Are You Financially Strong?

I love Suze Orman's definition of money...it is security. Think of that for a moment. How would you feel if you had an extra $10,000, $100,000, or $300,000 just lying around looking pretty? Yup, I think you would be feeling more secure. Understanding where you stand financially often becomes a complex task. It is not solely about how much money is in your bank account but includes several other important aspects. It comprises how well you manage your resources, the state of your debts, the size of your savings, and the financial habits you have developed over time over time. I make it a point to work with each client and their finances because this awareness can significantly influence your financial decisions, plans, and, ultimately, your peace of mind. The following list will clue you in to if you are in a good financial state or if you need to work on it. 1. How Much Do You Have In Savings? Savings is a prime indicator of financial stability. These reserves serve as a buffer in emergencies and afford the freedom to chase personal ambitions. Building considerable savings over time is a sign of a financially stable individual. Frugal practices like reducing unnecessary costs and regularly saving part of your income can boost your savings. I always recommend having eighteen months of business and personal expenses socked away in a money market fund or savings account. However, with today CD rates at 5% or better I am putting funds into a non-penalty CD. 2. Do You Have Credit Card Debt? If you have credit card debt, you either haven't been reading my newsletters very long or they fell on deaf ears. Let me state this very easily. Credit Card debt is the killer of dreams! Lacking credit card debt signals an excellent financial place. The high-interest rates of credit card debt can create a vicious cycle of repayments. Thus, its absence indicates responsible spending and sound financial choices. To dodge credit card debt, pay off your balances every month and curb spending beyond your means. 3. Do You Live Paycheck-To-Paycheck? With crazy inflation like we are seeing, this may be a new phenomenon for you, and it can be scary. If this is your "usual" pattern, please take note. If you don’t anxiously wait for the next payday, it’s another sign of your financial well-being. This shows that your financial resources aren’t limited to your immediate needs. Frugal habits such as cooking at home or choosing budget-friendly entertainment can help stretch your income. 4. Do You Dip Into Savings? In my opinion, dipping into an emergency fund to meet a shortfall is okay. That is why it is there. However, if you are dipping into college funds, retirement funds etc. please take note. The ability to get through the month without resorting to savings underlines another aspect of financial stability. It demonstrates that you’re living within your means. Here, frugality can help through mindful spending, curbing impulsive buys, and prioritizing necessities over luxuries. 5. Is Your Mortgage Killing You? Are you house rich and cash poor. That is super-stressful. A manageable or non-existent mortgage is a definite sign of financial health. Large mortgages can impose immense financial strain. If your mortgage isn’t burdensome or has been paid off, you’re in a secure financial place. To sidestep hefty mortgages, consider purchasing a home within your budget and making extra payments when feasible. Let's start with these. Tomorrow, I will give you some more signs. If you need help, ask a friend, colleague, or me. You heard it here first. Be sure to share this newsletter with someone who can use the information. In Gratitude, Paul Inselman Source: 911profit.com, 10/14/23.