Many people make a good income every year, and most of them spend everything and save nothing. The problem with this sort of attitude towards money is that these individuals are not getting wealthier but instead living high and opening themselves up to financial issues.
However, being wealthy might not necessarily mean financial security, and that is because everyone’s financial needs are different. As an individual, it is imperative you understand economic well-being as this is vital in knowing how to achieve it and also enjoy the security it provides.
Elements that show an individual’s financial well-being
• Security; having control over your daily and monthly financial activities to better prepare yourself for future foreseen and unforeseen expenses.
• Financial freedom of choice is critical to enjoying life. There is a joy that comes with being able to afford what you need when it is needed.
• The ability to cater for financial demanding surprises as a result of incidents due to health issues or the likes.
• Being able to meet all of your financial goals on time.
Factors that affect an individual’s financial well-being
A person’s ability to make the right financial decisions which often leads to an excellent financial well-being depends on their psychology and literacy in money management. The information processed with all of these parameters gives light to how healthy an individual is, financially.
Let us consider a scenario:
An individual earning a decent amount of money can get into a bind and decide to take out a short-term loan to cover those immediate expenses. He goes ahead to shop around for a reliable broker; in this case, Loanable. The loan broker renders an excellent service by submitting his or her application to a credible lender who pays out the funds on time. Now, according to the repayment agreement with the lender, the borrower ought to keep up to the end of his bargain and ensure funds are paid back in time with the full knowledge that any default will attract substantial financial consequences.
In this scenario, if the individual is conscious of their financial well-being, he or she will ensure they can repay the loan as well as the interest entirely and on time. This decision will involve personal evaluation of your financial income and thorough understanding of what the situation calls for even before submitting a loan application.
Influencers of financial well-being
The social and economic environment influences how you make your financial decisions because they comprise of your surroundings as well as the community. The attitude you have towards money also highlights your personality and shows more about how you feel, think and react when money is involved. Financial literacy is another primary factor that determines what you know about money and how you handle your funds. Can you identify the options in front of you when you need to deal with money? How do you behave when money is on the line? And, the most important factor to always consider, how satisfied are you with your financial situation? Answer these questions and determine how prepared you are to take charge of your financial well-being.