Best Way to Succeed in Life: What is success? The answer to that question will vary from one person to the next. Some would suggest that it would include having your own business, a family, and the ability to travel the world. These are all valid answers but they are not possible if your finances are not sound.
This term may be familiar to you. What does this term actually mean?
Sabrina, Finance Over 50, has a simple definition: “Financially sound” means you make financial decisions that will increase your net worth and that you can maintain that state for the future.
In finance, the term “financially sound”, more specifically, refers to being financially fit and able to make good financial decisions. Financially sound decisions and individuals are also characterized by stability, security and progress.
As an example, saving money for emergency situations is always a sound financial decision. First, you’re increasing your financial stability and protecting your assets. You are also preparing for emergency situations, which will strengthen your financial security. You’re making progress towards your financial goals by keeping money in a safe place.
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By adding monthly payments to finance cars, you can decrease your cash flow. Financial security can also be compromised if you are in a debt situation. You are also paying interest on assets that will eventually depreciate. This is contrary to economic progress. The average five-year depreciation rate for the 2015 BMW 7 Series was 72.6% by 2021.
In other words, building an emergency fund means being financially sound. However, financing a vehicle is not as important.
Financial Security: The benefits
How is it important to be financially sound? Financial soundness will have a positive impact on every area of your life. You will find that your life is easier and more enjoyable if you make financial sound decisions. These are just a few ways that being financially sound can help you live a happier life.
Better mental health
It shouldn’t surprise that financial and mental health are closely linked. There are more than 1.5 million people in England who have both mental and problem debt.
Furthermore, 86% of those with mental health issues who completed a Money and Mental Health survey said that their financial situation made them feel worse.
These mental health issues can lead to the following symptoms if they aren’t addressed:
- A high level of worry or fear
- Feelings of extreme sadness, or low mood
- Learning difficulties or problems with concentration
- Irritability
- Changes in mood
- Modifications to your sleeping or eating habits
- Substance abuse
- Social withdrawal
- Suicidal thoughts
Improved physical health
In 2015, the American Psychological Association reported that 72 percent of Americans felt stressed about money at some point in their lives. A CreditWise survey, however, found similar results. 73% of Americans ranked their finances as the number one stressor. 1. Stress in your life.
This is why it is so alarming. What does this have to do about your physical health?
Chronic stress can not only be uncomfortable, but it can also lead to death. Experts have described chronic stress as the silent killer.
Short-term stress effects include fatigue, digestive distress, headaches, and weakening of the immune system. The long-term effects of stress are the most serious.
Stress can be a major factor in obesity, heart disease, stroke, depression and other health problems. Because of the many health problems caused by stress, being financially stable may help to reduce some of it. Even if you don’t manage to eliminate all the stressors in your life, it will give you the ability to address any health-related problems.
Stronger relationships.
Financial problems are often the root cause of marital conflict. This could vary depending on which study was used. However, it’s clear that money can strain relationships.
Ashley LeBaron is a doctoral student at the University of Arizona Norton School of Family and Consumer Sciences. She says that financial stress can be detrimental for any person, but it can also affect the focus and time they put into their relationships.
It makes sense if you stop and think about it. You might end up playing the blame game if you can’t pay your bill or go out on date night. You may become bitter and stop working together to improve your financial health.
Increased professional and personal opportunities
If you plan for the future and manage your money well, you have more control of your life. Those who have heavy debts are held accountable by lenders. They also have no freedom to follow their professional or personal dreams.
If you’re not financially stable, you may not be able to take your dream vacation, change your career, or grow your small business. It is possible that you won’t be able attend networking events, or pay for your child’s education.
If you want more freedom and more opportunities in your life, you must make small sacrifices for the greater good.
The ability to give back.
A bonus of being financially secure? Giving back is an option. This is as important as it gets.
- Lower blood pressure
- Improve self-esteem
- Stress, anxiety and depression can be reduced
- Happiness increases
- Encourage personal and professional relationships
Eric Rosenberg, in a previous Due article, wrote that “with the right financial discipline you can turn around your financial struggles and get donations underway.” But before you give away any money, make sure that your high-interest debt is paid off.
Children who are financially more stable
Although this may not be the top priority for many parents, it is important to ensure your children are financially secure. They will be able to understand the value and how to set realistic goals and make smart spending decisions.
They will also know how to create more income opportunities. They’ll also be able give back to the community because they are in a good financial position.
Your financial future is secure.
Peter Daisyme says, “When your finances are in order you feel better.” You also have a better understanding of how to save money and plan for your future financial goals. You also have less to worry about at nights, as you are able to see the full picture of your wealth.
Enjoy your golden years if you have a solid financial foundation. Why? Because you can spend your retirement how you want, whether it’s pampering your grandkids or going on a Viking cruise.
You’ll also be able to cover any health-related expenses, including long-term care. You can also leave your heirs a legacy, such as an inheritance or death benefit from a life policy.
How to become more financially sound
It’s true. Financial security is the key to success in life. How can you do this?