I’m ashamed to say that the first time I read the phrase Financial Health I actually read it as Financial Wealth. That’s what 30 years of conditioning will do – train you to default to the same nomenclature and assumptions we toss around daily.
In my mind, Financial Health as a target is so superior to Financial Wealth, and here’s why. Financial Wealth has been defined over and over. We have defined categories for millionaires, multi-millionaires, the +$500,000 category, etc. These categories are talked about daily, and have become mainstream goals. Many people aspire to the almighty MILLION.
Shake Up the Status Quo
But, a million dollars in Wisconsin stretches a LOT further than a million dollars in New York City. So how do we know what we really need? Where will we live? What hobbies will we have? Do we want to work to keep our minds active?
Enter the term Financial Health. Health is personal. Health is body, mind and soul. We have the opportunity to better define what we need and want financially to make us happy, instead of aspiring to public standards of success that in reality mean very little. This involves a mind shift. And it’s tough because you need to know yourself instead of falling in lock-step with your surrounding environment.
Industry Rules are Only Benchmarks
The key is to start with your own goals, not those of others. The financial service industry has all sorts of Rules of Thumb like how much you should save per year, or how much you should withdraw per year during retirement. But they're just starting points, like an outline of a story, that needs to be revised and filled in. What makes you happy? What is important in your life? If retirement dreams are too far away to think about, block your life into 5 year periods to define your personal goals – travel, buy your first home, pay for the kids’ college, or start a business – you know the drill.
Define your goals and then attach a cost to them. Will you be absolutely correct? Not likely unless you have an amazing crystal ball. But it's a start, and you can massage the numbers as you think things through and go through life.
The Power of Personal Goals
There is also a great power in having personal goals. Once you’ve defined them, they stick with you. They help you say no to other temptations driven by other people's agendas. You put that next penny into one of your goal buckets instead of into someone else's goal bucket. Goals are part of YOUR personal success story and YOUR priorities in life.
Financial Wealth is the pursuit of money. Financial Health is the pursuit of happiness using money as a tool.
Related Link: Do You Use Money or Does It Use You?
Information shown is for illustrative purposes only and is not intended as investment, legal or tax planning advice. Please consult a financial adviser, attorney or tax specialist for advice specific to your financial situation. Behavioral Cents, LLC and any third parties listed, linked to or otherwise appearing in this message are separate and unaffiliated and are not responsible for each other’s products, services or policies.
BehavioralCents.com is a web site for women to help them understand and change their own money behaviors. Our mission is to better prepare women for financial independence by helping them save more through everyday habits. Thoughts always welcome: email@example.com.