Financial Success Indicators: Evidence of Thriving Finances Despite Perceived Struggles
In the pursuit of financial health, it's not always about flaunting luxury or accumulating visible status symbols. In fact, financial coach Dave emphasizes that quieter signs of financial health often go unnoticed. In a recent TikTok video, he shared four key indicators of financial well-being that are worth exploring.
- Modesty in Wealth Display: One of the signs of financial health is the lack of a need to show off or "flex" your wealth on social media or to others. Living below your means is a crucial aspect of this, as it helps maintain a steady financial foundation. According to a Market Watch study, this is not a common practice for most Americans, with 57% living paycheck to paycheck.
- Timely Bill and Debt Payments: Consistently managing to pay your bills and debts on time is another sign of financial health. Being debt-free is another significant aspect of this, with the average American holding $90,460 in debt, as reported by Megan DeMatteo from CNBC Select. Student loans, in particular, are a significant form of debt, with Americans collectively owing $1.6 trillion in student loan debt in June 2024, according to Pew Research Center.
- Regular Savings: Saving money regularly without stress is another quiet sign of financial health. Having an emergency fund is crucial in this regard. It can help you avoid borrowing more in times of need and keep you afloat without relying on credit cards or high-interest loans. NerdWallet's Margarette Burnette suggests that an emergency fund can prevent falling further into debt.
- Financial Stability and Confidence: Having a sense of financial stability and confidence without the need to prove it to others is another sign of financial health. This confidence comes from knowing that your financial affairs are in order, and you have a plan for the future.
Investopedia suggests that it's never too early to start thinking about investing for retirement. James Royal, PhD, recommends low-risk investments like high-yield savings accounts and certificates of deposit (CDs) as good options for starting out. It's important to remember that the benefits of saving money, even a small amount, can lead to future financial stability and goals.
If you aim to continue living the same kind of lifestyle in retirement, it's best to save 60% to 80% of the income you make before retirement. Social Security Administration payouts are only meant to supplement other money you have, and make up about 40% of a retiree's income.
In conclusion, true financial health is often quiet and understated. By focusing on getting your financial affairs in order behind the scenes, being debt-free, saving regularly, and maintaining a sense of financial stability and confidence, you can achieve financial well-being.
- A crucial aspect of financial health, as emphasized by Dave, is modesty in wealth display, which involves living below your means and not needing to show off your wealth.
- Regular savings, without stress, is another indicator of financial health according to NerdWallet's Margarette Burnette, particularly having an emergency fund that can help prevent falling further into debt.
- For those starting out in investing for retirement, low-risk investments like high-yield savings accounts and certificates of deposit (CDs), recommended by James Royal, PhD, can lead to future financial stability and goals.
