What Is Financial Health Management?

Financial health management (FHM) is a strategy that is sometimes used to help individuals and business arrange finances in a manner that is ultimately in their best interests. Considered a powerful tool in helping to effect debt relief and prevent the creation of new issues that also threaten financial stability, there are several different aspects of financial health management that may be employed. Typically, the process will include basics such as evaluation of the current finances of the individual or business, aid in developing a workable budget, and making arrangements with creditors to catch up on past due bills and remain current on future debt.

As it relates to personal finances, the process of financial health management will often focus on assessing the current circumstances of the client, accounting for all outstanding debt as well as all resources on hand that may be used to help arrange that debt to best advantage. Issues such as the total monthly commitment to current creditors, expenditures for essentials such as food, clothing, and shelter, and the total amount of net income for the household will all be factors to consider. Once the financial counselor has access to all relevant data, it is possible to make informed suggestions on how to begin improving the circumstances of the client, using various methods that may include the creation of a new household budget, liquidating some assets that are not necessary to the operation of the household, and learning how change spending habits so that further unnecessary debt is not accumulated.

With company finances, the same basic approach may be used to create a viable financial health management plan. The total assets and liabilities of the company are evaluated, along with the various types of revenue streams the company enjoys from sales and returns on current investments. Doing so makes it possible to identify areas in which the company is functioning responsibly in terms of finances, as well as areas where some improvement is needed. Depending on the severity of the company’s situation, methods such as debt reorganization, asset liquidation, a combination of production and manufacturing facilities, and even the revamping of the company organization structure to eliminate redundancy may be necessary to get the company on sound financial footing.

In all its incarnations, financial health management is about helping clients learn how to manage financial resources to better advantage, minimize any debt that may be present, and build financial reserves that can help to ensure financial stability in the future. The actual process may take only a short period of time to develop the resources and habits necessary to sound financial planning and execution, but may require months or even years of application to reverse severe financial hardship. While not always an easy process, financial health management on an ongoing basis can make a huge difference in the lives of individuals and businesses, making it possible to continue into the future with a great deal more confidence and peace of mind.