Creating A Financial Comfort Zone Amid The Current Economy

financial comfort

Most people believe that the more money they have, the better it will be in terms of living a happy and stress-free life. However, more money often brings with it greater expenses, and the desire to enjoy an enhanced lifestyle. So, rather than enhancing the peace of mind or the long-term financial stability of individuals, more money may actually raise the expectations of people with respect to leading a comfortable life.

Thus, having more money may enhance the overall life-comforts of an individual, but it does not necessarily guarantee peace of mind and happiness. Rather, it is likely to enhance the stress and anxiety of individuals in the process. 

This concept can be better understood with the help of a simple example. People living in a joint family in a small house, do not mind sharing rooms with other family members on a daily basis. They even become used to carrying out their routine work amidst all the noise and disturbance without feeling distracted.

Now, if such a family were to shift to more spacious accommodation, with individual rooms for every member, they will adapt to the new lifestyle within no time. It would be extremely difficult for them to return to their previous normal and might actually make them feel anxious about losing their newly acquired comforts.

This brings us to the concept of financial comfort zones. 

Financial Comfort Zone –  Getting Familiar With The Term

Despite all the buzz around financial growth and stability, there is a diverse range of possible financial conditions in which people are known to survive. At one end of the spectrum are those, whose everyday sustenance is based on the fulfilment of the basic needs of food and shelter.

The other end of the spectrum comprises people with unlimited wealth and a desire to earn even more. In between these two ends fall all other individuals, who share similar lifestyles, similar spending and saving habits and similar beliefs about money. These individuals are divided into relatively narrow bands within the spectrum, with each band defining a “financial comfort zone” for the people within this band.

Put in the simplest terms, a financial comfort zone can be defined as economic boundaries within which an individual feels comfortable. Having said that, it is important to understand that the financial comfort zone for each individual may vary based on a variety of factors. These factors mainly include their current financial situation, their existing and future liabilities, and their spending and saving habits. Defining their financial comfort zone is essential for individuals to avoid the burden of an emergency personal loan and also to live a happy and content life.

Establishing The Financial Comfort Zone

The most important aspect of establishing a financial comfort zone is for individuals to first set their maximum and minimum economic boundaries. While the latter limit is relatively easy to set, it is setting the former boundary that proves more difficult.

After all, deciding how much money is enough is just not that simple. Take a scenario, where an individual is earning a handsome income, has enough savings to carry him through for more than a couple of months, and has zero liabilities. One might feel that he can easily establish the upper limit for his financial comfort zone.

Sadly this is not true, as when the individual looks at his peers and friends, who might be earning significantly more or have greater savings, he might feel left out. This might urge them to increase their upper limit to be at par with their peers, even if it means availing regular payday cash loans.

This might turn into a vicious circle due to the consistent financial growth of those other individuals. The best way to avoid such a situation is for individuals to develop a practical approach to accumulating money. Just because a friend or a neighbour has a higher financial comfort zone limit should be no reason for individuals to follow suit. 

As mentioned before, the financial comfort zone for each individual varies as per his/her needs. The most important thing to understand in this context is that needs can be controlled and this fact can play an important role in defining appropriate economic boundaries.

With proper discipline and patience, people can easily cut down their needs to include only the most essential things, essential for living a basically comfortable and content life.