Personal financial wellness

Financial wellness is a subcategory of overall well-being that individuals frequently neglect. While well-being is ultimately a subjective evaluation of one’s life, financial wellness relies more on objective measurements. The definition of financial wellness is “having sufficient income and assets, quality health and personal care, the right mix of products and services, as well as legal readiness and professional guidance,” (Breen 1991). اضافة اعلان

Personal financial wellness

Personal financial wellness is a multidimensional concept that focuses on the individual rather than a group or community. These aspects include financial satisfaction, an objective look at one’s financial situation, financial attitudes and behaviors, and more.

Financial satisfaction is the subjective interpretation of one’s financial situation, and although positive financial satisfaction may not indicate good financial wellness, it is still a key component. For example, someone who has large amounts of debt but still feels as though they are satisfied with their financial situation. As a result, an objective measurement of an individual’s financial situation is necessary for determining overall financial wellness.

An individual’s attitude and behavior have a significant impact on their personal financial well-being. To achieve positive personal financial wellness, an individual needs to be satisfied with their situation. Therefore, their objective status needs to be desirable, and they must practice having a positive financial attitude and develop healthy financial behaviors.

While various other aspects play a role in each concept of financial well-being, those discussed above are the foundation of personal financial well-being.

Financial situation in Jordan

The current COVID-19 pandemic placed Jordan in a difficult financial setting.
2020 caused a surge in unemployment. Currently, it stands at 24.7 percent in total and 50 percent in youth unemployment.

According to the Department of Statistics, in 2013, the Jordanian national average annual income was JD4,300, approximately JD360 per month. The average annual income can be translated through analyzing the spending patterns in the Kingdom. The three highest expenditures in the average household. These are Food Stuffs (34.1 percent), Housing and Related Expenditures (28.0 percent), and Transportation and Communication (17.7 percent), which make for 79.8 percent of total expenses. All of these expenses are dedicated to essentials.

Other expenses included medical care, personal care, education, and clothing, which combined accounted for an additional 13.5 percent on average. Based on this breakdown, it is easy to see that most of the income (93.3 percent) is spent on necessary living expenses, and leaves little opportunity to save and practice the concepts of financial well-being.

However, there are still ways to help improve financial wellness.

Tips to improve financial wellness

Financial wellness is all about building security and peace of mind through monetary means.

Although Jordan is in a difficult financial setting, there are still ways to save money and build up assets.

Saving money and building assets can be done by reducing an individual’s own cost of living; this may come in the form of cutting out unhealthy habits such as smoking. According to the Ministry of Health, 45 percent of people in Jordan between the ages of 18–44 are current smokers.

Within that percentage, 83.6 percent of current smokers smoke tobacco daily. If someone is a pack-a-day smoker and assuming a single pack costs JD2, that equates to JD730 spent on cigarettes annually. While most people can afford the cost of smoking with their expenses, quitting can allow for that money to be reinvested into savings or assets that can appreciate in value over time.

When it comes to investing, Jordanians have a historical and straightforward method that still works in the modern age. Gold and land are the preferred assets used in investments, and evidence suggests that these assets can still appreciate value.

Gold is a precious metal with intrinsic value in the world’s economy. Therefore, buying gold when the cost is low and selling when the value goes up is a viable way to build profit. Although this process may take years and the price of gold is full of troughs and peaks, the value of gold has had relatively linear growth. As of August 2021, the price of gold on average was $1,800 per ounce. A decade ago, the price was approximately $422 per ounce, all adjusted for inflation.

Investments in land or real estate have been particularly lucrative, especially in the capital Amman. As the population continues to grow, the city is constantly expanding, ultimately causing the value of the land along the outskirts to increase in value.

Owning flats within apartment buildings can either save on personal housing costs or as a source of income if an individual chooses to lease or rent them out.

Amman is considered young in terms of development, and certain areas are expected to only appreciate in value. Therefore, taking the time to look into investments may be a worthwhile consideration and can significantly assist in creating profit or building up savings.

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Sources:
https://link.springer.com/chapter/10.1007/978-0-387-75734-6_2
https://www.worldbank.org/en/country/jordan/overview
http://dosweb.dos.gov.jo/products/household-income2013-2014/
https://www.macrotrends.net/1333/historical-gold-prices-100-year-chart