someone answers no to any of my questions, I’ll make sure they know I am available to help them convert their no to a yes. The goal of this self-evaluation is to help potential clients see their need for your services. It is ineffective to tell a group of young service members that you can help them set up a budget and get out of debt without making a connection between what they want and what you can provide. These four thought provoking questions can help you bridge that gap and help your client achieve true financial freedom.
Guest Contributer: Cain Hill, AFC®