How Much Money Do You Need to Have A Good Life?
What makes for a good life? Money is an important factor to be happy and content in life. While some people do believe that money cannot buy happiness, it is not entirely true. But is it the only ingredient for a good life? Of course not.
You might have come across studies that show that an income around $70000 to $75000 can make people happy. But in reality, there is no ceiling about how much money is necessary to make a person happy. However, there are some thresholds. Not having enough money can cause unhappiness and emotional pain, but the highest happiness score for money is around $75000.
How would you feel when you don’t have enough money to buy a house, food, medicine, etc. It is important to have money for a good life. There is a direct relationship between happiness and income. Having money can fulfil your materialistic desires and luxurious comforts. It can give you security which gives you mental satisfaction.
Are you aware of how much money is rolling around the world? Well, it is $36.8 trillion. What could you possibly do with all the money in the world? Will that make you happy? What is the ideal amount of money that can give you a good life? Well, it varies from person to person. It depends on factors like your standard of living, country of residence, family values, and the social and cultural environment that you have grown up in, your aspirations, etc.
For instance, in Turkey, the per capita income is $9042 in 2019. So, if you have a family of four people, you need to earn at least $37K per month to maintain the per capita income graph.
Plan Your Financial Freedom
Since life is uncertain and you will not work forever, to have a comfortable retired life, you should have enough corpus that can sustain your old age. So, if you earn $1000 a month now, you can think of building a corpus that is 500 times your present earning. In this instance, you should ideally target a buildup of $500000 to sustain yourself in your retirement years. Choose a good financial planner who can provide you with proper financial plans for your future.
Making proper financial planning for your future is important but at the same time, it involves much more than just investments. To get started with a good life with enough money, here is what you should do and follow:
Start Thinking Positively About Money
To achieve financial freedom, think positively about having money as it can buy you the necessities and luxuries that you have always wanted. And, this exactly is the first step to planning your finances.
Set Proper Financial Goals
You need to understand and work towards your financial goals. You must have a clear understanding of how much you can achieve and within what period of time. This will help you in setting up your financial goal so that you can work towards achieving it.
Don’t Live Beyond Your Means
If you want to achieve financial freedom, following a budget is essential. Create a monthly home budget and strictly maintain it. This will guarantee that your savings are well on track and your bills are also paid in time. It will also save you from splurging unnecessarily.
Pay Off Your Debts
Plastic money is a way of life these days. However, using credit cards and loans can negatively affect your wealth-building. Do not let your debts accumulate on your credit cards. Pay off your debts every month in full in case you use plastic money. Paying your debts on time will also enhance your credit rating.
Make Payment to You at the Beginning of the Month
It is a well-known saying that if you want to build your wealth, you need to pay yourself first. That is how you can automatically save up a part of your income. Ideally, you should save at least 30% of your take-home income.
Plan Your Investments Well
One of the best ways to grow your money is to invest it in various funds and stock exchanges. Create a financial portfolio and start investing money. You need to let a good financial relationship manager handle your investments so that you can get good returns.
Negotiate for Affordable Services
When you need to order any goods and services, do not hesitate to look around for affordable services. Negotiate to get discounts and offers as that can save you thousands of dollars every year.
Maximize Your Tax Returns
Read up on all the tax laws and their applications to ensure that you get the maximum deductions in your taxes. Keep your knowledge up to date with the latest financial news and adjust your investment portfolio accordingly.
Take Good Care of Yourself
Maintain yourself well health. Invest in good health so that you do not need to spend a lot of money on medicines, doctors, and hospital bills. Many health issues can be prevented with simple lifestyle changes and a healthy diet.
Maintain a Home Balance Sheet
To know what you own and how much you owe to society, you must create and maintain a balance sheet. This will also give you a fair idea about how much is your net worth. Once your balance sheet is created, check if your assets are more than your liabilities. Also, focus on gaining assets that can increase in value over time and has a low cost of maintenance.
Maintain an Emergency Fund
Keeping yourself prepared for financial emergencies is a wise move. Getting caught in the money-making business, people tend to forget about unprecedented emergencies like job loss, medical eventualities, etc. You need to be ready financially for any contingency that falls on you. Save up 3 months of your total expense like an emergency corpus as it can come to your rescue at times of need.
Develop healthy financial habits to start gathering assets for your future. Only then you will be able to chart a path towards financial freedom.