Financial First Aid

What are the “most important” financial issues with which we need help?  Isn’t the answer to this question highly subjective and individually unique?  Well, yes and no.  Many times when discussing needs v. wants I have posed the following question to my students:  “What are the most important human needs?”  Rarely does the most fundamental need get mentioned, so I follow up with another question:  “How long can you hold your breath?”  After a brief pause (and a few duped giggles or sighs) the realization sets in that we often overlook the obvious.  Then it is easy to build a list of the most-important needs, which are common to all people:  air, water, excretion, sleep, food, shelter, and clothing.  (Beyond air, the order of importance is debatable and may vary for each individual.)

As Maslow espoused in his Hierarchy of Needs theory, individuals who don’t meet these basic phsyiological (or survival) needs can’t worry much about “higher” needs.  This concept can easily be applied to questions of financial importance.  For example, it won’t do any good to talk about retirement planning to a person who is suffering from hunger; without adequate food there will be nothing to retire.  Those providing Financial First Aid–for themselves or others–must always start with the money issues relative to meeting fundamental needs.

A leisurely stroll through my “Webster’s II New College Dictionary” confirmed that one of the problems of combining well-established phrases and words, such as first aid and financial, to construct new phrases is that the original meanings often don’t quite mesh. For example, Webster states that first aid is “emergency treatment administered to injured victims or sick people before professional medical care is available,” and that financial refers to “the management of money, banking, investments, and credit.”  Reconciling Webster might result in the following definition for financial first aid: emergency management of a distressed individual’s money, banking, investments, and credit before professional financial help is available.

However, such a definition doesn’t quite convey what I perceive to be the essence of financial first aid.  Specifically, the parts about emergency management and professional help are troubling.  Many years of teaching college-level personal finance courses has convinced me that what works in an emergency is usually good practice before and after the emergency, and few people need professional financial help.   That is, most people can very effectively (or at least as good as the professionals) learn to manage all aspects of their finances under a variety of conditions.  Consequently, they can help others do the same.

Perhaps a more basic semantic approach will produce a better definition.  If one keeps the explanation of financial as already stated, but defines the component words first and aid separately, Webster may still prove useful:  first, “ranking above all others in importance or quality,” and aid, “the act or result of helping : Assistance.”  Financial First Aid, then, is appropriately defined as the most importance help or assistance in the management of money,  banking, investments, and credit.