Much of personal finance is about taking care of yourself. Some may even see it as selfish. It answers the questions: How much do I have? When do I want to stop working? How much can I spend while retired? Obviously, there is more to life than just worrying about our own well-being.
I have heard a financial advisor who explains this idea using an analogy. Many people have flown before. Most people know that at the beginning of a flight, there is a safety presentation. During the presentation, the flight attendants demonstrate what happens if the cabin pressure falls. Oxygen masks will drop from the ceiling, and you are instructed to adjust it around your nose and mouth. Adjust your own mask before helping those around you, such as children or the elderly. Why? Because if you pass out from lack of oxygen, you’re not able to help anyone. Worse, you then require help from others, increasing the strain of the situation.
I find this to be a good analogy for life. If I’m not healthy, I can’t help my children to be healthy. If I’m not happy, I can’t make my spouse happy. And if I’m not healthy and happy, I am in need of help from others. It’s the same with our money. If someone asks how much they should be saving for their children’s education, I will often ask how much they are saving for their own retirement. Different people have different values when it comes to education and financial independence, but generally, there is no point helping a child with their education, if the parents are going to become a strain on their children later in life. If the parents’ retirement plan is on track, then they have the luxury of starting to focus resources elsewhere, and helping their children is a great choice.
The idea behind “circles of care” is that the people in our life fit into concentric circles. We care about each person, but we also have priorities. In the inner circle is yourself. Each of us have a duty, as we grow and mature, to care for ourselves, meet our own needs and become an effective human being. The next circle, outside of ourselves, is our family. Some people may have only a spouse, children or parents in this circle. Others may include extended family or adopted family. Parents are responsible to care for and provide for their children. They can only fulfill those needs for their children as well as (not better than) they do for themselves. Extended family may occupy the next circle out. A further circle contains “community.” After we have been able to meet the needs of our family, if we have additional resources (usually time or money), we can begin to care for people in our community. To some, this means neighborhood, while others see every human being as belonging to a large community. After all, we all share the same planet Earth.
It is important to keep in mind what our needs truly are. People in another country, or even another part of the city, may have needs which are more urgent than mine. It is easy to forget about people who don’t have access to health care or adequate nutrition or even education, when I feel I “need” a vacation. I find that volunteer work, when I can use some of my time to help others, opens my eyes to the difference between basic needs, and my own desires for comfort.
I can’t effectively meet the needs of others until I have taken care of myself. Once I have my own financial plan in place and know I will not need to rely on others, I can begin to care for others. I have a duty to care for my children and meet their needs, since they are not able to do this for themselves. After caring for my own family, I am free to use any additional resources of time or money to care for people around me.