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Building A Financially Stable Life
Financial stability is so important. Having your finances in order can be a huge stress relief. It lets you focus on the important things in life. Even small financial changes can have a big psychological impact.
Unfortunately, financial stress is the number one stress factor in our lives. This is especially true for young people.
For young people, personal finances cause more stress than family, health, or work. We obsess over our finances weekly, daily, over even hourly.
There are many aspects to consider when building a financially stable life. Things like budgets, emergency funds, maintenance funds, saving rates and debt reduction.
It also takes motivation. You need to have a goal in mind. This provides you with the motivation to make changes to your daily routine.
Building a financially stable life is possible. Any financial situation can be improved. There are just a few things to consider…
Appreciate More, Spend Less
It’s hard to truly appreciate things until they’re gone. It could be something as simple as the electricity going out. When the power goes out you start to truly appreciate those little electrons that usually flow around your house unseen. At the flip of a switch you could create light but now it’s gone. Food is getting warm in the fridge. Your cell phone is running out of power. At that moment, you really appreciate electricity.
Or maybe it’s the internet. Something few of us could live without. Information at your fingertips. Updates from friends and family only a click away. At the press of a button you have thousands of movies and TV shows available for streaming. When the internet goes down you really appreciate its value.
How does this relate to personal finance? Isn’t it obvious? Everything we spend money on has value to us. Some things have more value than others. Unless you’re super rich you need to make decisions when you budget. What stays and what gets cut? The easiest things to cut are those things you value least.
Finding Financial Balance
Managing your finances is all about finding balance. There are obvious things you need to balance, like everyone needs to balance their budget, but finding financial balance goes way beyond that. You need to balance risk vs reward, you need to balance debt vs income, you also need to balance between spending and saving.
Finding the right balance between spending and saving can be tough. The national household savings rate was just 4.3% in the last quarter. That’s quite a bit below the recommended 20% savings rate. Of course, the right balance for you will depend on your unique situation and your unique goals.
It can be very easy to tip to one side or the other. Tipping too far to one side can lead to trouble.
Spending too much is fun today but it jeopardizes your future.
Saving too much might be great for your future but it can make you miserable today.
Finding the right financial balance will ensure that you’re happy today AND in the future. Finding the right spending vs saving balance can be difficult, but there are ways to find the right balance.