One of the enjoyable parts about having a personal finance blog is the aspect of continued learning and refinement of your own financial philosophies.  Some of it involves learning from other bloggers, reading great content and considering different points of view. A lot of it also comes from just thinking more about the subject in general, and considering it in the context of your own life.

As I’ve been doing this, it’s become clear to me that for people to set themselves up for a strong and healthy financial life, there are key elements that can serve as the foundation for future success.

Here are my top 12 key success factors for personal financial health:

1. Health.  For personal financial health, one needs to be physically and mentally healthy. If health isn’t there, it’s tough to generate cash flow. Think about it – if you have trouble working, or can’t give it 100% on the job, your future earning capacity will be limited. For most people, at least in the wealth-building years, income is generated from work.  It’s imperative to keep your health and keep the odds in your favor. Having more energy to focus, and work more effectively and efficiently, will help you succeed on the job. Bad health can impair your ability to work. Good health can help put you in a position to work and create wealth, while allowing you to keep your focused on your goals.
2. Hustle.  Sitting on the sofa, surfing online, playing games, shopping, etc – those are all fun things to do. But will they make you money? I have seen in my years working that it’s the people that are willing to roll up their sleeves and actually work hard are the ones that will succeed. It’s the willingness to hustle, and move forward in a positive direction that can separate people who advance in their careers or succeed in their businesses, versus those who stay stuck in a spin cycle. Money doesn’t come to people who sit around, you have to want it and be willing to work hard for it.
3. Education.  I’m a big believer in education.  Yes, I did a post on how a college football player should have dropped out school, and taken the big money that was sure to come his way. However, don’t let that distract you from my thoughts that education is critical to one’s success in life.  Personally, I ended up getting an MBA, going full-time, and felt that it was a great investment. Others I know with doctorates in different fields feel the same way about their choices. May not be for everyone, but regardless of whether you pursue an undergrad degree or go further in formal education – embrace education as being a lifelong venture. I’m beginning to think that a huge value of my grad school days was not necessarily the specific content, but rather in learning how to learn. More than that – embracing learning as something that’s fun and a necessary life skill that can be applied in day to day life, with intellectual curiosity.
4. Steady Income.  I wanted to put savings here, as I see that as being so important, but before you can save you must actually make some money first.  Making sure one has a steady income is critical to laying the groundwork for financial prosperity. Keeping aware of career and professional opportunities, networking, and doing great work are all a big part of generating income.  Make sure that you are adding value for your employer, are delivering more than what they’re paying you for, and try to make yourself truly needed. This is a baseline, with income growth the higher goal and accelerated path to wealth.
5. Control over Expenses.  This can also be looked as living within one’s means. But I’m talking about taking it step further, and not letting expenses get out of line as income increases. Sure, to some degree that’s probably natural, but in general it’s important to discern wants from needs.  Controlling those emotional urges to buy and focusing on what’s really needed as a first priority is a big hurdle for some, but is imperative for success in this element. Budgeting, comparison shopping, and frugality can be very helpful tools in this regard.
6. Saving.  Taking income and expenses into account, your net between the two is saving. Which isn’t rocket science obviously, you already knew that. But I think it’s important to have a savings mentality.  This is up for debate, and maybe my own biases are at work here, but I think that a save first, spend later approach works well. Pay yourself first and save for your emergency fund, health needs, and retirement. The latter is huge, and will get here sooner than you realize.  Nobody should want to be in a position where they have to work when old; rather, it would be great to not have pressure to work unless you want to. Big difference in terms of stress on the mind and tired old aching joints and muscles. Take care of yourself and your future, and save diligently.
7. Investing.  Saving money is crucial, but it isn’t enough. Stuffing money under the mattress is saving, and is better than nothing, but it will decline in value over time. Consider the time value of money and opportunity costs when deciding what to do with your savings.  As we should know, rate of return matters, and every percentage point counts.  A proper asset allocation strategy, based on your own life situation, should be employed. Cash, stocks, bonds, real estate, etc – are among the different buckets for your money. By investing, you’re letting your money work for you. Let time and compounding work their magic. But be careful not to turn investing into dignified gambling.
8. Purpose.  Having a sense of purpose is a way to guide your overall intentions and motivations. At the base level, we all have the instinct to survive. But beyond that, and bigger picture, what’s your sense of purpose? Connecting your overall life goals with your efforts to earn money can fuel your effectiveness to reach heights of success.
9. Risk Management.  This doesn’t necessarily mean being risk averse, but it means being aware of risks and avoiding making the big mistakes.  Examples: texting while driving then getting into an accident, not having the right homeowners insurance and then having a flood, having inadequate health insurance, etc. Whether it’s insurance coverage or decisions in day-to-day life, one needs to keep in mind the risks in given situations that could wreak havoc with your life, and manage them as best as possible.
10. Resilience.  Change is inevitable, so we should try to accept it and embrace it. This one is not easy for me, and I’m not naturally attuned to this. However, it is what it is, and I realize that I must get with the program here. So, I’m working hard on that.  We must be able to realize that despite our greatest work and plans, we can’t control everything and other people either.  Stuff happens, it just does – and we have to deal with it. Best to be internally strong with a sound perspective, and survive the tough times while thriving in better times.
11. Relationships.  It’s hard to be a lone ranger.  Whether at work, for your business, or in your personal life, relationships matter. I’m a believer that to the extent you have strong relationships, your health and wealth can only be better. Discussed this in the Role of Money post.
12. Generosity.  This one is fun.  It took me a while to figure this out, but it’s important to put yourself in the shoes of other people. We’re all human, and we all have our own needs. When some people aren’t able to have basic needs met, or are in poor health, it can make all the difference in the world to show them generosity.  Also, even just in day-to-day life, doesn’t it feel good to help others? What’s great is doing it without any ulterior motive. It’s fun, and the reality is that in some way something good will come back to help you. Karma is real. 

I’m actively working on all of these.

Now that you’ve read my longest post to date, I ask you:

Which of these elements do you see as being most important to you? Are there any you would add (or take out)?