Is Being Rich a Status or a Feeling?

Feeling rich isn't always related to how much money you have. As a financial advisor for more than 20 years, I've met multimillionaires who are dissatisfied with what they have, and I've encountered people living paycheck-to-paycheck who are extremely satisfied with their financial situation. What creates this difference in outlook?

Wealth can be a state of mind

Doing the following three things can make you feel richer than your asset sheet says you are:

1. Put some money aside regularly into an emergency fund

Make sure to put some money into an emergency fund every time you receive your paycheck. Even if it's not a lot of money each time, you will feel better knowing that you have an emergency fund that's available in times of need.

2. Give charity

When you give money to a worthy cause, you are sharing the gift of your livelihood with other people who are in a worse fiscal situation. Helping others at their time of need will surely make you feel rich.

3. Avoid debt

Apart from the financial cost of heavy debt, the worry of how to pay it off makes you feel powerless. Pay off your debts and you will be rid of that burden. Even if your income is fairly low, if you don't have debts you will feel far richer.

There is no one magic formula to spending and saving that can be applied to everyone because each person has his own unique situation. Therefore, rather than following “rules of thumb” blindly or spending recklessly, create a financial plan that's customized for you.

The first step towards drawing up a good financial plan is assessing the resources that you have. You can do this by downloading our free worksheet for creating a financial snapshot of your assets here.

Remember – you don't need to be a millionaire to feel rich, and money doesn't always buy you happiness. But if you take these three steps, you may end up feeling wealthier in spirit and deed.