In this episode, Jim Munchbach shares 3 Categories of Personal Risk Management – and tells a few stories to relate the principles of personal risk management along with some ideas for how you can create a personal plan to manage the risk of everyday life, recover from the unexpected, and realize your life purpose.
3 Categories of Personal Risk Management
1. Property Insurance – covers Your Stuff
2. Casualty Insurance – covers other people – when you’re “liable” (think Liability)
3. Personal Insurance – covers You!
Also in this episode:
— a little about Jim’s trip to Southwest Colorado (Durango)
— SCORRE Conference in Orlando
— Jim’s Personal Apple Update
— And much more!
Perspectives from an Expert in Personal Risk Management
As an insurance professional, I’ve seen clients hit with all kinds of unexpected problems, such as car accidents, hurricanes, floods, fires, medical bills, and traffic tickets. As we get a little older, we may face the death of a loved one who failed to provide enough money in his estate for a decent funeral. Today, a big” “expense many of us face is taking care of our aging parents. People who live barely above water aren’t prepared for any of these surprises. Even relatively minor setbacks, like the $2000 car repair, can devastate their financial world, and consequently, cause immense strain on the relationships they value.
Of course, I know several individuals and couples who make a lot of money and their goal is to enjoy as much pleasure and comfort as possible today. As long as they don’t go into debt (for too long, at least), they feel like they’re winning the game. They’re far more responsible than those who are buried in debt, and they aren’t in denial about their financial situations, but they lack a compelling purpose outside their own wants that could give them direction and fulfillment.
The Young and The Miserable
Young adults can find themselves at the painful juncture of incredibly high expectations and painful reality. Most of them grew up enjoying a lifestyle full of perks. Even in homes with modest incomes, a “normal” lifestyle included a cell phone, an Xbox or Game Boy, the latest iPod, a lightning-fast MacBook computer, and of course, the latest fashions and plenty of “money for movies, trips, and other kinds of entertainment. Their experience with amenities and wealth created the expectation that they’d have even more when they graduated and went out on their own.
Psychologist Jean Twenge, a professor at San Diego State University, wrote the insightful book, Generation Me: Why Today’s Young Americans Are More Confident, Assertive, Entitled—and More Miserable Than Ever Before. She notes, “There are a lot of young people hitting 25 who are making, say $35,000 a year, who expected they’d be millionaires or at least making “six figures.” *[Quoted in The Houston Chronicle, “A generation obsessed with having more stuff,” by Martha Irvine, January 23, 2007.] Many of these young adults spend every penny they make to maintain the lifestyle they’ve enjoyed, and they’re financially barely above water. Almost any unexpected expense sends them over the brink into debt. I know some young adults who experienced the pain of unfulfilled expectations. Some became disillusioned and bitter, but many of them used their disappointment as a steppingstone for change.
The Cure for Common Depression
Not long ago, I came across a word that captures the disappointment that results from unrealistic expectations. Weltschmerz (pronounced velt-shmerts) is a German word that means, “Mental depression or apathy caused by comparison of the actual state of the world with an ideal state.” And as we all know, comparison kills. Realistic expectations, however, combat all the distorted thinking and the promises of advertising, and we can then make good choices based on truth and live with a profound sense of peace.
Sadly, when I talk to people who are wondering through life withour any kind a financial plan, many of them tell me, “Oh, I don’t need a plan. What good would it do? I don’t have any extra money.” That’s one of the reasons you might need a plan…
But here’s another reason that – to me – is far more compelling.
A Risk Management Plan – with clearly defined life goals – can help you manage the risk of everyday life, recover from the unexpected – and realize your life purpose.