There are two types of financial stability. One relates with our personal finances. The other has a broader, wider implication and concerns businesses and countries.
In this article, let’s discuss why financial stability is important in life. I mean personal financial stability.
Let me put it this way.
Have you ever gone broke and didn’t have money to afford a meal? Or fallen short of cash when you needed it the most? I’ve seen people go through these real life scenarios. And trust me, they are a living nightmares.
An old proverb says money can’t buy you happiness. Very true. I’ll agree with this. But money can definitely keep away unhappiness. That’s the main reason why financial stability is important in life.
American author, financial advisor and TV host Susan (Suze) Orman says: “A big part of financial freedom is having your heart and mind free from worry about the what-ifs of life.”
These ‘what-ifs’ that Suze speaks of are various regrets in life that can arise due to financial instability. Therefore, to understand financial stability, let’s first understand what’s financial instability?
Defining Personal Financial Instability
In my humble yet honest opinion, financial instability is not just temporary money shortage. Financial instability means not having proper income for any reason. This translates as no savings, no investments and possibly no source to get money or other resources when absolutely necessary.
Financial instability also means dependence upon others for daily, basic needs and colossal loans and credit due to spending beyond limit. To me, financial instability also means a general unwillingness to rise out of such situation.
There could be lot many definitions, but I prefer to stick with my own.
Now, let’s see why financial stability is important in life.
Importance of Financial Stability in Life
Financial stability doesn’t automatically mean a stress-free life or one without problems. Stress and problems are integral part of our life. Hence, financial stability has several different features.
1. Financial Stability Buys Respect
Whether or not we agree, but the common tendency is to avoid people that are always asking for money or stuff or narrating their problems due to lack of money. We avoid such people. Regardless of how qualified or good natured they are, the tendency is to shun such people.
Now assume you are the person asking for money or things and complaining about hardships. Would you get any respect from people including close relatives? Definitely not. The modern society respects only people that are financially stable. Even a shady character loaded with money gets respect. Hence, financial stability buys respect.
2. Physical & Mental Wellbeing
Another reason why financial stability is important to life is for life itself. Generally, people that are financially unstable suffer from stress and emotional disorders. Over a period of time, these affect the body. A financially unstable person can suffer from aches, pains, frequent fevers and infections. That a strong link between physical and mental health exists is known since ancient times.
Financial stability therefore ensures you don’t fall victim to money related stress and mental disorders. Money affords you healthy food and if necessary, medical care. Even financially strong people experience stress, but for different reasons. And this stress doesn’t necessarily cause mental illness.
3. Financial Stability & Family
Wealthy couples get along very well. That’s what we’re led to believe all along. And that’s sheer rubbish. A survey by a leading economic daily finds, less than 30 percent of couples trust their partners on money matters. Another 26 percent of the sample population or respondents say, their partners are secretive about personal finances. This in turn leads to quarrels in marriage.
Why? Because both partners fear about financial stability. The survey finds that overspending by a partner and neglecting investments is the main reason for this distrust. Without proper savings and investments, there can be no financial stability. And that will remain cause for marital discord.
4. Employment & Job Opportunities
An employer will hire you only when you appear to be financially stable. Because they don’t want your money problems to affect their business. Financially stable people are able to focus better on work and can prove highly productive. They don’t take their money related issues to work.
While poorer people are also hardworking and efficient, their financial woes sometimes stresses them beyond limit. Their money problems also attend office. As a result, their productivity can be inconsistent. This is not a rule as such but such situations can arise.
5. Owning a Permanent Home
Owning a home has great significance in India. For most ordinary Indians, owning a home is a lifetime goal. And many achieve this objective through hard work and proper financial planning. Having own house has immense benefits: it’s an asset whose value increases over the years. And it provides shelter.
Financially unstable people have to live in rented premises, often very cheap and seedy accommodations, unless they have parental or ancestral home. They are dependent upon others for the basic human need- shelter. And they can lose shelter anytime if the house owner evicts them for any reason.
6. Old Age & Retirement
Yet another reason why financial stability is important in life is for old age and retirement. A financially stable person or couple is able to invest in schemes & plans for amass wealth of those golden years when regular income ceases. Hence, they can lead happier life as retirees.
In stark contrast, a financially unstable person would usually be dependent upon some kindly relative to provide food, shelter and clothing and often, medicines during old age. Unless some charity decides to onboard them, financially unstable people face the very gloomy prospect of destitution during old age.
So at the end it implies that everyone gets opportunities to become financially stable. Yet, these people fail because they can’t manage finances, save or invest astutely.