Financial fitness is when you have surplus money when you are not in debt and also you have enough of savings to sustain you in times of emergency. Being Wealthy on the other hand is having a large amount of money or excess money or valuable assets without the availability of adequate savings. Wealthy people without being financially fit can have some assets or money, but those assets aren’t “liquid”.
The Key Difference
Let us try to understand the difference between being wealthy and being financially fit with an example.
Suppose, you have a luxurious flat and a Sedan and you are having all the necessities that you need in your daily life. You eat outside at expensive places and you plan vacations every month. All of these can be attributed to the traits of a wealthy person.
On the contrary, you might not have the most expensive house or car. Maybe you don’t go to Europe for your vacations, but if you have proper investments and you are out of debt or maybe in a controlled debt, and you have necessary savings for the emergency, then you can be called as a financially fit person.
This is where the line draws. A wealthy person may run out of resources if the income vanishes but a financially fit person will have the necessary plans to counteract the job cut-off scenario.
What does it mean to be financially fit?
Being a financially fit person means you are out of debt, you have systematic investment, you have life insurance and medical insurance to help you out in emergencies and also you have enough of savings for the bad days.
If you are financially fit, it means that you don’t have to worry about being overwhelmed by bills and also in case a threat comes up, a financially fit person is ready to face it.
Let’s say that you meet up with an accident and you are admitted to the hospital. Now, for the time being, you are out of work, that means there is no possible income source for you. You never know how long you’ll be in that condition and this means the finances will be hard to handle in a while. A wealthy person will have to exhaust his/her resources for the treatment and there might be chances that he/she runs out of cash. A financially fit person, on the other hand, will have appropriate systems in place. This can be general insurance or a life insurance that was properly managed. The financially fit person will be able to handle the crisis and therefore avert himself/oneself from a major financial breakdown.
How to be financially fit?
To be financially fit, you need to start investing and utilizing your savings efficiently. Know about the various general insurance products and schemes in which you can invest. These will help you in times of emergency. The market is flooded with schemes as there are many insurance companies in India. Make sure you consult a trusted person and get to know the best investment options and probably about thebest insurance company in India.