Finances can be a big source of stress and frustration in our lives. The world seems to measure financial success with big houses, fast cars, and exotic vacations. Yet, happiness in the financial realm is more accessible than you think. And, it starts when you achieve financial stability.
What Is Financial Stability?
Financial stability means feeling confident in your financial situation. It allows you to live debt-free, handle your monthly expenses, and have an upbeat outlook on the future. You may have come to believe that this feeling is reserved for the wealthy. But, financial stability is not only about money. In fact, it’s more of a mindset and an outlook on life. And, with the right habits in place, you too can achieve financial stability.
Mindsets For Financial Stability
Your path to financial stability starts before you spend or invest your first dollar. It’s rooted in how you measure your satisfaction in life. It’s easy to fall down the path of chasing money for its own sake. But, to achieve financial stability, you have to understand your mindsets and motivations. So, here are 3 important rules to guide your financial journey:
1. Make finances personal
Your financial journey is personal to you. So, avoid comparisons with others. Set goals meaningful to you and remember to celebrate your successes.
2. Know your “why“
What parts of your life do you want to unlock through financial stability? What opportunities do you want to give yourself and your loved ones? Remember to keep the focus on what’s important – the intangible assets that make life worth living.
3. Invest in yourself first
You may not think of yourself as an investment. Yet, you are the one that creates all opportunities and accomplishments in your life. So, invest in your intellectual, emotional, and spiritual development. It will pay dividends for years to come.
Steps For Playing The Financial Game
Now that you know why you want to be financially stable, you can plan the strategic steps for getting there. It takes time to become financially literate. So, be patient and treat setbacks as opportunities to learn. Remember that you’re making an investment in yourself and your financial intelligence. So, pat yourself on your back, and let’s get started. And, be sure to follow these steps in order. It’ll help you achieve financial stability in an optimal way.
1. Create a steady income
This may seem obvious but the first step to financial stability is having an income. If you already have a job, make sure you’re doing something you enjoy. Nothing will make your financial journey more painful than a job you dread doing. You can also look for opportunities to create value at work so you can ask for more compensation.
2. Create a budget
Many of us have an aversion to budgets. But, understanding where you spend your money is a key step to financial stability. Create a plan for keeping your expenses low and living within your means. This helps build a solid foundation for the rest of your financial plan.
3. Create an emergency fund
Life moves fast and we can’t expect the unpredictable. This can cause many sleepless nights worrying about what the future may bring. By setting up an emergency fund, you create a safety net. This will give you peace of mind that you can handle life’s surprises without skipping a beat.
4. Pay off your debt
Having debt is like driving around with the parking brake on. It won’t let you get very far. Aim to pay off your debt as quickly as possible, starting with the highest-interest debt first. The money you save on interest will help propel your other financial goals. Also, you can leave accelerating your mortgage payoff out of this step. You can revisit your mortgage after doing all the other steps on this list.
5. Save and invest
Aim to save 15-30% of your income. Distribute this money across personal savings, retirement funds, and other investments. Power tip: create different accounts with different goals. It will make tracking easier and help you keep the money intact.
6. Give back
It may seem odd to see giving back listed in your financial plan. Yet, there are benefits to making your financial game about more than yourself. Giving back allows you to feel connected with the world around you. It also gives you a new healthier perspective around money. I recommend aiming for 10%.
7. Have fun
Budgeting and paying off debt can seem like serious business. So, it’s easy to forget to have fun in the process. But, remember that finances are a tool for creating the life you want. So, make room in your budget for things you enjoy. It could be an occasional massage or a family dinner out.
The journey to achieve financial stability can feel confusing and overwhelming. But, by starting with the right mindsets, you can learn to let go of financial stress. And, by leveraging the steps above, you can give yourself an unfair advantage in your financial game. For tactical tips on achieving financial stability, read this article (11 min read).
