More money is not necessarily an accurate measurement of financial success. Money is just one part of financial success. The more critical aspect is what we do with the money we earn.
Real financial success is attained when the accumulation of wealth or achieved income is enough to support your ideal life for the rest of your life. Some might define it simply as financial independence or financial freedom[1].
Financial success is a combination of wealth and wisdom
Financial success cannot be determined by visible wealth, such as a big house or a fancy sports car. Nor can it be defined by arbitrary numbers or percentages. It’s not about keeping up with the Joneses. It’s about optimising your finances in alignment with your values.
Someone earning $1 million per year is not financially successful if they also manage to spend over $1 million each year. What happens to the $1 million income determines financial success. Is it mindlessly spent or purposefully invested? Is the income used to enable you to live your ideal life?
Financial success empowers you to live your ideal life. But money alone doesn’t make it happen. It’s the wisdom you apply to the money you earn. Too much money can even detract from living your best life if you do stupid things with it.
Financial success requires more than just having a lot of money… it is about building financial security AND freedom:
- Financial security means having enough money to cover your basic needs and some comforts.
- Financial freedom is the ability to make choices based on living your ideal life rather than being constrained by financial limitations.
The path to financial success requires a good understanding of financial literacy, clearly defined personal values, a long-term perspective, and the ability to establish, and stick to, a strategic plan.
Financial Literacy
Understanding how money works, including managing, investing, and saving it, is critical to achieving financial success.
This knowledge will help you make informed decisions about your finances and enable you to take control of your financial future.
Personal Values
Successful people achieving financial freedom often clearly understand what is most important to them. They know their values and use them as a guide when making financial decisions.
This approach helps you focus on their priorities and avoid impulsive purchases that jeopardise your long-term financial security.
Long Term Perspective
True financial success and wealth isn’t built on the back of “get rich quick” philosophies. There is no “magic pill” for financial success; it’s a lifestyle, not an overnight fix.
Building wealth takes time. It requires focus, discipline, patience, and long-term commitment.
Strategic Planning
Achieving financial success requires strategies such as creating a budget, investing wisely, and building passive income streams.
Again, these are all strategies that require patience and commitment. It is essential to stay focused on your goals and take the necessary steps to achieve them.
While the above factors each play a critical role in your journey to financial success, the secret ingredient lies in defining what financial success and living your ideal life mean to you personally, as someone else’s definition of financial success may look very different from yours.
Happiness is not a straight line. As popularised by in the book, The Happiness Curve: Why Life Gets Better After 50, by Jonathan Rauch, happiness is more of a curved smile. An ideal life may very well follow this trajectory. The sooner one acknowledges the things (family, relationships, community, travel, good health, purpose, hard work, simple pleasures, etc.) that bring happiness and fulfillment, the sooner life will naturally evolve to prioritise those things and eliminate distractions, accelerating the upswing[2].
Some ways to achieve this are to:
- Assess your lifestyle – Consider what your ideal lifestyle looks like; where are you, who are you with, what are you doing?
- Define your values – Figure out what is important to you and define your values based on this. Your values can then provide a framework to make decisions based on what is important.
- Set Financial Goals – Be clear on what you want to achieve in life. You can then define your vision further by setting specific financial goals.
If you are ready to start your journey toward achieving financial success, a financial adviser can help. They will assess your financial situation, help you identify your goals, and create a long-term financial plan tailored to your individual needs. With their guidance and support, you can take control of your financial future and achieve the financial security AND freedom you deserve.
[1] https://www.retirebeforedad.com/definition-financial-success/
[2] https://www.retirebeforedad.com/definition-financial-success/
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