Self-knowledge is an essential ingredient to understanding and improving your relationship with money. This includes taking a more holistic approach to evaluating your financial life.
Therefore, in addition to tracking your net worth, it is important to assess your progress in these five key components of "true wealth": Recognition, Resilience, Resourcefulness, Relationships, and Wisdom.
Recognition comprises your awareness of both the fact and feeling aspects of your money matters. This fundamental component of your true wealth requires introspection and honesty regarding the elements that have shaped your current relationship with money. Recognition is a powerful catalyst for personal growth in your financial life.
Resilience gives you the ability to successfully navigate life transitions and to bounce back from financial setbacks. From a practical perspective, financial resilience involves laying a foundation of economic protection. From an emotional perspective, financial resilience involves increasing your confidence in your ability to prepare for and deal with financial challenges.
Resourcefulness is the desire and ability to maximize your resources. In other words, it is the process of making the most of what you have. Resourcefulness also involves looking for effective and creative ways to reach your goals. A resourceful individual recognizes that "money" in and of itself is not a goal, but rather a tool to achieving goals and increasing life satisfaction.
Relationships include connections with others that affect your financial well-being and life satisfaction. This fundamental component of your true wealth includes the kind of communication you have, on both a practical and emotional level, with your family, friends, colleagues, and financial service providers. The complex dynamics of each relationship can have a profound influence on how you feel about your money and the big and little financial decisions you make on a daily basis.
Wisdom involves linking your financial goals to your values and priorities in all areas of life. This key to your financial well-being represents your "money maturity" and a growing understanding of both the fact and feeling aspects of your financial life.
When you earn, spend, share, and invest your money in ways that are "smart" and also compatible with your underlying values and priorities, you will experience a sense of success, satisfaction, and purpose in your financial life.
Reprinted by permission of Money Quotient, NP