Are You in Control? What It Means to Be Financially Sound
Many people strive to obtain financial security. However, there isn’t a bell that rings or an email that pops up once you’ve become financially sound, so how are you supposed to know when you’ve reached that point? Moreover, everyone has a different dollar amount in mind when they’re trying to become financially secure. Some strive to have millions put away, while others aim bigger, hoping for billions. But placing an unrealistic number on becoming financially stable could be a mistake. Get Rich Slowly writes that by putting a number on it, many people begin to believe it’s unattainable.
Likewise, financial security isn’t based on making or having a certain amount of money, and it isn’t defined by the number of homes you have or the cars you drive. How can you tell if you aren’t even close to financial security? That one’s easy. According to Real Simple, if you’re putting your entire paycheck into your checking account, spending more money than you have, trying to mimic your parents’ saving/spending habits despite paycheck differences, don’t have any financial goals, and don’t know how to properly pay down your debts, there’s a good chance you’re not financially secure.
If you don’t fall under any of those categories and want to see how close you are to obtaining financial security, take a look at our list of five ways you can tell.
1. You’re debt free
Most likely you’ve got some sort of debt, whether it’s for your car, house, or even education. But debt for other things is a clear sign you are not financially secure, per Get Rich Slowly. For example, are you still paying off a vacation you took several months ago? What about the shopping spree you went on a while back?
Are there still remnants of a trip you took years ago left over on your credit card? If you owe money for items such as these, the people you owe money to have power over you. Think about it: You’re going to work each day to pay off debt. And if you don’t pay that debt, there are dire consequences, which could include lawsuits, repossession, and foreclosure. There’s nothing secure about any of that.