Financial Health
Financial health is about having a sense of security regarding your ability to meet your financial needs. What someone needs to feel secure can vary significantly. Some people need six months of savings in the bank, others six weeks, and some until 6 pm, or when the next check clears. A person’s relationship with money and the role money plays in their life is heavily influenced by many factors, such as upbringing, expectations, experience, guidance, and goals, just to name a few. The amount of stress finances play in one’s life is individual. Just look at how spouses have different levels of stress regarding financial situations despite being in the same household.
Dangers of rushing into the chase.
I don’t know many people who, at some point in their lives, have not thought, “I need more money?” Henceforth, we will never have a shortage of individuals who claim to have shortcuts and systems to ensure rapid financial gain. However, get-rich-quick schemes typically only work for the individual selling the scheme, just like the house always wins. Being in a rush to make more money, like a rush to do anything, limits one’s ability to see all the traps, long-term ramifications, and blatant false promises. Remember, the creation of urgency is a tool frequently employed to obtain power over people’s decision-making. Don’t sell yourself short because you’re in a rush. Creating tension and urgency, then selling someone on a quick, rapid resolution is a tried-and-true technique to take advantage of people. Think of how many people commit to investments only to later realize that the outcome would be nowhere near what they were sold. The losses can add up, leaving many capped a level or worse, going in the wrong direction.
No money, more problems.
The interplay of financial health with other aspects of wellness cannot be overstated. This applies to those who seem to have a dearth as well as a surplus of money. Poverty brings about housing and food insecurities, which contribute greatly to adverse childhood events such as abuse, neglect, parental substance abuse, and absenteeism in general. Limited access to health care and healthy food options increases morbidity and mortality, further putting strain on limited resources. Lower-income neighborhoods also have an increase in violence, higher paternal absenteeism, and limited healthy outlets and activities for child development. The increase in childhood adverse events contributes greatly to the presence of mental and physical illness. For some, the persistent chase to obtain additional resources to combat insecurities, attachment of material gains to their sense of identity or happiness, as well as the need for money as validation or means of control, can lead to mental and physical health issues even when money is technically present in abundance.
More money, more problems.
The mismanagement of money is a major contributing factor to divorce, substance abuse, emotional turmoil, and burnout for many to include professionals. The amount of income that an individual makes does not determine whether they’re financially healthy. Many high earners also have high debt. The relationship one has with money determines the security it provides and the freedom it brings. Unfortunately, many people believe they can overcome bad spending habits by earning more. That belief will generally lead to an imbalance in life as the time spent chasing money takes away from the time required to maintain healthy mental, physical, and spiritual health. The stress can also leave many people feeling overburdened due to a refusal to change their lifestyle. Although for some, this is not an option as they have already over-extended themselves, and failure to meet their financial obligations could lead to further financial distress. I have been down that path, and found the following principle helped me get back on track.
10 Beneficial Financial Habits
- Keep an accurate budget (Income and obligations)
- Live below your means by actively limiting spending
- Commit 10% to savings, investing, and giving (tithe)
- Max out 401 (k) and IRA options
- Establish passive income
- Seek guidance from individuals with a proven record of earning and managing money
- Avoid attaching your self-worth to your net worth.
- Avoid taking on the debts of others
- Set aside an emergency fund
- Consider obtaining a professional tax preparer and/or a Certified Public Accountant