The idea that earning more money guarantees financial security is a widespread but mistaken belief. Photo: Drobotdean-Freepik.
Inflation, rising housing costs, the increasing cost of living, economic uncertainty, and the fear of not having enough money have become major sources of stress and anxiety for many people. An investment expert explains how to “calm” our finances and, in doing so, restore our psychological well-being.
What does it truly mean to have financial peace of mind in a world full of uncertainty? Does financial security depend on earning more money or on learning to manage it better? Is it possible to feel financially secure even in times of volatility? What can we do to live without the worry of “not making ends meet”…?
In a context marked by the impossibility of knowing where the world economy is headed or of having a predictable horizon for our personal economic situation, financial tranquility has become one of the greatest aspirations of citizens, and the difficulty in achieving it, one of the greatest sources of stress and anxiety.
To “calm down” financially and make the right decisions in that direction, we need to build a healthy relationship with money, adopt habits that progressively improve our situation, and eradicate from our mindset a series of errors and myths about wealth that in practice prevent us from moving forward, explains investor Juan Vidal.
One of the most common misconceptions that leads us astray from the path to prosperity, and which we must discard, is the assumption that our financial security depends exclusively on earning more, this specialist told EFE in an interview.
Vidal (www.juanvidal.es) began investing in the stock market at the age of 22, without financial studies or a clear plan and after learning from the mistake of “disinvesting from what works (a long-term portfolio) and betting on what shines (the buying and selling of financial assets in the short term),” and then training in the United States, he created the Aristocrat investment method, which he applies and teaches today.
- Clear objectives.
“Financial peace of mind isn’t a number in a bank account. It’s a state of mind that you achieve when your money decisions stop being guided by fear and intuition and start being guided by knowledge and concrete actions,” Vidal explains.
This specialist defines it as “having clarity: knowing what you want to achieve, how much you have, how much you want, and when you want it.”
“This clarity is the first step. By achieving it, you will already be much further ahead than most,” he says.
For Vidal, the second step towards financial tranquility consists of “acquiring the necessary knowledge to see what you can really achieve, and then taking action.”
“External uncertainty doesn’t disappear, that’s impossible. Markets go up and down, inflation tightens, governments change,” he emphasizes.
“But when you have clear goals and understand how money works, external uncertainty ceases to matter, and you begin to learn how to navigate it, and also see how your money grows. Peace of mind comes when you’re at the helm,” he emphasizes.
- Reasoned management.
Many people associate economic security with having a high income, but Vidal disagrees with that idea, and points out that “it’s not like that at all.”
The belief that to be more at ease one must earn more “is the most widespread myth and yet the most erroneous that exists,” he says.
Vidal has seen “people earning 10,000 euros (about 11,550 US dollars) a month, but completely drowning financially, while others slept peacefully with a salary of 1,800 euros (about 2,100 US dollars),” he explains to EFE.
“The key is not in the amount of money you earn, but in what you do with it,” he emphasizes.
“Earning more without financial education only leads to spending more, and even more debt. The problem is not income, but management and mindset,” he emphasizes.
“Income is often uncertain and not permanent. It changes. But your mindset must remain strong. Before seeking more money, you must learn how to manage it,” he advises.
- Common mistakes.
On the other hand, Vidal describes three mistakes that he constantly observes in those who aspire to achieve financial stability, and which end up sabotaging that aspiration.
“The first mistake is not having an emergency fund, as a result of which many people live on the edge (spending everything they earn) every month and any unforeseen event becomes a crisis,” according to this specialist.
According to Vidal, “the second mistake is confusing consumption with investment,” giving as an example that “buying a new car is not investing, but spending.”
“We need to understand that difference before talking about the Stock Exchange or any investment or financial initiative,” he emphasizes.
The third mistake that is frequently made, and perhaps the most profound, according to this investor, is “completely delegating financial decisions to other people without understanding anything about this subject.”
“Trusting your future to a bank or someone you don’t know, without having your own financial judgment, is the perfect recipe for unpleasant surprises,” he warns.
- Financial education.
Vidal emphasizes that having a good financial education has a radical and almost immediate influence on reducing stress and anxiety related to money.
“Financial anxiety almost always stems from a lack of knowledge, not from the uncertainty of not knowing what will happen in the world,” he adds.
“When you start to learn about economics and finance, to understand how inflation works, what an asset is, how to protect your savings and how to make them grow, that mental fog and anxiety dissipates,” he argues.
When you have an education, “the problems don’t disappear, but you stop adopting the role of victim of circumstances and you do something about what happens, because you have resources to deal with it,” he explains.
In his experience with thousands of students who have taken his investment courses, Vidal has observed that emotional change occurs even before financial change, he points out. “First you gain confidence, then the results come,” he emphasizes.
- Profitable habits.
Regarding those habits or decisions that help build long-term financial security, Vidal points out that “the first thing is to ‘clean up bad debt’,” eliminating debt from consumer spending and avoiding it as much as possible.
The second habit that Vidal recommends adopting is “saving before spending, and not the other way around.”
His third recommendation is to “train with the right people, being selective since there are many training courses and many of them have a lot of ‘fine print’ (hidden conditions or clauses).”
In that sense, he warns that, in the educational field, he often encounters scams, which many people fall for due to lack of knowledge.
Finally, Vidal advises starting to invest, even if it’s just a little, as soon as possible, since “in the markets, time is the most valuable asset there is, and most people waste it waiting for the perfect moment, which never comes.”
“Financial peace of mind is built with small, consistent habits, not with strokes of luck,” concludes this investment specialist.
Author: Ricardo Segura. EFE – Reports
