Remember: Financial success is not about the Stuff you gather
If I ask you “What are the the changes you would make in your life if more money starts reaching you – that is you have a better job paying higher salary than existing one?”
Most probably the answer would be
- Buying a better smartphone
- Upgrading the laptop
- Buying a bigger house
- Taking a nice vacation abroad
- Upgrading your car
The list would be infinite. Isn’t it?
Yes, that’s true. But I need to buy these things as these things will add comfort to my life. Since I am earning more, don’t you think I deserve these? Others should also know that I am doing well in life.
“Too many people spend money they haven’t earned, to buy things they don’t want, to impress people they don’t like.” — Will Rogers
It’s easy to spend money to buy stuff, to buy things that make us look cool and gives impression that we are well off financially. But the truth is most financially well off people do not need to show that they are well off. They know very well that their financial success is not indicated by the money they earn and spend it in buying the stuff every year. It is indicated by how much they earn and keep for growing it year on year.
Yes, true but I need to buy a decent SUV as I had a dream of buying it when I was in college. True that I can not afford it outright but I am eligible to buy it on monthly payments.
You are looking to buy a SUV which is not meant for city driving conditions and costs you a bomb. Any sports utility vehicle is expensive & comes with a huge list of expenses with it. Expensive car means more monthly payment, more maintenance cost, more insurance premium and expensive spare parts. Moreover, you will not be able to use majority of its features when you use it as a daily commuter vehicle. Instead of buying you can always rent it for a spin or two when you feel so. Read here why your car is not you ASSET
Hmm sounds good. But if I am not having a big house, an expensive car and latest gadgets, how will others know that I am doing well. Also I need to justify to myself too
Right but this is your life and why you have to buy stuff to show others that you are doing well in your life? You can not spend your hard earned money simply to please others. Remember, money is merely a tool to attain happiness, money itself is not happiness.
True, I agree but how to measure financial success? How anyone can come to know that he is heading towards financial success?
A simple and quite accurate measure of financial success is NET-WORTH. If you have a reasonably high positive net worth and it’s growing at a decent pace then it means you are doing well financially.
“net worth is really everything you own of significance (your assets) minus what you owe in debts (your liabilities)”.
- Do you have a house which is mortgage/ loan free
- Do you have a sizable emergency fund
- Do you have a vehicle which is paid cash
- Do you have no consumer finance
- Do you are covered adequately on insurance front
- Do you have an investment account and you are regularly investing
- Do you have a positive net worth and a retirement fund which will give you regular income post retirement
If you have “YES” as answer for most of the above points, yes you are doing well financially. Do remember, age also plays important factor in the points listed above. But even if you are young, a positive net worth indicates that you are on the right rack and doing well financially.
Remember – you are accountable to yourself. Do a tight scrutiny periodically on your finances, on your investments, on your budget. If you honestly (you can not lie to yourself , right?) find that your net worth is growing, you are heading in the right direction.
You have some valid points. But all seems too much complicated. How can a beginner like me can proceed and implement this to my finances?
It is not complicated. You need to move step by step.
- Start with the basic budget. Here is the link on how to make basic budget.
- Start investments – and do invest regularly. Do not wait to invest Here is the link on why?
- Have adequate insurance cover. This will help you
- Plug in money leaks. This article will help you on how to
- Take steps to increase your net worth. Here is how you can do it
- Make proper retirement plan. This article will help you
- Money alone doesn’t bring happiness but it sure can help
- You only have to take care of your money and ensure that it grows – none else will do it unless they have their own personal interest attached to it
- Money can not solve all your problems. Yes but it can help you sail through most of your problems
Happy investing !!!