Welcome to another week of financial learning. I believe we are all well and staying safe under these “abnormal” COVID-19 times!
In today’s article, I will be looking at lifestyle and its impact on our personal financial goals and how we can readjust to be financially independent.
Many of us have great aspirations and financial goals that we have been chasing after our first paycheck.
Lauren Schwahn is a personal finance writer at NerdWallet in her article defined financial goals as personal, big-picture objectives you set for how you’ll save and spend money.
Financial goals according to Paul Mckinney, a lecturer with study.com are goals you set that revolve around finances or money.
Financial goals are targets, usually driven by specific future financial needs.
We all need to have goals in life.
Goals provide a positive expectancy of the future, stimulate personal growth and development, and help you to focus on the desired result.
Having a goal also provides the motivation you need to bounce back from life setbacks and disappointment.
Some financial goals you might set as an individual include saving for a comfortable retirement, saving to send your children to college, or managing your finances to enable you to purchase home.
We all have financial goals that we strive to attain.
Some examples of financial goals are paying off debt, saving for retirement, building an emergency fund, buying a home, saving for a vacation, starting a business, feeling financially secure, earning more money from your job to mention a few.
These are goals that give us sleepless nights.
They determine the type of educational course you want to pursue, the kind of relationship to keep as well as the genre of music one may “like and enjoy”.
Followers will attest to the fact that about 80% of my financial lessons are centred on setting and meeting our financial goals.
The core to meeting financial goals in my humble view is from having a personal budget.
A personal budget is a simple analysis of how you want to spend, save, and invest your income.
It gives guidelines on how much you need to spend on specific expense items.
A personal budget is however meaningless if one cannot control and tame the consequences of their lifestyle.
It is against this backdrop that I will be discussing lifestyle and its impact on your financial goals.
At the end of the discussion, I will offer practical ways that can help us to tame our changing lifestyles.
To start with, what exactly do we mean when we say lifestyle?
Austrian psychologist Alfred Adler first introduced the term in his 1929 book, The Case of Miss R as “a person’s basic character as established early in childhood”.
Lifestyle has further been defined as the interests, opinions, behaviors, and behavioural orientations of an individual, group, or culture.
Max Weber saw lifestyles as distinctive elements of status groups strictly connected with a dialectic of recognition of prestige. From his perspective, lifestyle was a product of social position.
A person’s lifestyle has a great impact on the attainment of their personal goals. It has a direct correlation to one’s ability to meet its financial goals as discussed above.
Some of the components of lifestyle are dietary habits, physical exercise, sleeping patterns, personal hygiene, health consciousness, etc.
The above components and orientation become a person’s lifestyle. Lifestyle can be formed from home, immediate society, and association.
The way some people behave in Ghana is different when they travel outside for greener pastures.
It is therefore important that we become conscious of what is capturing my opinions and perception that gives rise to our taste and preferences.
It is important to define your lifestyle & financial goals so that you can develop a plan to achieve them.
The question now is, how can we align our lifestyle with our financial goals!
I will enlist and explain five (5) ways of forming an appropriate lifestyle that encourages the attainment of our financial goals.
Overcome draining habits
Dictionary.com defines a habit as an acquired behavior pattern regularly followed until it has become almost involuntary. Habits are formed over time. Habits formed overtime become addictions.
Positive habits breed wealth and financial freedom. The reverse of this situation is also true.
The first step to take in our quest to align our lifestyles to match our financial goals is to locate negative draining habits in our life.
Some of the common negative draining habits are excessive addiction to alcohol, unplanned outing, expensive vehicles, impulse buying to mention a few.
We need to look through our monthly expenses to locate some of these habits that add little value to our lives. I know overcoming habits formed over the years is difficult. However, if we desire to meet our financial goals, we ought to ditch these avoidable habits.
Replace draining lifestyles with exercising
Quitting a lifestyle without a favorable replacement is always counterproductive. In the first point, I mentioned some of the common negative habits that lead people into abject poverty and financial struggles.
As we work on overcoming these habits, the easiest replacement in my view is to exercise.
Form an attitude of exercising when you have the urge of going back.
If you feel like moving your car around town to chill without a plan, just take your skipping rope for some 200 rounds. Get a soccer kit and join an area boys football gala.
Walking and jogging at home can also be of great help as you seek to fill the vacuum left by negative habits.
These are tried and tested positive habits that not only help you to be financially sound but also improve your health being.
A study published in the Lancet looked at data from 142 nations about the costs that were likely to be incurred by people who suffered from illnesses associated with a sedentary lifestyle, including heart disease, stroke, type 2 diabetes, and others.
According to the study, people who exercise pay $2,500 less in annual health care expenses related to heart disease than someone who did not exercise for 30 minutes five times per week.
This total included savings of $400 on prescription medicines and far fewer emergency room visits and hospitalizations.
This study came to their conclusions by separating people into two groups: those who met the national exercise guidelines, which recommend that people work out moderately for 30 minutes five times a week, and those who did not meet it.
Now before you say that that is a lot, moderate exercise includes several things. Moderate activities include brisk walking, leisurely bicycling, or even raking leaves. so simply taking a stroll with a friend or doing some yard work every week count as activities that can help to put you on the path towards greater personal, and financial, health. (Source: Mellody Hobson, blackamericanweb)
Understand your financial strength
Financial strength is the state of a person’s money abilities. A person’s ability is subject to financial needs and priorities.
A university graduate who starts his first work will have money abilities that may be different from someone who has been working for about ten (10) years. The money abilities of a husband with four (4) kids cannot be the same as a newly wedded groom.
A person’s status in life determines their money abilities and strength. It is therefore crucial that we become conscious of our state in life and not go overboard.
The husband with four kids will perhaps have to focus on his children’s education, a place of comfort for the family as well as looking after his parents.
Decisions that he will be taking financially should be made by assessing his level of income vis a vis all the aforementioned financial obligations.
Such a person should not go about comparing and trying to live like a bachelor.
That is what I mean by understanding your financial strength.
Focus on your own life
Latoya Irby, a credit expert in her article titled “How to Successfully Live Within Your Means: The Most Important Step to Debt Freedom” explained that to “live within your means” means that what you spend each month is less than or at least equal to the amount of money you bring in each month.
This set the tone for this approach. We need to always remember that society does about you! The standards set by society are only in the minds of those who want to believe it.
You are not in any “wealth” show off with anyone.
Resist the pressure to have the same material things as the people around you or, worse, the people on television more especially the reality shows.
Many people have fallen into traps of trying to live like others. Remember I said, your financial goals benefit you and your family first.
Living off fake wealth for a short period will lead to perpetual pain of regret.
Buy the type of dress you can afford. Drive the model of car your current financial status can afford. Organize the wedding that matches your financial goals. Anything more than these will only lead to gnashing of teeth after a while!
Get an accountable partner or “policeman”
It is good to have a personal budget and plan to ditch the bad habit. However, we all need an evaluator in our lives.
The Holy Books says in Ecclesiastes 4:10 that “If either of them falls, one can help the other up. But pity anyone who falls and has no one to help them up.”
To have a companion who constantly guides you in your financial journey is a must now.
The accountable partner can be your spouse or financial advisor. A financial advisor will periodically take a report on your progress i.e how much you have been able to save and invest, what you have been using your income on etc.
Financial advisors check in with their clients regularly to re-evaluate their current situation and future goals and plan accordingly.
We need such people in your life. Share your financial goals with that person and ask for guidance where necessary.
This is one key area of concern for my financial group Patrick TV GH. We offer financial counsel and personal financial planning tips.
Get a financially inclined person in your church or social grouping to assist you.
I strongly believe that if we follow these simple but effective lifestyle tips, our financial goals will no longer be a mirage but reality.
I wish everyone an enjoyable and memorable week!