Well, I think we would all agree that the answer depends on how you define financially healthy. We know that there are a multitude of studies that correlate fiscal health and physical health. There are any number of physical ailments that studies have attempted to associate with a lack of fiscal health, or indirectly from the stress associated with being fiscally unhealthy. There are also any number of studies that associate marital strife and suicide with being fiscally unhealthy. We don’t need some egghead statistician to help us know that if our money ain’t right, it is a problem.
This paragraph is where I ask questions in my best imitation of a gameshow host. (cue the gameshow music) If you are working towards financial health, how do you define such health? Does financial health involve a certain amount of savings or being able to comfortably pay bills? Does your financial health involve the purchase or ownership of something? Will you really feel financially healthy? How will you know if you are financially healthy if you don’t know how that feels? What does financial health feel like?
A very wise person once told me that financially healthy people use money to make more money, while financially unhealthy people use money to pay bills. In my mind, this made a lot of sense, especially when you look at the people that we would characterize as fiscally healthy. It also answers some questions about those that we think should be fiscally healthy but prove to be otherwise. For instance, the long line of athletes and entertainers who appear to be fiscally healthy, but end of broke and doing TV commercials for hearing aids or something. We have all heard people say, “I need to get a job so I can pay my bills.” While this is a very responsible way to manage your fiscal life, will that provide fiscal health for you?
At this point, you are probably rereading the first sentence of the last paragraph, right? You’re noodling around in your head, “use money to make more money.” Are you wondering how to do that? If that is your question, you need to read that phrase differently. Using your money to make more money isn’t as much something that you do as it is a way to think. It also presumes that you have budgeted in a way that yields enough surplus income to deploy in an idea to make more money. At the end of the day, there are essentially only 2 ways to make money. You make money by you working or money working. Create a surplus income and put your money to work.