Financial Health

Financial Health. Psychology Fanatic article header image

Traditionally, finances are conveniently separated from well-being guidance. This is a travesty. Financial health impacts our quality of life in many important ways. Riches can’t buy happiness; but insufficient means to cover needs creates anxiety and too much anxiety destroys happiness. So, while we are delving into the psyche to discover happiness, we should also make a side journey into our wallets. By putting finances in order, we free ourselves of the pains of lack, and can better concentrate on living that happy life we desire.

Money and Happiness

Several studies have shown a correlation between money and happiness with a diminishing return. This means that up to a point happiness and wealth grow together but eventually riches reach saturation where riches have less and less impact on happiness.

​I suppose as riches accumulate they extract a heavier and heavier demand on our time, interfering with relationships and other factors that impact happiness. We can have sufficient money and be sad or poor and be happy. The studies simply state that increased money, up to a point, have a positive impact on our over-all well-being.

Character Traits and Financial Stability

While financial struggles can stand apart from other aspects of our lives, often the same character traits that disrupt financial stability rudely butt their way into other sacred areas of or lives, bothering relationships, employment, while inviting addictions into our already fragile life.

“Riches can’t buy happiness; but insufficient means to cover needs creates anxiety and too much anxiety destroys happiness. “

~T. Franklin Murphy

Long introduction made short, finances aren’t everything, but they are something. Struggling to pay rent, growing levels of debt, and an uninviting credit rating, play out in our psychic lives through anxiety—and anxiety conflicts with happiness. Like other irritants, we can adapt with unhealthy responses, ignoring the root of the problem—our financial statements are ugly.

Distressed finances need purposeful attention like any other detrimental features of our lives. We must recognize the problem and respond effectively. Generally, acknowledging that our finances are chaotic and silently committing to do better will not cure the ills. Even the best intentions fail when shroud in vagueness. There is too much room to fudge resolves, lack of measurement, and denial of the underlying causes.

My financial health changed with a simple excel document to measure the monthly and annual pulse of my accounts. The ignorant evaluation (mentally) from reading monthly statements and guessing upcoming expenses is always subject to misleading optimism, seeing improvement where there is none. Like a gambler sitting at the table, calculating a near miss, as something positive, enforcing further bets on a losing game.

​Accounting isn’t a science of guessing. Accounting is governed by generally accepted principles that allows for beneficial comparisons.  In our personal finances, this means comparing January balances to February balances, collecting helpful information, seeing past natural fluctuations, and making sound decisions based on actual spending patterns impacting our financial stability.

The Weight of Debt

America is drowning in dept. Consumer debt has reached all time highs. Something must give. Eventually, the rising weight of burdensome interest will catch up to the weary spender. Credit cards, Amazon, and smartphones have simplified spending. We can buy ourselves into oblivion without ever leaving the sofa. The ease of spending must be countered with increased self-discipline, which, unfortunately, many of us have forgotten to bring to the party.

Credit is the nasty philosophy of enjoy now pay later. The same concept that can break relationships commitments, eat unhealthy, or postpone professional development. We buy because we want without thought of the impact. The momentary joy of something new blunts the impeding doom slowly creeping into our lives.

Basics of Financial Stability

​A few disciplined years and expendable income quickly expands freed from the weight once given to pay ungodly interest rates. We can then make educated choices on using our surpluses to increase savings, find profitable investments, and modestly upgrade our lifestyle.

We achieved freedom, escaping the binding anxiety of insufficient funds, and can enjoy the happiness reward of financial health.

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