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Are you ready to challenge your myths of financial wellbeing? Get ready to debunk some common myths and learn how to achieve true financial stability!
You must have grown up being told that money cannot buy happiness, didn't you? However, the feeling of purchasing your first diamond, Gucci/Prada, car, first home, and so on, contradicts the myths of financial wellbeing.
It is also impossible to forget the horror you faced when you did not have enough money to pay the car loan EMI, or when your credit card bill was about to bounce, which can negatively impact your credit score.
What we are trying to highlight, though, is that money may, after all, be the reason happiness in life, if not necessarily buy happiness. And that, like everything else in life, money is neither all black, nor all white…
According to a survey, 90% of Indians reported that financial health has a profound impact on their general well-being.
Similarly, according to the American Psychological Association (APA), stress over money is the main factor contributing to unhealthy habits like smoking, gaining weight, and abusing alcohol and other drugs.
So you see: there is a direct correlation between financial well-being—which is essentially being financially healthy—and physical, emotional and general well-being.
In the above regard, a salary hike seems like the answer to all the vices, isn't it?
You may want to think it through…
Most people believe that a salary raise will solve every problem that is preventing them from attaining financial well-being. However, this is a big bubble they are living in.
When you get a salary raise and are still not able to achieve financial stability, the bubble bursts and you understand that you were unable to separate facts from myths.
While both savings and income make a part of financial well-being, they make a small part of it. There are several other things to be noted. Continue reading to learn more.
Features Of Financial Well-being
Before one can realize that a salary hike or more funds does not automatically translate to financial well-being, it is crucial to understand what qualifies for being hailed as financially well-off.
Given below are many features that together determine your financial wellness:
1. You’re financially well-off when you have control over your finances
If you have a good level of financial well-being established, you will feel that you are in control of your finances today and in the future.
You do not worry about meeting your daily expenses and feel in the power of any near-future expenses as well.
However, do you think it comes from having a lot of money only? No, the main trick here is to manage the amount of money that you have.
2. You’re financially well-off when you can manage any financial emergency
If you have stable financial wellness, it will not be difficult for you to deal with any emergency.
For example, your child’s education needs an upfront payment instead of installments. If you are financially well, you will be able to meet any such expenses.
3. You’re financially well-off when you’re on the road to achieving your goals
Your short-term and long-term financial goals should be easily met if you are financially well. This may be a very good sign of financial well-being for you.
For instance, if you have been planning to accumulate a certain sum of money in the next three years if you can go halfway through the accumulation in 1.5 years, you’re financially well-off.
4. You’re financially well-off when you’re making choices, instead of being forced to make one
If you can make choices that help you live life to the fullest, you can consider your financial well-being to be in a good position.
For example, going on a family vacation, taking out your family to have a good meal or having extra family time by decreasing your work burden. This may also be known as financial freedom.
“A Higher Pay Is Equivalent To Financial Well-being” Is A Myth
As mentioned before, the amount of money that you possess is not the solution to your problems.
The way you manage the amount of money in your hands and bank account is important.
Let’s discuss the misconceptions that people associate with a higher salary and financial well-being:
Myth #1: A higher salary = financial well-being
While taking a job, most people look after one with a higher pay cheque. However, have you ever wondered if that is enough to build wealth and be sorted for the future?
Let’s say, you get a raise in your salary but you still have to spend a considerable portion of it on repaying outstanding debt. That would not give you financial wellness even with a higher salary.
Moreover, if your expenses rise with the salary hike, you will essentially remain in the same place when your salary was lower. Thus, money-management and financial planning is the key to financial well-being; not necessarily a higher salary…
Myth #2: Till money flows, things will be be alright!
You may often think that by the time you are getting a salary along with a raise, your problems will be solved. This may not be the case though.
The money that you receive should be handled properly and not spent mindlessly. This problem can be managed by understanding the amount spent on things within a period. Making a budget can you help get rid of this problem.
Myth #3: Investing requires a lot of money
Many people think that investing money in financial assets requires a lot of money. However, this is not the case. You can start investing with a small sum as well so that you can receive returns on them after some time.
Myth #4: A higher salary is the only way out
A higher salary is not the key to financial well-being. Sure, having a lot of money can seem like the best thing that can happen to you. However, you have to start by eliminating any useless expenses from your budget.
For example, you can stop having restaurant meals regularly, or compromise that one earring or shoes that you desperately want to buy! Such restraints can go a long way to ensure your financial well-being.
Myth #5: 20s are too early to plan for retirement
Having a good level of financial well-being requires you to plan for your short-term as well as long-term financial goals.
Your long-term financial goals would include your retirement as it is bound to come one day.
You can invest your money to save up for retirement and keep it locked in for a long time. This way, you can take advantage of compounding and may have a considerable amount for your retirement.
These misconceptions about financial well-being have robbed many people of the happiness that may come from financial well-being. Moreover, maligned finances can cause a lot of stress.
The best route to take apart from investing time in financial planning is to ditch the idea that money is the solution to all your problems.
Now is your time to start moving towards financial well-being with whatever money you have in your hand.
Contrary to the belief that a certain salary is akin to financial well-being, the reality is that there is no specific amount of money that serves as a benchmark for financial well-being.
Set out your goals, understand any current and future obligations and see how you can smartly use your current money and save up for the future. Investing can always be a good option to move toward financial wellness.
As and when you feel that you can relate to the four features of financial well-being discussed above, you will understand that you have achieved it without getting a hike in your salary.
For a part of your long-term savings plan, you can always explore the Jar app that enables you to invest in 24-karat gold, digitally. Find the Jar app in Apple’s App Store and Android Play Store.