Who doesn't want financial stability? Well, everyone desires it, but few can achieve it!
It’s a fantastic feeling to be in complete control of your finances. Financial stability gives you a higher sense of confidence and achievement.
You don’t have to ask your friends, family, and banks to borrow money in case of emergencies.
You can chase your dreams- favorite holiday trips, ideal start-up business, lavish lifestyle, and more!
Having no financial worries in your retirement age is the biggest perk of being financially stable.
There's no age to work for your financial stability. Although, it's wiser to begin in your twenties and early thirties.
For anyone in their twenties, it’s quite hard to stay focused on their financial stability journey. People will tell you to enjoy your youth without worrying much about the money.
However, we know better, and we’re here to tell you you can still enjoy your life while getting smarter with your financial decisions.
Most adults over age 50 regret not having enough money saved for a comfortable retirement period.
Right now is the time to spend smartly. You have good health, energy, enthusiasm- which gets lower with age.
By the time you'll reach the retirement period, you’ll thank the financial efforts made in your youth.
If you’re looking to bring stability to your financial life, keep reading.
What Does It Mean by Being Financially Stable?
You must have heard various points of view on financial stability. For some people, just having enough money for their basic needs and some decent savings is called financial stability. Honestly, savings alone can’t do a lot of good to you!
What if your savings aren’t enough when you turn 58?
It would be a nightmare!
Especially when you’re not young and energetic, making both ends meet is quite hard.
For others, financial stability means growing their savings exponentially through the stock market.
Financial stability is another name for free-living. When you’re enjoying a debt-free lifestyle, with savings and investments going on side by side, you can do well even if you don’t have a job for a couple of months.
Be it medical emergencies or rainy days -you don’t wander for loans and credits when you earn more than your necessities. You have extra money to save for your future; that’s when you’re financially stable.
Examples of Financial Stability
Having all your debts paid, including student loans, credits, car loans, and mortgages, is a vital step in reaching financial stability. After all, paying interest over an unpaid balance doesn’t sound impressive, right!
Extra Money for Security
When you meet all your necessities, you’re able to save up to $500 each month. You can put this extra money into action via multiple pathways- savings, insurance, retirement plans, investments, etc.
Savings and Investments
We can’t stress more on investing whatever amount you have saved. You need to have sufficient savings to carry out profitable investments. So, savings and investments go hand in hand.
Remember, storing the extra money in your bank (saving) will give you half the advantage instead of investing it. First, we recommend saving 3% of your income and investing at least the amount your employer can match for your 401k.
Why Financial Stability Is Important
Having your own house, car, and business is a dream which, interestingly, you can chase with financial security. It definitely will take time, but eventually, you’ll be financially well off. You can plan vacations to your favorite destinations worldwide.
You can become the boss of your very own startup, and that without the headache of loans and mortgages. Financial stability will boost your confidence with complete financial freedom.
Having excess cash at your disposal can even rejuvenate your personality. The impact of financial security will improve your personal and social relationships as well.
After all, we are social animals who do our best when our terms are going well with the people we love.
Most people in their twenties do the jobs they don’t like because they can’t afford their dream job straight after college. Once you attain financial stability, you no longer remain dependent on your current job.
With multiple means of earnings via investments, you can get through the basic needs of life even without a job.
Although, having a job while you’ve attained financial stability is a win-win situation. That way, your earnings will be equally increasing with your savings.
How Do You Get Financial Stability?
It is a popular question every individual is intrigued to know! It is difficult, and the key is the right financial decisions, consistency, and lifestyle changes.
Now let’s dive into the nine best tips to get personal financial stability to enjoy your life to the fullest while having a secure future.
1. Don’t Compare Yourself With Others
The best thing you can do while you decide on getting financially stable is to stop comparing yourself with others. It doesn’t matter if your friends are vacationing every six months or your neighbor has bought your favorite sports car’s latest model.
Everyone has means of income, and not everyone is struggling with their finances.
Especially when your friends are spending extravagantly, you might get demotivated. Brand new cars, heavy-bikes, luxury apartments, excessive clothing, etc.- just put all of this aside!
Remember, the lifestyle standards are not equally important as your future. If you can do it with a local bag, why spend three times the price on a Prada or Chanel bag?
Similarly, If you can save more money while traveling locally, why get the pain of debts in buying a personal car?
These are some innovative financial decisions you have to make for yourself. Break society’s overburdening standards! Be unique and set your rules only by yourself.
You will ultimately get everything you desire once you’re financially stable.
2. Invest in Yourself
Self-investment, while you're already tight on your budget, might seem not “so cool” to you, but it’ll reward you in the long-term. Yeah, it's more rewarding than investing in gold bonds and real estate. But how?
By reading books, listening to podcasts, and taking relevant courses that’ll help propel your career to the next level.
I’m talking about skill-sets every employer is dying for these days. Think about learning soft-skills like public-speaking, effective-communication, and team-building, etc. These skills can set you apart from others competing for the same position.
Even if you plan to run your own business one day, you must become more valuable to your potential employers.
So you can get a higher-paying job while you grow your business unless you’re one of the lucky ones; building a company that can sustain your lifestyle will take time. Often, years.
If you’re not a book-person, instead opt for short video courses or listen to informative podcasts. Find out the best resource which suits your learning mechanism.
For many, video courses work best as you don’t have to travel or socialize to get there.
No matter where you come in terms of life and success, the idea is to never give up on learning. For if nothing else, It’ll give you self-worth and a strong sense of reasoning!
3. Earn Extra Income
Now let’s think of side-hustles to support your budget, savings, and investments. There are multiple ways to earn online. The best part is you don’t need any professional experience, degree, or certificate to make money from these side hustles.
Start by focusing on your interests.
Freelancing, for instance, is the easiest way to get started. If you have any talent, you can sell, register yourself on freelancing websites like Upwork and Fiverr.
There are multiple part-time jobs available online, including marketing, programming, project coordination, virtual assistantship, graphic designing, Video-editing, proofreading, blogging, etc.
Don’t get disheartened if you don’t have any of the talents mentioned above.
Remember, no one is perfect when they begin. As you gain more experience, you eventually master that skill, which ultimately sets you in control of your preferred pay rate in the market.
You can also use your voice as a source of earning.
Try voice-over for videos or podcasts. There are many voice talent jobs you can find online. Although these jobs may sound less rewarding, you’ll start earning equivalent to any full-time position once you become a pro in a particular niche.
Besides part-time jobs, you can earn from YouTube videos, sell ebooks online, podcast, and put up your crafts on sale. There’re a hundred ways to make money out of your personality and talents.
Use these experiences to run your side-hustle in the long run.
4. Build a Budget
Budgeting is challenging, especially if you’re not used to it.
The first step is to write your basic needs, for instance, food, health, bills, transportation, clothing, hygiene, entertainment, etc. Once done, allot a specific budget to each one of them.
Doing so will save you from overspending the money-which is a big “NO” if you’re into financial stability goals. You’ll get a complete idea about your spending habits. If you find them irregular and undisciplined, it’s better to follow the budget strictly.
Budgeting is crucial if you want to have some decent savings to invest in, chill, and enjoy!
Today, you can find several ways to help you with setting up your monthly budget. YNAB, for example, is a mobile app that works by budgeting the dollars you possess for the entire month.
5. Live Below Your Means
The magic trick to achieve financial stability quite earlier than your peers is simply by living below your means. Don't worry; everyone struggles with this one!
One straightforward way to stay within your budget is to avoid credit cards. No matter how much you want to buy unnecessary things, stay focused on your goal.
Most of the time, we don’t need items, which we end up buying. That’s because we do what others are doing around us.
Following expensive fashion trends, excessive shopping, and dining out more frequently are draining your bank account.
The key is to analyze the difference between your needs and wants critically. You can live a wholesome life by fulfilling your needs and ignoring non-vital desires until you reach financial stability.
Be unique and comfortable with a minimalist lifestyle.
Not everyone has the same goal as yourself! For some, financial stability is not a serious matter until they’re close to their 40s and 50s. Here, be smart and start planning for your better future and a relaxed old age.
6. Have an Emergency Fund
It’s a wise choice to have an emergency fund at your help. This way, you can combat any unplanned or sudden financial crises. Having an extensive amount saved for the unexpected is a tremendous relief and a necessity.
No one wants to beg for money at the eleventh hour, be it from your friends or family. Bank loans in such situations are a relief only until you’re not paying an incurred interest over it in the future. An emergency fund works like a backup amount.
You can safely sail your financial boat even if you’re devoid of a stable income. Maybe you left your job and need money to get going till you find alternative employment.
Or you encountered emergency tours ripping out your current budget.
Perhaps you need a home or car renovation urgently. In all scenarios, setting up an emergency fund is the first step towards financial stability.
It's a win-win situation to keep self-respect and avoiding more debts over emergency loans.
Maybe you’ll find a one-time profitable investment opportunity that’ll grow your wealth sustainably. Imagine having not enough money to take advantage of the offer.
7. Pay off All Debt
Do you have student loans, credit card debts, or other loans? If yes, this is a crucial point to ponder over!
It doesn’t matter how much debt you own; the point is to get rid of them as soon as possible.
Being debt-free has many perks, like not worrying about those pesky interest fees and having financial confidence.
You’ll also be able to focus on bigger dreams.
Try getting rid of the small debts first, including credit cards and student loans, by paying them twice each month if possible.
Once you're financially stable, focus on paying making more significant mortgage payments and bigger loans.
If you’re looking to clear out student loans, try refinancing for a better rate.
You can rely on study scholarships to avoid the hassle of debts.
8. Invest for Retirement
Do you want a more comfortable retirement life with much fun, vacations, and loads of wealth? Well, it's a desire for many, but few can achieve it by initiating retirement savings plans at the right time.
The first step is to make some calculations for yourself! How much money do you need to be financially stable? We recommend you use excellent retirement tools like Personal Capital.
Once you know the exact amount, you need to live a comfortable old age, set your monthly budget accordingly.
It’s better to start earlier than after your 40s. As you grow older, your expenses also grow with you, and it gets more difficult to save more for your old age.
Put in a double effort to save money. With declining health and more family responsibilities on your shoulders, saving money will be challenging.
Establishing your career, business, marriage, children, etc., is overwhelming in terms of finances. So, if you’re in your late twenties or early thirties, right now is the best time to invest in your retirement plan.
For instance, if you're able to save $300 monthly in your youth. You’ll be saving $150 a month in your fifties. Quite a difference, right!
Besides, more savings means a more annual return rate of an average of 5% to 8% on your deposited funds. 401(k) and Roth IRA retirement saving plans are the most common among others.
You can choose the one which works best for you!
Another great opportunity to ultimately reach financial stability is investing through Wealthfront, an automated investment service.
It allows you to deposit around $500(min), making it the right choice for youngsters.
You can even get free financial guides, automatic rebalancing, tax-loss harvesting, and other benefits using Wealthfront services.
9. Be Consistent and Have Fun Building Stability
As you’re setting your monthly budget to reach financial stability, don’t forget to include some amount for your recreation and entertainment.
We’re all human and not money-making machines. It's always better to unwind and relax.
A proper balance between work, savings, and rest will help you achieve your financial security faster and smoother.
Try cost-effective, fun activities like sleeping overs, get-togethers, movie nights at home, and local trips.
We know that endlessly saving money without rewarding yourself isn’t right. If you’ve been consistently hitting your financial goals each quarter, splurge on items that make you happy.
Buy your favorite shoes or eat at your favorite restaurant with the money you’ve budgeted for splurging.
Finally, you need to develop a healthy mindset and consistency to reach your goal towards financial stability.
Discipline, regularity, minimalist-approach, wise financial decisions, and a lot of patience are all it takes!
Remember, only the start is difficult; once it becomes a habit, things get more sorted and easy.
Financial Stability Tip: How To Get Rid of All Your Worries
Having complete financial freedom defines personal financial stability. Having an emergency fund, insurances, savings, and wise investments are some examples.
When you’re no longer worried about how you’ll be paying your upcoming bills, you’re more satisfied with the sustainable investments you’re putting in your financial plan. And when a well-off retirement life awaits you, know that you’re financially stable.
The best thing to do is setting your perspectives regarding expensive trends. It’s essential to make some innovative lifestyle changes to get wealthier.
And that'll be impossible if you keep comparing yourself with others.
Before going to make any purchase, ask yourself whether you want this item? Is it a need or a mere want?
Budgeting will help you control your habits of spending extra money over not-so-important stuff!
Remember, not everyone is smart enough to consider future financial freedom at an early stage. But it’s always better to prepare for the future.
Once you’re at peace with your finances, you’ll be happier and prepared for most unexpected financial situations.
You're Now Ready to Reach Financial Stability Like Never Before
Having ultimate financial freedom will boost your career, relationships, and mood.
There’s no secret it’s a tough job, but keeping a delicate balance between smart financial decisions and consistency can do wonders for your wealthy future.
By keeping an eagle’s eye on your budget and spending, you can sail smoothly towards your financial stability.
During your journey towards financial stability, don’t forget to be kind to yourself! You’ll find many distractions and unexpected spending on the way.
The key is never to let them demotivate you. Surround yourself with like-minded individuals that’ll help you reach the goal of financial stability.
Everything is hard until you try it, and financial freedom is not an exception. It comes with proper planning, patience, and real hard work.
The fruit for that will be a fun, comfortable, and prosperous future.