Tips towards Financial Stability

At the start of a New Year we usually carefully formulate our resolutions to focus on becoming better people. Notwithstanding the fact that we began and ended the last year in a pandemic, we should remain cognizant of the fact that life goes on. One of the ways we can improve is by developing habits which can help us become financially healthy for the challenges that lie ahead…in times like these, we must look ahead to securing our wealth, health and happiness.

Financial stability is something everyone wants but not a lot of people achieve. In simple terms, being financially stable means, you are spending less than you earn. You are able to pay for food, shelter, utilities, clothing, and still have money set aside for any unexpected bills, emergencies, and your retirement.

Human beings feel more comfortable when we quantify things so a big question commonly asked is: How much money is needed to be financially stable? Well, personal finances are unique to you, depending on your cost of living and needs. How you view financial stability will therefore vary when compared to someone else. To provide some sort of benchmark, short-term financial stability would be to have 3-6 months of living expenses saved while long-term financial stability would be having enough to retire without running out of money.

Now that we know what financial stability is, how do we become financially stable? I’ve heard many speak about a secret process or magic formula. And, if that is your thinking, I need to tell you that there is no secret or magic formula.

When you are financially stable, you don’t have to stress about money and you can focus your energy adding value to other elements of your life.

Becoming financially stable is achievable via simple habits. Here are some recommendations:

1. Live Below Your Means – spend less than you earn. Create a budget and put a spending plan in place to lower your bills and prioritize your savings.
2. Create a Debt Payoff Plan
3. Build Out Your Financial Plan - your plan should cover your expenses, income, savings, spending trends, debt, insurance, even estate planning or wills.
4. Find Ways to Earn More Money
5. Educate yourself in Financial Literacy
6. Plan for Your Retirement ASAP

One last thing: remember that financial stability isn’t about being rich or achieving a dollar figure. It’s about your mindset and how comfortable you feel, underpinned by the idea of having the freedom to live a quality life by your terms and not be controlled by money and debt; to be at peace with your financial position.