About Financial Security

 

What does it mean?

Financial security means having stable and consistent income, it also means the ability to meet basic needs such as food, housing, healthcare, electricity, internet, emergency savings, and a plan for the future (vacation, retirement). This security affords us more life choices; being able to afford standard education, travel, quality healthcare and maintaining resilience against unexpected events like job loss, illness, and other financial emergencies. It is less about being rich and more about predictability, control, and freedom. All of which psychologically impacts our lives. 

Living in a capitalist society means everything costs money, and since a capitalist system prioritizes having capital, cost of living such as affording a house in a clean and organized community requires a certain level of income, even affording food requires money, adequate healthcare requires more money, basic amenities such as water and electricity and as if not unbearable enough the prices go up consistently, these are recurrent payments which require money. Consistently affording these requires a significant level of financial security. Recurrent bills which require recurring income.

The current situation 

A comprehensive review of 40 observational studies covering both high and low income countries found a clear, consistent association, the research indicates greater financial stress equals higher depression, especially in low income groups. The experience of being financially secure often brings about emotional stability, confidence, and mental clarity but when it is lacking can trigger stress, anxiety, and feelings of inadequacy. Knowing your basic needs are met, you are protected from emergencies, and you have control over your financial future. The psychological effects of financial security can be deep and yet grossly overlooked especially in a country with so much mismanagement. For an average individual having multiple sources of income eliminates a lot of unnecessary situations (Richardson, Elliott, & Roberts, 2013; Wagland & Taylor, 2021).

In a capitalist society without the assurance of financial security, you live on the edge; between the devil and the blue sea type situation. You either get to work on creating some form of value which can generate income, or you exist in survivor mode. Several studies highlight how financial insecurity at the household level impacts overall economic structure and longterm growth of an economy. When basic amenities, even affording education becomes luxury, the psychological effects on the population extends to the economic structure, stunting growth. When even education becomes unaffordable by a significant portion of a population, this stunts economic growth overtime, with even worse effects for third world economies. 

What this means for me?

For an individual living in a third world country which is in reality not financially secure and lacking efficient economic management itself; with limited employment options and the effects of inflation enforcing currency devaluation, you not only experience and are used to a scarcity mindset, structural mismanagement, economic fluctuations, extreme dualization, reduced quality of life, also as a larger portion of the population is unaware, that becomes but one item on the long list of your concerns as you experience consequent price increases on food items, payments, cost of living; more money buys less, leaving you with less money yet more expenses and recurring bills. More money, less value. As it takes more money to afford even basic amenities, so get more money? Yes, sort of.  Conveniently, you can always make more money despite the inflation causing a hike on the prices of products, goods and services.

 Money being a medium of exchange is used to buy and sell, a store of value which holds its worth over time, a unit of account. Money is important but seeing as money merely communicates the value of something, more value equals more money, so get value. Not just any kind of value, something of recurrent value, something that brings in recurring income, might be a job or business or both for basic survival. Also conveniently, value just like wealth, can be created or built. To build/create value that produces recurring income and eventually wealth, consider that value exists in categories, for this context consider intrinsinc value and exchange value. (see article on types of value; and how it is created). 

What To Do?

The awareness of ongoing economic activities by the larger portion of a country’s population is very much in the interest of everyone involved; enough to cause a positive shift towards growth. Additionally, the number of upcoming privately owned businesses, indicates the growing awareness of the inevitability of complete capitalist takeover in these parts of the world. Exacting a shift or significant change in capitalist economies requires financial buoyance and the involvement of major economic institutions; research shows that those who control finance like banks, investors, asset managers do not just participate in markets, they shape them. In capitalism money is not just power, it is the mechanism by which power is structured, enforced, and multiplied. This concept is central to research by Nitzan & Bichler (2009) "Capital as Power", where wealth is not just a store of value, but a tool of exclusion, governance, and influence.

For an individual in a third world country with an emerging or stunted economy, creating and acquiring value alongside money is your route to financial security despite price instabilities and currency devaluation; and if you decide, generational wealth. I envision economic development of possibly a larger portion of the economy and economic awareness throughout.

 Conclusion

Existing in a poorly managed economic atmosphere is not a good quality of life, if you decide, it is not permanent. Enforcing general awareness on this issue is a great step towards solving the problem, this awareness should extend throughout the population encompassing the substructure. Pick a skill, if you already have a skill, use it, teach it,  start a business, get more skills and build! lets create incredible value.

Read Further: 

Galor, O., & Zeira, J. (1993). Income Distribution and Macroeconomics. Review of Economic Studies, 60(1), 35–52.

 Igan, D., Jip, G., Kyn, U., & Lian, W. (2023). Financial Stress and Economic Activity: Evidence from a New Worldwide Index (IMF Working Paper No. 217). International Monetary Fund.

Lazzarino, A. I., Hamer, M., Gaze, D., Collinson, P., & Steptoe, A. (2013). The association between financial strain and biological risk: Findings from the English Longitudinal Study of Ageing. Psychoneuroendocrinology, 38(9), 1485–1493. https://doi.org/10.1016/j.psyneuen.2012.12.019

Mian, A., Sufi, A., & Verner, E. (2018). Understanding the Macro-Financial Effects of Household Debt: A Global Perspective (IMF Working Paper No. 76). International Monetary Fund.

Nitzan, J., & Bichler, S. (2009). Capital as power: A study of order and creorder. Routledge. https://doi.org/10.4324/9780203876849

Richardson, T., Elliott, P., & Roberts, R. (2013). The relationship between personal unsecured debt and mental and physical health: A systematic review and meta-analysis. Clinical Psychology Review, 33(8), 1148–1162. https://doi.org/10.1016/j.cpr.2013.08.009.

Sokol, M. (2023). Financial chains and the uneven geographies of financialisation: Crisis, inequality and the power of finance. Cambridge Journal of Regions, Economy and Society, 16(1), 1–18. https://doi.org/10.1093/cjres/rsac038.

Wagland, S. P., & Taylor, S. (2021). Financial capability and mental health: A longitudinal analysis. Social Science & Medicine, 287, 114353. https://doi.org/10.1016/j.socscimed.2021.114353