How do you feel about the number 5? Unless “5” is your favorite number then the number should be meaningless to you if it is not compared to something else. Allow me to explain.
I am somewhat of a gadget geek, whether it’s for heavy machinery or facial care. Recently, I bought a weighing scale that measures not only weight but also body mass index, body fat, visceral fat, resting metabolism, skeletal muscle and body age using the bioelectrical impedance method (told you I was a geek).
Body mass index, which is “weight (lbs.) ÷ height (inches) ÷ height (inches) × 703” is supposedly a reliable indicator of body fatness for people. This weighing scale also measures both essential and stored fat. Visceral fat (as opposed to subcutaneous fat or fat found underneath the skin) is the fat found in the abdomen and in areas surrounding the vital organs.
Resting metabolism measures the minimum level of caloric intake needed to sustain a particular body’s everyday functions. The weighing scale also measures percentage skeletal muscle, which grows around the skeleton and comes in pairs – one to move the bone one way and the other to move it back. More muscle means more calories needed.
Finally, the weighing scale determines the equivalent biological age of the body.
The weighing scale merely comes out with numbers. In and of themselves, the numbers mean nothing. However, when compared to averages per age bracket and gender, the weighing scale gives a pretty good picture of the current health of its user. For example, a biological age of 55 for your body would elicit no reaction unless you compare it to your actual age. You would be alarmed, however if your actual age is only 45. The same goes with the other tests.
But this is just the starting point. You can then go on a diet and/or do exercises and track performance over a certain period to bring back your results to within the normal averages.
The same is true with personal finance. Income and savings may be high or low. But it is the size of those income and savings taken in the context of your lifestyle that determines whether you are financially healthy or not.
I have come across a janitor who was able to send his children to college, own a house, buy a car and manage a small business with his wife, all starting with his meager income as a janitor.
I have had another client explain to me why Ilocanos are very frugal. Because they harvest and earn money only twice a year, they trained themselves to save up for the lean times. In fact, this Ilocano client told me that he feels more financially confident during the times in between harvests.
On the other hand, I have come across many highly paid employees of large companies in Metro Manila who are hardly making ends meet. Their supposedly high, steady and more frequent earnings has made them complacent and to a certain extent, over-confident. Consequently, many of them live an income level or two higher than their own, a disastrous financial situation to be in.
The number denoting your income, though important, is just a starting point. It is in the amount of expenses you incur and how you grow what is left that will determine how financially free you will be.
It has probably been said too many times already but the old adage of “it’s not what you got but how you use it” definitely applies to personal finance.
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