Six Signs That You Are Truly Financially Stable
The practice of keeping track of one’s health statistics in order to keep an eye on one’s general physical state has become commonplace in today’s society. How frequently do you weigh yourself, count calories using an app on your smartphone, or use an activity tracker to keep track of the number of steps you take each day?
You should, however, also monitor your entire financial state to ensure that it is improving in the same way that you monitor your general physical condition to ensure that your health is improving.
The following are six key indicators that can help you determine whether you are financially stable or not. If you’re unable to respond “yes” to more than a handful of these signs, it’s time to take an assessment of your financial situation and make some changes.
You Have Savings For Emergencies
Even though some modern vehicles no longer come with a spare tire, having one can still get you to your destination. However, you shouldn’t rely on it regularly.
Therefore, having access to money, whether in the form of a credit card or money saved in an account, can assist a person in maintaining their current level of financial stability. That said, you shouldn’t treat your savings or credit card like it’s about to expire any second now; rather, you should keep them set aside for true emergencies only.
Having a variety of different sources of income as well as setting part of it aside for savings can both come in helpful in the event that you are hit with unforeseen costs for medical care, problems with your vehicle, or anything else that appears out of the blue.
You Know Your Credit Score — And Understand How It Works
It is imperative that you determine your credit score if you are unaware of what it currently is. Because it provides potential landlords, employers, and other stakeholders with an indication of your financial stability, your credit score can be thought of as a kind of financial GPA.
Taking steps to enhance your credit score and maintaining tabs on your score and your progress can give you a sense of control over your financial future and, depending on your score, indicate that you are more financially secure than you would realize.
You Have Health Coverage That Actually Protects You
Since the individual mandate was eliminated by Congress, it is now entirely up to the person to find their own means of covering the price of medical care – at least in the majority of states.
Even if the government doesn’t require it, you should get health insurance because it’s likely you’ll have a medical emergency in the next several years that you won’t be able to afford. That might have a catastrophic effect.
According to the findings of a survey that was conducted earlier this year, the majority of individuals who declared bankruptcy did so due to the high expense of their medical care.
Those who do not have health insurance or who have only a minimal amount of coverage are more likely to forego necessary medical care. For instance, a recent survey conducted by NORC at the University of Chicago indicated that 40% of respondents had declined a prescribed medical exam or treatment in the previous year due to cost.
You do not want to find yourself in that predicament. It’s possible that you won’t need the most expensive plan available, but it’s still important to get the finest coverage you can manage to pay for. Short-term coverage is available for up to a year, so even if you’re really watching your budget, you can still get the protection you need.
You Keep Your Credit Card Balance Low
Keeping the debt on your credit card as low as you possibly can is another positive indicator that you are in general more financially solid than you initially believed you were.
Someone who lives within their means and has a minimal credit card bill is a wonderful example of someone who does this. Having modest revolving debt balances is one of the finest signals of spending control, and it is the key to becoming financially stable.
With personal debt in the United States increasing due to rising student loans and credit card balances, this is one of the best indications of spending management.
If you don’t stick to your spending plan or give in to your every spending whim, it can be challenging to keep the balance on your credit card at a manageable level.
It may also be challenging to maintain a low amount on your credit card if you find yourself in a precarious situation and don’t possess any cash on hand to assist you to get through it, regardless of what kind of emergency you’re facing.
Your Accounts Grow At Least A Little Bit Every Month
Those who have no outstanding debt and can consistently put away $1 each month after covering basic living expenses for a period of time of, say, a year are in a strong position to recover from bankruptcy.
Moreover, they get to enjoy a comfortable standard of living moving forward, including the ability to buy a home, send children to extracurricular activities, eat healthy foods, and so on.
If you can put aside more than a negligible amount of money, doing so is, of course, something that you should consider doing. However, if you are unable to save any money at all, even a small amount is preferable to none at all.
If you make it a habit to put funds away into some kind of account on the first of every month, regardless of whether it’s $10 or $1,000, you have a good habit that, with practice, can become even better.
It’s similar to when one prepares to ascend a mountain. If you are going to go on a trek, the first thing you need to do is decide why you want to go there, then you need to devise a strategy, and then you need to decide when you are going to go.
Getting to the summit requires careful planning and preparation; you can’t just decide to go in the depths of winter.
For example; you have to gather your resources, you may have to perform some training, and then you have to put one foot in front of the other, hoping that you’ve thought of everything you’ll need along the way and that you’ve made provisions for any emergencies that could arise.
If you’re able to save even a small amount each month or on any given month, you’re definitely doing a better job than you believe. However, it might be easy to get down on yourself if you’re unable to save as much as you should.
You Automatically Save For Retirement
There are some young individuals who do not understand the necessity to invest for retirement because it seems like such a distant concept; nonetheless, it is quite vital, and individuals who are financially comfortable are undoubtedly doing this.
You might be able to fool yourself for a while, or perhaps for a very long time, but eventually, the truth will out. A better strategy is to invest ten to fifteen percent of each paycheck into a retirement account that is exempt from federal income tax.
After you have paid all of your other monthly obligations, you should not feel guilty about splurging on momentary pleasures if there is any money left over.
The question then becomes how you can evaluate your current investment situation. If you plan to retire at age sixty-seven, you should have saved up a sum that is equivalent to your yearly income by the time you are thirty years old.
You should have saved three times your annual pay by the time you are forty years old. If you start investing at a younger age, you will have more success because your account will have more time to accumulate compounded profits.
Financial Stability – Final Words
If you’ve only recently come to terms with being an adult, or if you’re still anticipating that sensation to set in, the prospect of financial security can be daunting.
In order to keep yourself in check, it can be helpful to ask yourself questions when deciding when and how much money you want to spend. You may be more financially secure than you give yourself credit for, and these clues may be rather subtle but nonetheless present regardless of how much wealth you’re actually generating.
If you are practicing some of these signs or keeping a watchful eye on these sets of figures, those could be strong signals that you are in a better position than you believe you are.
