What Financial Health Means to Me

The Oxygen Mask Theory of Financial Parenting

After having kids, my wife and I worried about the examples we present to them. I don’t know about you, but it was a reality check for me when I brought that cute baby home from the hospital. We want our kids to be healthy. We want their habits to promote mental and physical growth.

Before kids:

  • I might have been guilty of pulling out the carton of ice cream and enjoying a bowl while watching my favorite tv show (almost every night).
  • I might have watched TV for 8 straight hours and never got out of my pajamas on a Saturday. 
  • My meals might have consisted of a bag of popcorn and a soft drink from time to time.

I’m not proud of it but it’s reality.

Parents want our kids to be better than we were. This doesn’t only include our work ethic and physical health, but our financial health too.

I quickly found out that as I strive to be a better parent, this includes setting my kids up for success financially.

The Oxygen Mask Theory of Financial Parenting

Okay, this is a little disturbing.

But before I can prepare them, I need to have a good idea of my own financial status.  

Do you know where you stand?

Conveniently the Center for Financial Services Innovation (CFSI) has put together a wonderful paper on eight indicators to measure financial health. 

  • Spend
    • Spend less than income
    • Pay bills on time and in full
  • Save
  • Borrow
  • Plan
    • Have appropriate Insurance
    • Plan ahead for expenses


Components of Financial Health

These eight indicators let you take a quick assessment of your financial life. You then have a model and a way to start a conversation with your kids so that they get a head start on financial success. Let’s quickly go through these indicators.

  1. Spending less than you bring in is the foundation of any good financial plan. There is no getting around it. If you aren’t doing this, regardless of your income, you are setting yourself up for failure. This should be the number one goal.
  2. Paying bills on time is about keeping your word and doing what you say. That idea is foundational to raising awesome kids that will become dependable adults.
  3. Having the ability to save enough for living expenses should be automatic. It is really a sum of all the other indicators.
  4. Carrying out #3 will lead to saving enough for the long haul. This is carrying on what you’ve been doing before.
  5. They place a good debt load at less than 36%. This is still high in my opinion and I strive for less.
  6. My strategy for the prime credit score is more of an asset for credit card reward strategies than taking on more debt. It is still an asset that anyone and especially high income earners can exploit.
  7. Everyone needs the appropriate insurance, especially when you are a parent and have zero income earners depending on you. If you don’t have the right insurance, you’re penny wise but pound foolish.
  8. Surprises happen. Planning for them is fundamental. I’m always surprised how many people don’t have any forethought when it comes to the future and its probabilities. It’s a skill I stress to my children.  Thinking ahead puts you both ahead of the competition and catastrophe.

Financial health is a family putting money matters in the normal day to day journey by following these stepping stones. 

My wife and I have spent the last 15 years striving to meet or surpass these indicators. We’re very close but still saving for financial independence. That’s alright because it gives us something else to discuss with our kids and we can both look at ways to improve. The nice thing is my children are a few decades ahead of me when it comes to financial knowledge. They have the potential to improve their financial health and that of generations to come. 

Join me in promoting #FinHealthMatters Day. Share this blog post with as many people as you can to get the word out.

Tom is a doctor, husband and father of five with a passion for parenting and finance. When he isn't skateboarding, riding BMX, or jumping on the trampoline with his kids, he is reading and writing about personal finance. He helps high income parents educate and mentor their kids to become financially, emotionally, and intellectually self sufficient.

4 Responses to “What Financial Health Means to Me

  • I definitely agree that a 36% debt load is just too high especially with all the other expenese people have. We spend 35% without a mortgage. I can’t imagine adding 36% debt and a mortgage payment. We would definitely be underwater for sure. I am so happy we got rid of our mortgage 🙂

    • I’m looking forward to that too. For now we are paying into a taxable account. When that account gets to the mortgage value, we will have a decision to make.

      Tom @ HIP

  • This post and the list are a great litmus test for the new initiate into personal finance and also for some of us journeyman to gauge if we are drifting from our goals. I’m not sure what is meant by debt load, but 36% seems high if it means a percent of your balance sheet, like 36% liabilities. As a physician, and I’m sure I share this problem with anyone with student loan debt, I know how debt load feels. We are often 300-700K in the hole depending on mortgage, spouse debt, private/public school choices etc. It’s crushing debt and it’s kinda like being drunk. You make bad decisions because of the debt that seem ok at this time. Such as taking more debt because your monthly check covers it, avoiding the debt to invest and harness arbitrage but not actually investing the difference, etc.
    I’ve never seen a list like this but it could be the outline of any number of good finance books. It’s reassuring for me to know that I’m meeting them all, guess my family and I have made out ok thank largely to some great blog advice such as this over the past few years.

    • Thanks for stopping by aGoodLifeMD.
      I know this list is pretty basic but I agree that it’s a great outline. I really liked the study that the CFSI did.
      They had another one that categories people based on these indicators and a bunch of other question. That one was really interesting because some categories about being vulnerable to economic distress were independent of income. There was a category for people over $100,000 that showed they screwed up handling money just as much as those below the poverty level. It just goes to show more income doesn’t always solve the financial problems we have.

      Tom @ HIP

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