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Financial stability is a goal most adults work towards and wish to have. Although achieving it can seem intimidating, it is a reliable indicator of your ability to live life to the fullest.
The need to feel financially secure and stable comes with adulting and is a commonly seen outlook in young adults of this generation. So, what are some signs that tell you if you are financially sound? Let’s take a look.
There can always be surprises that can come your way like a job loss or a medical emergency. Having an emergency fund set up just for instances like this can make you feel financially secure and take away the stress that comes with it.
An emergency fund is usually worth six months of living expenses or half a year’s worth of your salary. If you already have a financial source for situations like this, then it is a sign that you’re more financially sound than you think!
If you can save even a buck a month, it is far better than saving nothing. Having some kind of account (such as a savings or recurring account) where you put in some of your monthly earnings is a great way to save for the future.
It also ensures that you develop a habit of saving, which can only get better over time. Monthly savings can contribute to an overall increase in your net worth. If you are actively saving a certain amount every month, it may mean that you are well on your way to being financially sound.
Can you afford to spend impulsively or buy whatever is on your mind, and yet don’t do it simply because you know it is unnecessary? This is another big sign of being financially responsible, as it shows you can manage your expenses and not spend more than you earn.
Using credit cards responsibly and smartly can positively impact your credit score. By using these cards for small expenses and ensuring timely payment of your bills, you can increase your credit score. So, if you are being offered higher credit limits and using credit card deals and discounts to save money as you spend, you are more likely to be on the way to financial security.
In contrast, if you are relying too heavily on your credit cards and cannot manage monthly expenses without them, be careful. This could lead to a debt trap and jeopardise your financial health.
Knowing that you have enough money and sources of income to support your lifestyle in the future is also a good sign of being financially sound. This means that you have saved money and made responsible investments for retirement.
Debts weigh you down financially and can pose a burden for everyday life. They also make it hard to manage your finances and maintain savings. Trying to pay off debts can lead you down a frustrating spiral, especially with high-interest rates such as those related to credit cards and personal loans.
If you are free from this burden, you may be financially stable. You can avail of debt in the future as long as you have a good repayment plan in place.
If you are financially secure, you know where to look for ways to save money. This may be when you are purchasing electronics, booking vacations, or buying insurance. Whether it is online sales, using your credit card rewards, making the most of seasonal offers, or using your healthcare benefits and work incentives, if you are smart about saving, you can boost your financial stability.
Automation greatly helps save the time and effort required when making online transactions. The fact that you can confidently set up automated transactions like subscriptions or credit card bill payments is an indicator that you are financially sound.
Life is to be lived, and while we all need to buy essentials, splurging on yourself is also important. If you can do that without losing control of your finances or putting your income in jeopardy, you are likely to be in good financial health.
If these signs resonate with your current financial situation, then you are certainly capable of keeping your head above the water for a long time. The tips above on how to be financially secure can help you achieve this with ease.
If you falter on some of these, it’s never a bad time to steady the boat and be more responsible. You can take an instant personal loan from Fibe to tide over your expenses and be back on the road to financial stability!
Financial stability is important in life as it helps you manage urgent or unexpected events with calm and confidence. It also helps you take care of yourself and your dependents while living life to the fullest.
You can become financially independent by working towards a rewarding career, saving 20-40% of your income, investing prudently and budgeting your expenses. Having health and other types of insurance also helps you address mishaps with ease.
Some of the steps to becoming financially secure are to pay off your existing debts, have a retirement plan in place, create an emergency corpus and spend smartly.
You can create a financially sound plan for yourself by setting goals based on your income, expenses and debts. Once you have your goals in place, save and invest to achieve them and follow a budget. Make sure you have the insurance coverage you need and try to improve your financial literacy so you can take the right decisions.
