Financial problems on the other hand make me nervous, stressed and emotionally unbalanced, which then in turn increases the amount of poor financial decisions etc. It all turns into a vicious cycle.
So how do we describe our financial situation in a way that helps us determine what to do to better it? Finances are a complicated matter after all.
A short article by Pinyo on Moolanomy.com describes five "Stages" of financial health along with some advice for how to handle each stage.
Quote from the article:
Last night, I was pondering the subject of cash flow (essentially how money flow through our hands) and about financial well being. I played around with various visualizations that consist of income, expenses, debt, and assets. What I came up with was the 5 stages of financial health below.
I believe that all of us go through these stages at one point in time, although some may never fall into “the debt spiral” or achieve “financial freedom”. Below are the description of each stage and some suggestions on how to improve your finances if you fall into that particular category.
Entire article here
After reviewing the article I concluded that I'm currently transitioning from stage 2 to stage 3. I will probably remain there until the end of summer when going back to school will force me back into stage 2. All the more reason to be frugal now. Money saved now might in turn save me from trouble during the school year.