What is it that you’re striving for everyday – why do you work every single day? To create more wealth? To have the ability to live your life on your terms? So that you can buy things that bring you joy and happiness?
Whatever we term it, all of us are chasing the same thing – financial stability. People spend years to become financially stable by working hard and spending their money wisely. However, what most of us don’t do is understand the proper meaning of financial stability. Just because you make a lot of money does not mean you are in a good place. Being financially stable is a fine balancing act between how much you earn and what you do with it. So here are a few indicators to help you understand how financially stable you are.
- You have an emergency fund
Building an emergency fund is an often underrated financial step. One needs to save and preserve wealth to make one and hence it requires a good amount of planning. Having an emergency fund of 6-8 months worth of basic expenses is a base indicator of financial stability.
If you don’t have one yet, here is how you can build your emergency fund in 30 days or less.
- You are not worried about anything bad happening
Apart from having an emergency fund in place, the basic advice from financial planners is to have adequate cover in the form of insurances. Starting with medical and life insurance, those with their valuable assets like house, car, office, etc insured are building their way up towards financial stability.
- You pay double for retirement planning
Financially stable people always plan ahead and have enough in their bank account to contribute towards their retirement so that they can be financially stable in the future as well.
- You spend less than what you earn
Living within your means is a habit that most rich and financially stable people follow. They buy things only under their income and only with their income. They don’t need credit to get what they want and pay all their dues on time. And when they use credit-cards or borrow money, it is to benefit from these tools (like earning points/miles or for tax benefits).
- All your bills are paid on time
Monthly bills are the foundation of living life in today’s world. Those who are unable to pay their bills on time are not only showing great signs of financial instability, but also end up paying more than they should – with late fees and charges.
- You don’t feel guilty for spending on occasions
It’s not only the rich who are able to spend on luxury items they don’t need. Being financially stable means that you’re able to buy what you need, and even what you want, without feeling guilty about spending your money.
- You are generous with your money
The ability to donate money towards charities and causes you believe in is definitely a positive indicator of your financial stability.
So how many of these signs can you check off?
Though the exact definition of financial stability can differ from person to person, it ultimately means the same thing: to be able to live a life free of money related stress. Some people may feel good with a lot of money while some may be happy with the meager wages that covers their basic needs, but broadly speaking the above mentioned signs are a few well-known indicators of good financial health.
If you think you need help becoming financially stable, keep reading the KyePot blog for tips and advice from Team KyePot. You should also start investing in KyePot’s digital chits to help you accelerate your journey towards being stress-free!