Financial Stress Management
To include finances and investing in discussing health and longevity may appear odd. Pundits may object, but they can’t ignore the distress of all the homeowners who faced foreclosure from 2008 to 2012. Many of these people received loans they didn’t deserve and couldn’t pay for once their mortgage payments ballooned. Others saw opportunities and set up mom-and-pop loan companies. Some, perhaps many, are serving prison time for the mortgage fraud they committed. Financial mismanagement and greed often lead to worry, anger, frustration, jealousy, all of which depress the immune system. Yes, many studies link poverty with disease, both in children and adults. Au contraire, LifeNuts live within their means, understand the value of a budget, know how to invest wisely, and plan to achieve financial independence.
Two college professors, Thomas Stanley and William Danko, studied habits of affluent Americans for over 20 years and in 1996 they published their work in The Millionaire Next Door. However, with the devaluation of the greenback, a millionaire in 2012 is not quite the same as one in 1990. That said, a million dollars still represents a nice nest egg and a good financial goal.
After interviewing hundreds of millionaires, the professors found many interesting statistics. Eighty percent of America’s millionaires are self-made – no inheritance. They have common characteristics:
Live below their means
Use their time and money efficiently to accumulate wealth
Most are small business owners
Most paid for their own education
Have the belief that financial independence is more important than displaying wealth
Their adult children support themselves
The book also revealed an insight into happiness, a big part of every LifeNut. These researchers found that financially independent people were happier than those who earned the same amount but who were not financially secure. One major advantage of being financially independent is that you have freedom to: design your daily schedule, work when you want, volunteer for or fund charitable organizations, exercise as needed, spend time with family, and choose hobbies you enjoy. Financial independence rocks!
CNN Money reported that government surveys showed household net worth fell from $125,000 in 2007 to $96,000 in 2009, a 23% drop. While that’s not surprising considering the recession of 2008, what is amazing is that the median net worth of Americans is only $100,000. Translated: there are some above this level and plenty below it. You can find out where you stand by using a net worth calculator at CNN Money’s website. Simply enter your age and your income and see how you compare to people of similar age and income. Caution: you will be blown away by how low these net worth figures are. But actually they may be optimistic since many Americans wallow in debt and have a negative net worth.
The next piece of the financial puzzle is the art of living within one’s means. It’s hard to believe that high wage earners making more than $300,000 a year aren’t wealthy. A physician, a high income earner, practiced for over four decades. Now in his “golden years,” he’s overweight, has multiple health problems, but still must work the night shift in hospital emergency rooms. For over forty years he’s lived a lavish lifestyle but financial difficulties forced him to move out of his palatial mansion into a more modest dwelling. His story, hardly unique, reflects the attitude of many affluent folks who feel that they must not only compete with “the Joneses” but beat them. Fancy houses, second homes in dream locations, luxury cars, designer clothes, and on and on.
Money-savings tips abound in books, DVDs, and websites. Everybody can tell you how to live cheaply. Buy one of these books and follow its advice. But do you have the discipline to follow such advice? Warren Buffet, worth about $44 billion, drives one car, a 2001 Lincoln. Billionaire Sam Walton, the founder of WalMart, was content to drive an old pick-up truck. Sam passed his frugality on to his children. His youngest son, Jim, whose net worth of $17 billion places him 23rd in the world, drives a 2002 Dodge Dakota and Buffet’s daughter, Alice, with a net worth similar to her brother’s, drives a newer car, a 2006 Ford F-150. I guess they’re comfortable in their own skin.
LifeNuts know their net worth. By living within their means, they don’t feel financial pressure. Budget is not a strange term for them. They pay off credit cards each month and have minimal debt. They enjoy their work and excel at it but keep it from upsetting the balance of their lives. Each day they review their action plans for financial independence. LifeNuts manage their finances well and understand that this skill is valuable in managing daily stress.
