It is only natural that we should want to be doing more than just survive, financially, and that is why so many of us are more than ‘happy’ to sacrifice our personal lives and keeping running on that treadmill as we continue to plug away at work. It is kind of ironic then that when it comes to actually reaching financial success, our priorities are seriously out of whack with what they really ought to be.
A recently conducted survey, to try and gauge just how the average American would define success. The results of the study were a little surprising, or not, as the top three things that were associated with success in that study were:
Enjoying frequent vacations
Purchasing the latest gadgets and electronics
Eating out at lavish restaurants
Now, nobody is saying that we don’t deserve the occasional treats but the rather disturbing thing about this little sample, of the top of the list, is that we seem to be completely sidelining one key element of actual success – financial security. Without financial security, how are any luxuries possible at all? Setting priorities right means assuring financial freedom and there is no way around that.
The majority of Americans do not have financial stability
Dreaming of extravagances and luxuries, and hoping to be able to one day afford these things is one thing. Seeing these things as measures of success, however, only serves to highlight just how disconnected we have become with the realities of financial stability and the difference between being able to pay for something and being able to afford it.
Instead of chasing luxuries, we as individuals should be focusing more of our efforts on acquiring something much more more valuable and long lasting – financial stability and security. It is more important now than ever that we do focus on this because most Americans simply are not there yet, and if their future is to be secured then they need to be. To put into perspective just how dire this situation is, you should consider the fact that a massive 57% of people have less than $1,000 in their bank account at any one time.
That’s not all, as around 39% of all Americans have no savings at all. Add to this the fact that the majority of the population are also behind on retirement savings, and you have a recipe for disaster as at least two generations are walking into a retirement black hole. Having so many people, so close to the breadline is not conducive to a happy and healthy poplulace.
Also, with no savings, it can make things far worse if an unexpected emergency means that a fast injection of cash is needed. In many cases, if that does not happen, the future becomes a little bleaker. Of course, loans are an option if you can afford repayments and you could take a look at these reviews of rise personal loans, but saving is naturally the preferred option.
Consumer debt is on the increase
It isn’t just the fact that the majority of adults do not have the savings to make them financially robust, but they are also not too shy about borrowing either – not there is a lot wrong with it, of the repayments are affordable. Consumer debt is at the highest it has ever been, sitting at over $1 trillion, with the average sized household having a credit card debt of around $16,000.
All of this borrowing leads us to another figure, and a rather sad one at that: well over 16 million households in the United States have what is known as a negative net worth. What does that mean? It means that a household’s debt is worth more than the household’s total income. Yes, student loans are partly responsible, but credit cards and mortgages have a role to play also.
We need to get our priorities straight
If you are among those that place fancy restaurants and vacations above financial stability in the ‘success’ stakes, then here’s a headliner for you: fond memories and souvenirs of these great nights out and vacations in the sun are not going to be worth anything in the event of a financial emergency. What if your car breaks down, you can’t afford the repair and you wind up losing your job because you can’t get into work? Are your holiday snaps going to keep your family fed, the lights on or the bank away from your home? No, of course not.
Those shiny new gadgets won’t help either unless you are planning to sell them in order to try and pay off those mounting debts. That’s no way to live, by anyone’s standards; by far the best way to go is by having an emergency cash fund. By being financially stable and secure.
From the above, you would naturally assume that staying clear of all borrowing is the best way to go but that is not necessarily the solution. Sometimes, unless you have an exceptionally well paid job, borrowing is just something that cannot be avoided – especially when it comes to mortgages, of course. Instead, there is another way, a more practical and realistic way.
By living below our means, consistently, we create a situation where we always have a little extra cash left over when we have finished with our monthly outgoings. Every little helps when it comes to stowing money away for a rainy day, and when you have the equivalent of 3 months paychecks saved, to cover emergency situations, you can start thinking about a ‘little me time’.
Everybody deserves a little treat once in awhile, just be sure you are not potentially shooting yourself in the foot to do so.