What is Financial Success?

This is a guest post by Bucksome, a baby boomer trying to make the most of her money while saving for retirement. Read more about her at Buck$ome Boomer’s Journey to Retirement. Subscribe to her RSS feed to follow new posts.

The common goal all people have when managing money is financial success. But what does that mean? The dictionary definition of success is “the favorable or prosperous termination of attempts or endeavors.” Adding the adjective “financial” would mean positive results pertaining to money matters. There are many ways to measure monetary outcomes.

Debt Reduction

When I made the final car payment recently (six months early) it was a great feeling. Not as good as those who get to call up Dave Ramsey on debt-free Fridays but nice nonetheless. Reducing the debt load or eliminating a payment can be success to those with outstanding obligations.

I have short term and long term goals related to debt ranging from paying off consumer debt to burning the mortgage.

Savings

A second way to measure financial progress is savings. There are all kinds of vehicles people use to save ranging from emergency funds to retirement plans. You’ll see many personal websites with various savings tickers.

If you are out a debt, the next financial goal should be a fully-funded emergency fund. Daniel’s written about his goal to fund a $5,000 emergency fund. Saving for retirement will most likely be continual during working years.

Net Worth

If you have no debts and have met savings goals then net worth is the another way to measure financial progress. You’ll see blogs that regularly update the author’s net worth figure. The problem with this method is that it can be volatile.

Just ask anyone who owned real estate in Michigan, Nevada or California the past few years or invested heavily in the stock market. We saw a plummet in net worth which is still recovering.

Financial Success

Meeting your monetary goals however measured is what counts. For us, financial success will be a comfortable retirement with no debt and more than enough savings. I hope to see you there too!

5 Responses to What is Financial Success?

  1. Ken says:

    Having a debt reduction plan and consitent savings are 2 important pieces of every successful person’s plan. Good post.

  2. Bucksome says:

    Ken, I totally agree. Thanks for your comment.

  3. Great post, Bucksome! We did call in to Dave Ramsey’s show almost a year ago to celebrate our freedom from $58,000 in debt. It was awesome! :)

  4. Scott @ Credit Repair Services says:

    Financial success is when you have control over your money situation and to do this you have to set the first goal of controlling your daily finances. The only way to manage your money is to learn how to stretch your paycheck to the next paycheck. Here are some tips on how to do this the old fashioned way:

    Never live beyond what you earn and try to save as much as you can.
    Use the simple ‘bucket of water’ approach; make sure you add more than you spill out to keep the level going upwards; in short, buy less and save more.
    Pay off credit cards every month. If you can’t afford to pay cash, it means you can’t afford the item.
    Shop around and don’t pay top dollar for anything.
    Teach your kids the value of each dollar.
    Have a plan and work at it.

    As you very well know most lottery winners have gone bankrupt in the end. Being financially independent is not an accident or some stroke of luck. It adds up to the principle that financial success requires vision, a goal and a plan, hard work and discipline. Everybody can do it; you just have to apply it.

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