By Ryan Guida, CashMoneyLife
We all have financial goals in our lives. Mine have changed through the years, but I can still remember the big ones. Paying off all consumer debt. Getting married. Buying a home. Becoming a father. These were all huge financial milestones. But perhaps the biggest financial leap of faith I ever took was becoming a full-time small business owner.
My wife and I had recently become first-time parents. We decided my wife would become a stay at home mom and I would continue to work my day job while still running my small business in the evening hours. It was the perfect plan. Until it didn’t work.
Our newborn daughter had colic. She didn’t sleep. My wife didn’t sleep. And as much as I wanted to, I didn’t sleep. At least not enough to continue functioning at both my day job and in my small business.
Something had to change. So after careful consideration, prayer, and a thorough review of our budget, I gave my two weeks notice and joined the ranks of the self-employed. That was 6 and a half years ago. It has been one of the most challenging and rewarding periods of my life.
But it couldn’t have happened unless we were financially healthy.
Financial Health — What it Means to Me, and Why Everyone Should Seek It
My favorite definition of the word health comes from the World Health Organization, which defines health as “a state of complete physical, mental and social well-being and not merely the absence of disease or infirmity.”
This definition works for our personal health, but can just as easily be applied to our financial health. To me, financial health is meeting all these needs:
- Physical needs. Do I have the basics covered — food, shelter, clothing, transportation? A little buffer for emergencies? Yes, and yes. My physical needs are met.
- Mental needs. I’m not stressed about money. I don’t worry about making rent, where my next meal will come from, and I’m not burdened by debt. I am grateful for this. We also have enough to save for fun things, such as a family vacation, the occasional meal out, or other fun activities.
- Social well-being. A lack of money doesn’t prevent me from spending time with friends or family. And I don’t play the “keeping up with the Jones’s” game. Money doesn’t define me.
The WHO definition of health is good, but I would add one thing for financial health: Financial health includes the freedom to pursue opportunity.
I wouldn’t have the freedom to live and work where I choose if my wife and I didn’t take that leap of faith over six years ago. And we couldn’t have done that if we didn’t have our financial house in order. By living within our means and diligently saving, we were able LEAP. And sometimes it feels like we haven’t landed. Being self-employed is a blessing, and I encourage everyone to pursue opportunity every chance they get. And it all starts with being financially healthy.
Here are the simple financial rules I live by:
- Earn more than I spend.
- Save for big expenses.
- Invest the rest in low cost index funds.
- Automate as much of this as possible.
- Repeat.
Follow these rules, and you will have financial health. And you will have the freedom to chase opportunity and possibly change your life.
What does financial health mean to you?
This blog post originally appeared June 29, 2016 on CashMoneyLife. It was one of 10 winners of a national #FinHealthMatters Day essay contest created by Financial Health Network. MetLife Foundation is a major sponsor of Financial Health Networks ongoing consumer financial health work. To learn more about FinHealthMatters from Financial Health Network, sign up here.