Financial Bondage

So what is financial bondage?


It's when an individual, organisation or country for that matter, is restricted in choice due to financial constraints. While the consequences flow both ways, the example below shows a domino effect starting with the individual.


Personal


Personal finance is the number 1 cause of stress in Australia. At the personal level when there is financial strain at home, mental and physical health may be affected, as well as personal relationships.

A client example of this was when the decision was made, due to financial constraints, not to visit a dying relative. The couple were not acting in accordance with their values and this placed a huge strain on the relationship.

At work this detracts from focus as home life plays on one's mind.

Business


At the business level an employee may manage million-dollar portfolios however this does not mean their personal finances are in order.

An example is that of an employee who "lost" $90,000, being reflective of her personal spending (ie not knowing where her money went). She found the $90,000 but had wasted valuable time in the process.

Along with other research, page 59 of this Global Fraud Report shows personal financial MIS-management as the 2 main Red flags for fraud (yes the top 2 reasons can be grouped together as mismanagement). Lastly, if staff attrition occurs due to needing "more money" this creates recruitment, retraining and retention issues.

National


At the national level if individuals are not financially independent or healthy, there is a greater burden on the Government to provide supporting services such as Health and Housing. This means a greater burden on the taxpayer.

Recognising this, in 2006 the Federal Government ran an Understanding Money campaign and in 2007 released Financial Literacy in the workplace (ISBN 0642 74389 4).

See the benefits of conducting financial literacy training here.