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Financial Wellness – Keep Your Money Tree Healthy

Money, Cash, Riches, Wealth, Capital, Finances – name it whatever you may, it is something that all of us want to have with us at all times. Don’t we and, why shouldn’t we? After all this is the common denomination of trade and material transactions in our wonderful world. This very feature of money, makes it dear (pun unintentional) and one has to work hard by putting all our faculties – physical, mental, emotional – to work to earn a respectable amount of money which can help us buy the necessities and luxuries in that order of priority.

That is the reason why we always feel short, even if it is in abundance. How? because it is always measured in:

  • Comparison with what others have; and
  • In relation with our never-ending wants and desires to own material things

However, usually, everybody earns it commensurate to the knowledge, skills and efforts that an individual puts in to earn it.

Manage Your Finances Well

Having money – in abundance or not – is not enough to lead a comfortable life. You need to manage it well, too. Spending in the right amount for the right reasons, investing wisely to earn maximum returns, saving appropriate amounts for rainy days are all required to keep oneself in a good financial health and not feel the lack of finances at the time of need.

So, Financial Wellness is to have an unambiguous understanding of your financial situation and managing it in a way that you are capable and prepared to face any changes in your immediate environment. In a nutshell, it is being comfortable with where you are getting the money from and where you are spending it.


Elements of Financial Wellness

To attain complete financial wellness, you need to look at each of its components, individually.

Earnings: The very first step to start a journey of financial wellness, money earned becomes the base. The amount of money earned is always commensurate to your knowledge and skills in your chosen field of excellence and the amount of hard work that you are ready to put in your work life. You could have multiple streams of income, if you can manage your time and energy to attend to each. The earning streams got to be from legitimate sources. Illegal activities, often give you increased earnings but are always under the scanner of the law enforcing agencies and are busted one day or the other.

Spends: Once you are in the know of the amount of money you earn and the frequency of earning this money, you need to spend this money to buy the necessities and comforts of life. Spending would be mandatory like taxes, duties and other charges which are required to be paid to the State under law and voluntary for purchasing items for personal and dependent’s consumption. You need to know where and how much are you spending.

Savings: Should you spend each and every unit of money that you have earned, you are doing a disservice to yourself. You need to keep some money aside from your earning, in order to utilize it for urgent and sudden needs. This is a must as lac of such savings can be crucial in emergencies.

Investments: Simply keeping aside some money as savings will actually depreciate its value on account of usual market forces like inflation , foreign exchange fluctuations, etc. However, if money is wisely invested in instruments which yield returns and increase your money, that bodes well for your financial wellness.

Keep Your Finances Healthy

To keep your financial wellness in good shape, you need to take some measures and keep checking upon them on a regular basis to see and correct any deviations from the desired path

Spend & Save Wisely: Never spend more than you earn; Make a budget for all your proposed spends; Predetermine a percentage of earning or an absolute amount that you will keep aside for saving; Focus on your necessities; Curtail those expenses which you can do without; Treat luxuries and comforts only to the extent which does not become a drain on your resources.

Invest Wisely: Make a sound investment plan which helps you earn good returns; Do not put all your eggs in one basket – invest in multiple instruments – equity, debt, real estate, insurance, precious metals; Make long-term and short-term investments; Keep a tab on the performance of your chosen instruments – are they yielding good returns on a continuous basis or not; Be flexible in your plan.

Seek Professional Advice: Managing finances is a specialized field, hire a specialist to advise you on your financial status and plans; Find a trustworthy person to do this job. Even if you find one, keep a close watch on his/her performance and do not trust blindly, it is your money and only you have the right on it; Whenever in doubt, always seek advice.

Conclusion

In conclusion, living in the material world, it is imperative to keep your financial status in good health. Emergencies can come up at any time without warning and to address such situations, one must have adequate funds available. Also, bear in mind that keeping your money idle is akin to losing money. Invest your savings where it can earn more money and add to your wealth. If you keep these fundamentals in mind and keep a continuous watch on your finances, you do not need to worry about your financial wellness.

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6 thoughts on “Financial”

  1. Thank you for giving a clear perspective

  2. I don’t know much about investation. I only saves money and invest in the health and education insurances. I think I need to strengthen the fundamental first, investation later. Then I surprised because the land price increased multiple times compare with 5 years ago. If I invested in land, my money value will increase a lot compare with only save it.

    1. Hi Melani, Health and education are great investments. Yes, Real Estate, in developing nations particularly, is a great area for wealth creation. Having said that, no one can invest in every instrument available. Each to his/her own. As long as you are investing and creating wealth for the coming days/emergencies/etc. you are doing good.
      Cheers!

  3. Hi, to add on to what you’ve said, there are two main types of income – active and passive income. We should all aim to create our own system and acquire passive income.

    Also, you’ve mentioned about investing wisely. Could you give some specific examples about wise investments? Thanks!

    1. Hi Jerry! At the outset, sorry for the delayed response. You are absolutely right about passive income.

      As for investment is concerned, there are various options and the right mix for a “wise investment” will vary from person to person. It largely depends upon what goals one wants to achieve from the investment. Are you looking to invest for short term or are you looking at long term. Also depends upon how much are you capable/willing to invest – this will decide the vehicle of investment. It also depends if you are investing just for earning interest money or are you looking to achieve something more, say an accident or life insurance. In a nutshell, one can select the instrument of investment after finalising the goals. Bank deposits, equity and debt instruments, life insurance policies, precious metals, real estate sre some of the options available.
      I shall soon be posting about instruments of insurance on my website. Hope I have been able to answer your query.
      Cheers!

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