Most people measure financial success by income, savings and net worth. However, doing well in these areas does not always produce a strong sense of financial security. Although people who are retired may have a nice nest egg and a reasonable income, they are often afraid to spend money if they are worried about it running out too early. Being financially healthy does not mean saving money to build wealth. People must feel positive about their spending and saving habits, and they must be able to correctly determine their financial future.
A recent article from Time’s Money site stated that both emotional well-being and economic stability are essential for attaining true financial health. The advice came from a respected behavioral economist. She was referring to emotional well-being as it relates to financial status and whether a person’s feelings are good or bad regarding finances. People who feel helpless are pessimistic, and those who feel that they are in control of their finances are more likely to be confident and positive. She suggested some mental exercises for people to improve their financial health, and the suggestions were based on the result of a study about the perceptions of 500 adult participants.
Think Specifically From A Long-term Perspective
If people think further into the future, they are more likely to make good decisions about their finances than they would if they use a short-term perspective. In the study, people who thought three or more years ahead had nearly four times as much of a nest egg than those who only thought about the future in increments of months. According to the study, the finding that a long-term focus was better for financial health held true regardless of gender, age, education level or current income. Since the human brain is designed to seek rewards in the form of immediate satisfaction, people are naturally prone to short-term thinking. However, it is possible for anyone to learn how to develop a long-term perspective with the right training and discipline.
The economist recommended that people visualize their desired financial future using different time increments. For example, a person should set goals for every five-year period. Analyzing current spending, saving habits and income can help determine if the goal is realistic. When each increment passes, the person must assess progress and figure out what needs to change before the next goal. The underlying idea is to emphasize that there is a connection between current money decisions and improved financial well-being in the future.
The Financial Road Map for 2018 – This post The Financial Road Map for 2018 appeared first on Daily Reckoning. In last year’s roadmap, I forecast that 2017 would end with gold prices up and the dollar index down, both of which happened. I underestima… https://t.co/8l8zG8DQsn
— Agora Financial (@AgoraFinancial) January 12, 2018
When using the future visualization technique, the economist recommended that people be specific. People must use numbers and percentages instead of simply thinking about saving more for retirement or living an enjoyable life after retiring. For example, a good goal is to boost annual savings by a percentage point each year. Another example is to save a specific percentage of an annual salary over the span of five years. People can also take non-financial steps to achieve their retirement goals. For example, a person who has set specific goals and has an aspiration to spend a month in Italy after retiring may start learning to speak Italian as an added motivation.
Focus On Positives
If people feel that they have control over their finances, they are more likely to make smart decisions on a regular basis. Also, they are more likely to feel good about those decisions after making them. The economist found that people from the study who felt that they were in charge of their own financial future had positive feelings about finances, and those who did not feel that way had poor control over their finances. This was true among people with larger and smaller incomes. Even those who had a modest income but managed it wisely agreed with more positive statements on the survey than those who earned high incomes but had poor control over their finances.
A good way to build a sense of financial confidence is to push away undermining thoughts when they surface. Making a conscious effort to replace those thoughts with positive ones helps. If the negative thoughts emerge when unnecessary spending is taking place, the behavior must change as well. By taking these steps, people can gain financial confidence and feel empowered. Also, the economist emphasized the importance of not dwelling on past mistakes. Celebrating accomplishments is important. When there is a reward to look forward to, people are more likely to continue their positive behavior.
About Agora Financial
Agora, Inc. was founded in 1979, and Agora Financial is part of the company. In 2004, Agora Financial started because of some popular and accurate publications from its parent company. Agora Financial is based in Baltimore. The financial branch reports important investment data, and it is especially known for publishing valuable information before most mainstream sources share it. Agora Financial’s followers knew that the housing, credit and tech disasters would happen beforehand.
Agora Financial publishes videos and webinars with advice. It also hosts conferences. The authors at Agora Financial are known for writing high-quality information that is based on statistics and facts. Also, the authors are professionals who have proven records of achievements. They are known for making accurate and bold predictions. The company refuses offers of money from investors or financial companies and keeps its information 100 percent unbiased.
Follow Agora Financial on Facebook.