How Do You Know If You Are Financially Stable Right Now?2 min. read
Most of us dream of affording a lot of things: a huge house, a shiny car, a sizable savings account, and other life’s greatest pleasures. To achieve this, we strive for financial stability to free ourselves from the shackles of poverty and live the good life. While we continuously work on getting to the point of financial stability, how are we going to know if we’re already there? What are the most telltale signs that you are now financially realy to live your dreams? Here are a few indicators that will help you know that you are financially stable now.
In all probability, most of you have some form of debt—whether you owe your friends a small amount of cash or you have outstanding credit card bills to pay. Regardless to whom you have obligations to pay, you need to know that having debt is a sign of financial instability. When you owe someone money, you are giving up control over your finances. They have power over you, and that will be the case until you pay off your dues. And when you are thinking about skipping town just to run away from your debt, there are dire consequences such as foreclosure, repossession, and lower credit scores. Now that’s far from having financial stability.
Having an emergency fund means more than just stability: it actually shows that you are future-oriented and cautious. Emergency fund, as the name states, is an amount that you can use in case of financially crippling events such as retrenchment, accident, hospitalization, and other events that may require you to come up with a huge amount of cash. When you can stockpile an emergency fund, it only means that have enough money to cover your basic expenses and still have the capacity to save up for your contingency money. You’ll never know when you’ll need your emergency money.
If you think that your savings account is your emergency fund, then you are not doing it right. On top of having a fund for your contingency needs, you need to have a separate savings account. What is the reason why people should build their savings account—even little by little? Two words: asset building. Even if you are putting a mere fraction of your monthly income in your savings account, what’s more important is that you are seeing your account grow right before your very eyes. There is nothing more satisfying and reassuring than building your own savings account from scratch and watching it grow over time.
Probably the biggest telltale factor that you are totally in control of your finances, frugal living is all about contentment with your lifestyle and not asking for more even if your finances can take care of it. When you start to live within your means—or even below your means—you will have the cash to set aside, which can be used for savings, investments, other expenses, and others expenses which may need your extra budget. If you want to finally achieve financial stability, then take control over your budget and you will open up a chance for yourself to have savings and make investment.
Financial stability is something that may take you a while before you reach it. However, with enough persistence and the right knowledge, you can start sleeping at night peacefully without thinking about money.