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Do You Fear Being “Premium Poor"? Create the Financial Plan That’s Right For You

Do You Fear Being “Premium Poor"? Create the Financial Plan That’s Right For You

December 11, 2017

One of the topics that hit our team meeting this month was how to help clients who are afraid of being "premium poor". Although we believe that our team can develop a financial plan that will serve any family, we also understand that not every family has extra money each month to put toward future goals. So let's talk about what "premium poor" actually is, and how we can address it with every family.

"Premium Poor" vs. Financial Security

It’s scary to have to choose between being “Premium Poor” and protecting your family, versus paying the bills, but not having sufficient coverage for the worst case scenario. Essentially, the term "premium poor" refers to someone who is paying money out each month for insurance or investments, but who feels they don't actually have that amount of money in their budget to use. Think about it - if you're spending $100 on your insurance premium, but that forces you to put $100 worth of groceries on your credit card, you're losing money. With interest payments piling up, soon you'll be paying more than that $100 premium per month in fees. Is this really getting you anywhere?

Your New Financial Plan: Stop Wasting Money

It's not difficult to understand the fundamentals of budgeting - just don't spend more than you make, and you should be okay, right? Yet, what sometimes gets forgotten is prioritizing your spending. If it's truly important to you to make sure that your spouse and children are financially secure if anything happens to you, then you need to find a way to pay the premium on a life insurance policy. And, if you're really committed to saving for a secure retirement, then you'll need to figure out how to fund an investment account. There are many ways to shift your monthly spending, which will help you find the dollars to fund your important financial plan. A few ideas include:

Coffee & Comfort Drinks

We've all know how that stopping at Starbucks or your favorite local coffee shop every morning is costing you an arm and a leg. But, let's put some numbers to the equation to make it more real. Imagine you stop for a latte or an Iced Caramel Macchiato on average, three times per week. You're spending about $12/week or $624/year on coffee! Now, even if you buy Starbucks coffee beans, you can brew a cup at home for about 27¢, or $0.81 per week, or $42.12/year. That's a savings of nearly $600 annually, which would certainly set you up to fund that insurance coverage. (Yes, we get that home-brewed black coffee is not a Caramel Macchiato - but even if you added the expense of some great flavored creamers and a beautiful mug to your budget, you'd still save enough to fund that premium).

Clothing, Shoes, and Accessories

We all want to look and feel our best. Yet, when we're over-spending on external things, it can cause us to ignore our financial plan, which stresses us out. 

How important are name-brands to you? It's okay if you love your Coach bags or Patagonia jackets. But, can you spend less on them by planning better? If you sign up for the retailer's email list, you'll often get promotional deals. And, you can check to see if your brand has an outlet store near you, or if it's carried at an overstock store like TJ Maxx.

Have you considered what the lifetime of your clothing is? Many of your garments could stay in better shape for a longer time just by doing laundry a little differently. The longer your clothes' color, shape, and texture last, the less often you'll have to buy new ones (and you might even save a few bucks on laundry, too)! And, when it comes to shoes, may we suggest buying the $8 leather protecting spray? If it gets you an extra season out of your favorite pair, you're saving money. 


We've seen so many families come in with a vision for their financial plan, and even a budget. But, the reality of their food and entertainment costs shocks them every month. Here's where a few simple money-saving ideas could put hundreds of dollars in the bank - or in this case, into action for a secure financial future. 

A few ideas for you to consider when it comes to your food and entertainment budgets: 

  • How many times are you "eating out" per week? Even if you're only grabbing lunch once per week (let's say it averages about $10), your expense is adding up to over $500 per year. 
  • Are you encountering food waste on a weekly basis? If you're constantly throwing out rotten vegetables, or leftovers that have gone bad, it might be time to reconsider your shopping list. Keep it realistic, and test to see if your family can get by with less food in the fridge each week.
  • Is convenience the key factor that's adding up when it comes to your food expense? Frozen and pre-packaged meals come with a hefty price-tag, compared to pre-making those meals and/or freezing them yourself. Make a game out of preparing meals for the week with your family, or find a friend who's interested in pre-making freezer meals in bulk together - you'll enjoy the process, and cut your costs. 

How To Fund Your Financial Plan Without Being "Premium Poor"

The first step is finding out where you stand today. By looking at what protections and investments you and your spouse currently have in place, we'll be able to help you put a financial plan in place.

We do see people and families who truly don't have an money left in their monthly budget to invest in their financial security. Our team will not abandon you! We can help you take a look at your budget, implement cost-saving strategies, help you identify ways to decrease debt, and envision a plan to move toward financial freedom.  

Another thing we see regularly is people who have purchased insurance coverage in the past that isn't quite the right fit for their current situation. We might be able to save your family $50 per month on insurance coverage, which frees up $50 to invest!

Time To Plan Your Financial Future

Our conclusion? The fear of being "premium poor" should not stop you from putting the financial protections your family needs in place today. We will help you find the right solution for your unique situation, and we'll put a financial plan in place that helps you move toward your short and long-term hopes and dreams.