Americans spend many years of their lives scrimping and saving in order to make their way up in the world. They work hard, sometimes at more than one job, and try their best to save money wherever they can. When does someone get to the point of being considered financially stable?
Having an Emergency Fund
If your emergency fund is healthy, you will have a good chance of being able to pay for unexpected surprises that arise. The majority of Americans would not be able to come up with $500 on the spot if an emergency arose. Starting an emergency fund can consist of adding just $50 every month and watching it grow from there.
You Pay off Your Credit Cards
Credit cards are useful in building credit for individuals. However, they can be detrimental if used incorrectly. People who are able to pay off their credit cards completely every month are considered to be more financially stable, as they are not ‘living off credit.’ If you only use your credit card to build credit or to earn rewards points, it is likely that you are at a fairly stable place.
You are Tracking your Spending
Whether you are budgeting or simply keeping an eye on your purchases, you should be watching your spending. This is a good idea even just to make sure that there have been no unauthorized purchases on your account that you need to dispute. Being financially stable involves knowing exactly how far your money is going, and where your limitations are.
You Would be ok if you lost your Job
Losing a job can be a terrible thing. However, if you are financially stable, this won’t be the worst thing in the world for you. You will be able to use your savings to support yourself until you get back on your feet. This allows you to take the necessary time to really search for a job that suits you, rather than the first one that comes along.
Staying On Top of Large Loans
Sometimes taking a large loan out is unavoidable, such as during the purchase of a car or house. However, this can be okay as long as you are staying on top of the payments and are not overextending yourself. If your monthly mortgage is $2,000 per month, and you are making $1,500 per month, you are not in a position of financial stability. Rather you are in a precarious situation in the event that an unexpected expense should pop up.
Your Net Worth is Increasing
If you can see that your income is increasing and your assets are gaining value, this is a good indication that you are financially stable. Saving and increasing the value of your assets will result in an increasing slope for your future. This can be a little more difficult to judge if you have invested in the stock market. You can speak with your financial advisor to analyze the growth that your investments have experienced over the past year.