April 25, 2010
You buy insurance, but can you get free economic assurance?
Ever think about the reasons why you buy insurance? We buy insurance because we have no concrete assurance we can protect ourselves and our families from disaster. If you don’t get a needed surgery, replace the light pole you hit with your car, provide an income for your young children if you die, or repair the roof on your house that was struck by lightening you and your family will face problems that can destroy your economic security. Your inability to pay for these disasters won’t stop them from happening to you. Without insurance you may not be financially able to respond to these challenges. Then what happens?
Will you be economically scarred?
In an article published by the Economic Policy Institute the effects of dramatic financial setbacks, caused by things like a job loss, have what they call a “scarring affect”. That means when we suffer a major setback it takes an usually longer amount of time to recover back to your original standard of living. It can also mean being forced into a situation where you are delaying quality of life items such as health care and education. Protecting your ability to maintain your economic stability is crucial. If you don’t, you could fall victim to a harsh domino affect of financial problems. Is there an insurance against recession related income loss and the ensuing difficulties that threaten your standard of living?
The best insurance policy
In his book “What Would Google Do” Jeff Jarvis talks about the web providing us with access to information and education unlike any other time in history. When making the point that access to any information we want changes our ability to control our lives he says “Education and information become insurance against insurance”. Unemployment insurance is meant to provide a degree of financial help when we involuntarily lose our jobs. It never completely makes up for our previous salary and thus our quality of life is immediately threatened. However, what if we were in a position to immediately find new sources of income rather than needing to rely on the unemployment insurance? How can we make that happen?
Your level of ability in solving problems and creating solutions is what puts you in a position to proactively ward off economic set backs. Education is how you achieve those increasing levels of ability. Education is how you acquired a second or third marketable skill set that makes you employable in a shorter period of time. It is how you avoided a costly legal entanglement or identified the reason for your child’s asthma attacks. Improving your education allowed you to change your car’s oil, create your own website, start your own business, do your own taxes, identify energy drains in your house, replace a leaking toilet, and improve your credit rating. Educating yourself and adding new skills to your repertoire reduces your need for insurance and will save you money in many areas of your life.
Why do we rely on coaches, doctors, lawyers, and mechanics? One reason is that they possess a skill that we do not. They answer questions to which we do not have the answers. Throughout history there have been professional classes of people that make their living off of the information they possess. That’s information that we need to solve economically impactful problems, but never had regular and easy access to. In many cases we paid for insurance products that allowed us to afford their services. Additionally, we were at employers’ mercy to keep us employed as we had fewer alternatives for income.
In essence we were bound to services, individuals, and employers who kept a degree of control and influence over our lives because of access to information that they had and we did not. The problem many people faced was that access to the very information needed to gain back that control was economically out of reach. Education was expensive. However, that has changed.
Education is free, accessible, and abundant in 2010
The Internet has dramatically leveled the playing field. On the web you can now find information on just about anything from the complex to the trivial. The educational materials and references you find online are free, abundant, varied, and accessible regardless of your financial status. Before, you would pay someone directly or via insurance to solve a problem for you. Now, you have the ability to learn how to solve and prevent problems on your own. In regard to employment your employer (and the economy) won’t necessarily have the same influence on your personal economic well being anymore. You have the power to learn and develop new skills on your own that make you more valuable and employable in the marketplace.
All of us will face some degree of economic challenge. How prepared we are to handle it will be a determining factor in how fast and successfully we rebound from a setback. No one can know everything, but anyone can learn more things. Give yourself assurance that you can solve costly problems and prevent deterioration of your quality of lifestyle by reducing your dependency on insurance and others through constant education. Education and application of knowledge are cheapest and most powerful forms of insurance.
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