• Harry N. Stout

The Eight Personal Finance Risks of Life


To guide your journey through the FinancialVerse, you must explicitly consider the financial risks you will face and how you can eliminate or mitigate each one. These risks can be easily understood and may seem second nature to you, but they must be clearly addressed by you in order to stay on track. If not, you may encounter major detours and potholes in your financial life. Learning how to overcome these challenges can take time and effort, but these skills will help you at every stage in your journey.


Here are eight personal finance risks in the FinancialVerse that you may encounter:

  • Education Risk – The risk of obtaining too much or too little education, or pursuing a trade, concentration or profession that will not qualify you to earn reasonable cash income.

  • Cash Income Shortfall Risk – The risk of not earning sufficient cash income to support your needs.

  • Disability Risk – The risk of becoming physically or mentally disabled and not able to work.

  • Health Risk – The risk of becoming ill and not having sufficient resources to pay for the costs of care. This risk includes providing for the cost of long-term care during the Returning Stage. The long-term care need is what I call the “risk elephant in the room.”

  • Premature Death – The risk of dying too young and not being able to earn the income and accumulate the assets necessary to support your needs or leave funds to provide for the future needs of your dependents. In the famous Motown song sung by the Temptations, famous Motown song sung by the Temptations, “Papa Was a Rollin’ Stone”, the lyrics went something like: “Papa was a rollin’ stone. And when he died, all he left us was alone.” Be it a man or a woman, dying too soon and not leaving cash for your dependents is likely not what you want to do.

  • Debt Risk – The risk of accumulating or relying on too much or too costly debt such that the debt cannot be comfortably repaid from current cash income.

  • Liability Risk – The risk that you will physically, emotionally, professionally or financially harm someone in an accident in your car, home or other physical or digital location and be held legally responsible to pay cash damages to the person you harmed.

  • Longevity Risk – The risk that you live a very long life and won’t have the cash income to pay your living expenses. It is the risk of running out of money in old age when you are unable to work, which is a common concern in our society today.

As you design your journey through the stages of the FinancialVerse, you have to plan on addressing these risks using your own financial resources and sound decisions. How you approach and solve each risk is a function of your individual circumstances. For example, if you decide to have children, you will take on the added responsibility to provide for them until they can provide for themselves. You may also encounter personal health issues, experience damage from a natural disaster or need to care for an aging parent or relative. When you have a financial approach that has built-in protection from potential risks and life events, you can remain resilient no matter what life brings your way.


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