The Financial Performance Indicator
Discover where you are with your finances and take control to become financially healthy!
Are you in Survival Mode, Effective Mode or Fulfillment Mode with your finances? In today’s economic climate, many of us are finding our selves in confusion around our finances. Do you feel like your finances are spiraling out of control? Are you reorganizing and reeducating yourself about money management and investments? Or, are you seeing this economic downturn as a fabulous opportunity?
With the Financial Performance Indicator there are three Financial Modes: Survival Mode, Effective Mode and Fulfillment Mode. Let’s take a look at each mode so you can identify where you are.
Survival Mode: People in survival mode with their finances are fear based. They feel paralyzed, are extremely negative and blame others for their financial demise. They are in reactive mode, reacting to all circumstances around their finances. Some will ignore this financial situation, pretend everything is ok, not accept the truth about their troubles, avoid calls from creditors, write bad checks, continue to borrow money from anyone that will give it to them. Personally they will have a feeling of attack and defeat. Typically, living hand to mouth every month, juggling finances, not paying bills on time and no savings. If you are investing, your strategy needs to be very conservative; you have a zero risk tolerance for losing money or investing in risky investments.
Effective Mode: People in effective mode are in an active state around their finances. They are actively working on educating themselves about financial options and reorganizing their finances to lower debt and get their finances under control. They will seek out advice to continue to educate them selves about how to improve their financial situation. They will attend workshops, talk with financial planners and read books like “The Complete Money Makeover” by Dave Ramsey. Typically paying all bills on time, have a budget and aggressively paying down debt and have a small savings for emergencies. If you are investing your risk tolerance is moderate.
Fulfillment Mode: People in fulfillment mode are proactive with their finances. They see this economy as an opportunity to increase their portfolio. They are constantly looking for creative ways to manage and grow their money. They seem to have a “magic touch”, everything they touch turns to gold! They have a positive outlook on their financial future and plan aggressively for their future. They are innovative and will sometimes take high risks which also reap high returns. They surround themselves with people who are financially smart and secure. They know and understand the financial market and everything that is occurring in that arena. Typically, low debt to income ratio, have a substantial savings for emergencies, pay cash for most purchases, pay credit cards in full every month, and have money to invest wisely. Investors at this level typically have a combination of conservative, moderate and aggressive investing. They are in a position that it will not financially crush them to lose on a risky investment.
Step one: Identify where you are on the Financial Performance Indicator, be honest and accountable. Accept where you are, and be responsible for your financial situation. Step Two: Take action to move up the Financial Performance Indicator. Step Three: Review the Financial Performance Indicator every month to evaluate where you are and take proper action.
If you are in Survival Mode, stop blaming others for your situation and start by facing the truth about your finances. Use Quick Books to manage your finances, to log every bill, monthly expense, the date they are due, the balance owed and the monthly payment due. Create a budget and stick to it! No excuses, no deviation. You will be amazed and how good you feel once you have everything in one place and start to take control of your finances. Create a system and stick to that system. Be relentless!
If you are in Effective Mode, keep up the good work. You will soon be well on your way to financial freedom; it takes consistency and dedication to getting your finances under control and your debt paid down. Continue to educate your self on financial management and surround your self with people that are financially smart and secure. Hire a book keeper that you trust, will help you stay on track and who you enjoy working with!
If you are in Fulfillment Mode, continue on your path of financial success. Monitor, manage and educate yourself about all of your investments. Research your favorite charities to donate to as well! You are in the situation not only to help yourself but also to help others. Find someone that you can mentor that is dedicated to financial success and share your financial strategies.
Each month re-evaluate where you are on the Financial Performance Indicator and take the appropriate action to continue to grow and stay financially healthy! Best of luck on your financial journey!
