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  • Financial Fortress

Top 5 Signs that You're Financially Stable


Stacks of coins at the end of the dominos

For many of us, the ultimate goal is becoming financially stable at a certain age and being able to do what we want without worrying about how to survive in the coming days. When you’re financially stable, the overall quality of your life improves and it becomes easier to go after your long-term goals.


The question is, in a fast-paced, expensive city like Singapore, what does financial stability exactly look like? Is it being able to treat yourself once in a while or having a decent rainy day fund?


People have varying opinions on what financial stability is. One thing’s for sure, though, it will always involve strict financial planning and a great amount of savings and investments.


Here are 5 signs of financial health to help you determine if you still have work to do. If none of these is true for you yet, then you can start working to make at least a few of these a reality in your life.


 

1. You have at least 6 months of savings for emergencies


Money savings rescue concept

Think about what would happen if you lose your job tomorrow. Do you have enough rainy day funds that you can dip your hands into to help you survive being unemployed for the next few months?


We can’t stress enough how an unexpected life event can turn your financial situation upside down quickly. It’s important to have sufficient liquid funds that you can live on for a few months while there’s no paycheck coming in.


Knowing that you have a solid source of emergency funds as a backup when life throws you a major curveball can prevent you from depleting your entire savings account.


Most experts recommend having at least savings or investments that can take care of your living expenses for the next 3 to 6 months.



2. You can pay your bills promptly


Chinese lady working on laptop at home

Paying bills has become a common part of adulthood that we often ignore that it can be a good measure to gauge if we’re financially stable, or on track to being one.


Essentially, financial stability means having the capacity to settle your bills on time, or better yet, in advance. Bills would come in, you pay them off, and the cycle repeats every month.


For many financially stable people, bills are nothing but something to deal with every month and move on. You pay your bills on time because you don’t like bills to linger and don’t like owing anybody anything.


Bills shouldn’t be a cause of concern and anxiety for you. Otherwise, that’s a sure sign that you aren’t financially stable yet.


If you don’t have the funds to settle your bills on time, you’ll always dread clicking on that email reminding you to pay your dues. There’s no way to escape from your bills, so you either pay them on time or find a way to increase your income so they become less of a problem.



3. You follow your monthly budget


Hand writing home budget with calculator

A budget helps you keep track of how you spend your monthly salary. A huge part of being financially stable is having a grasp of your current financial situation and following a budget to help you achieve your long-term financial goals.


The majority of money-wise people have a clear picture of their monthly priorities and are no longer tempted to live beyond their means. Those priorities exist in their budgets.


A more solid sign of financial stability is when you’ve memorised your monthly priorities that there’s no need to keep a monthly budget. You’re able to settle your monthly dues on time and still be able to live comfortably without worrying about running short on money.



4. Your retirement savings are on track


Hand putting Coins in glass jar for with retro alarm clock

Saving up for retirement in your 20s or 30s will teach you one of the most important financial planning skills: delayed gratification.


It’s about the capacity to put off an immediate gain in favour of a more massive and better reward in the future.


The ability to tuck away something for retirement doesn’t necessarily mean you’re financially stable, but it proves that you understand the significance of long-term savings and know what your priorities are.


For some, financial stability is as much about having enough savings in the present as knowing the importance of building a financially secure future.



5. You use credit cards because you want to, not because you need to


Image of a young girl student using mobile phone

Credit cards aren’t inherently a bad thing, as much as other people say they are. They allow us to make huge purchases and split the payments into small, reasonable amounts.


However, how you use credit cards could say something about your financial health. If you’re using credit cards to earn rewards like cash back points and air miles, then all is well and good.


Meanwhile, if you’re using credit cards because you no longer have money and payday is still weeks away, then this isn’t a good sign. It could mean that you’ve mismanaged your finances, which implies that your financial health is fragile because you’re a financial emergency away from being in debt.



Building a financially stable life


Hand putting money on coin stack

The road to financial stability is a long, stressful journey. You’re bound to make minor and major financial mistakes along the way, but as long as you learn from them, it’s never too late to achieve a financially stable life.


If you’re finally able to stash something away every month for emergencies and retirement and don’t go beyond your monthly budget, then that could mean that you’re financially stable, regardless of how you choose to define that term.


If you want to learn more about this topic, or simply need financial planning advice and wealth management tips, feel free to get in touch with us! We can connect you with experienced financial planning experts who can help you build a financially healthy life.

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