A recent CNBC poll found that 90% of Americans feel anxious about money due to the COVID-19 pandemic. Financially stressed men and women face greater physical and mental health challenges. During the last financial crisis, people who worried about their finances reported greater back and muscle tension, more ulcers and digestive problems, heart arrhythmia, higher blood pressure, insomnia, migraines, severe anxiety, and even depression. To a great extent, the difference between handling money right and wrong determines our happiness, well-being, and quality of life.
We should wonder why schools do not offer classes in financial education? Few become biologists or historians. All of us have to earn, spend, and save. According to the Financial Health Network, people who handle money well have eight habits in common:
1. Spending less than they earn.
2. Manageable debt.
3. Pay bills on time and therefore avoid interest charges, late fees, and reconnection costs.
4. Higher credit score and therefore lower cost of borrowing.
5. Enough savings to meet an unexpected financial emergency.
6. Appropriate insurance, so a sudden setback doesn’t derail them.
7. Long-term goals.
8. Long-term investment goals.
Too many people do not have basic financial education and do not know how to become wealthy. Instead, they’re too busy trying to look and act rich, buying luxury cars, designer clothes, and expensive wines that most wealthy individuals could happily live without and often do. If you want to live a wealthy and healthy life, then give up the extravagances, save regularly, invest wisely, and fight the temptation to spend down your net worth. That’s the most effective route to financial independence and a smart way of life.
Sven Franssen