1. Financial Crisis Management
Tenth Annual Financial Literacy Leadership Conference
Society for Financial Education and Professional Development
Vonda Bowens, CPA

2. Sources of Financial Crisis
Income Loss
Job
Business
Death of Income Earner
Increase in Expenses
Illness
Injury
Major Home Repair
Major Car Repair

3. Before Financial Crisis
New money coming in periodically from Job/Business
New Bills “eating” the new money

4. Financial Crisis (Stage 1)
Either loss of income or increase in expenses
New Bills have to “eat” Assets (Old Money)
Level of Assets determine how long the household can be maintained

5. Financial Crisis (Stage 2)
Continued loss of income or increase in expenses
New Bills have to “eat” Liabilities (Other People’s Money)
Availability of credit determines how long the household can be maintained

6. Financial Crisis (Stage 3)
Continued loss of income or increase in expenses
New Bills have nothing to “eat”
Insolvency

7. Building Financial Resilience
Address Financial Behavior to Change Financial Reality
Strengthen Each Household Financial Pillar (Income, Expenses, Assets, Liabilities)

8. Address Financial Behavior to Change Financial Reality
“The problem with most financial advisors out there today is that they believe that all clients can achieve financial health if they only had the proper education and information. This is based on the assumption that we will all make the right financial decisions and behave in optimal ways to reach our financial goals if we just know what we should do. However, the reality is that just knowing what to do isn’t enough–just like knowing how to eat properly and exercise correctly is all it takes to lose weight and get in shape. The truth is that for most of our clients, their financial beliefs, which drive their financial behaviors, can’t be changed by education or information alone.”
Klontz, Brad; Kahler, Rick. Facilitating Financial Health: Tools for Financial Planners, Coaches, and Therapists (Kindle Locations ).

9. Address Financial Behavior to Change Financial Reality
What should we help them with?
Identifying unconscious detrimental financial beliefs so they can be changed
Identifying how financial history experiences contributed to financial beliefs and behaviors
Identifying clear financial and life goals and learning to use money as a tool to achieve them
Showing how to take financial actions that are in line with one’s values and purpose

10. Address Financial Behavior to Change Financial Reality
How can we help them?
Assessments
Individual coaching
Group Coaching
Etc.

11. Strengthen Each Pillar: Fortify Income
Increase skillset to get promotion/find a higher paying job
Get Tax Refunds Early
Income Protection
Disability Insurance
Life Insurance

12. Strengthen Each Pillar: Manage Expenses
Identify where money is going
Use spending plan to manage expenses
Use spending plan to reach financial goals

13. Strengthen Each Pillar: Increase/Protect Assets
Teach the money mechanics to invest and manage funds properly
Build active savings and retirement plans from the surplus
Asset protection
Homeowners insurance
Vehicle insurance

14. Strengthen Each Pillar: Control Liabilities
Pay down debt
Pay off smallest debt first, roll that monthly payment to the next smallest debt, and so on
Ask creditors to lower interest rates
Use portion of surplus to accelerate debt elimination
If credit is strong consider balance transfers

15. Strengthen Each Pillar: Control Liabilities
Build/Rebuild Credit Scores
Pay bills on time (35%)
Revolving account balances should be no higher than 30% of credit limit (30%)
Don’t close long standing accounts (15%)
Have 3 active revolving accounts (credit cards) and at least one open installment account (mortgage, car loan) (10%)
Keep inquiries to a minimum (10%)

16. Let’s Get This ONE THING:
To more effectively help households achieve and maintain financial resilience, it requires addressing financial behavior to change their financial reality

17. Life More Abundantly, LLC
Vonda Bowens, CPA
Life More Abundantly, LLC
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THANK YOU