What is Financial Stability and How Do You Achieve It?
What does financial stability even mean? If this question often lingers in your mind, you must have looked into your personal finances and given your financial stability some thought.
The meaning of financial stability differs depending on who you ask. It could also vary from one individual to another, making it one of those concepts that lack a single universally accepted definition.
We believe that to be financially stable, you must have a healthy financial status. The benefits of financial stability are manifold and tend to cut across all aspects of your life.
And what better way to be financially healthy than to stick to the basics of proper personal finance? The best part is that you can borrow a leaf from financially stable and successful people to achieve financial stability fast.
Here goes financial stability hack #1
Make savings a habit
As cliche as having savings might sound, this particular piece of advice never ages. While savings is a broad term, you can break it down to what suits you. Think of it as setting aside some cash for uncertainties, kicking off your individual retirement account (IRA), or just saving for a rainy day.
Rather than save aimlessly, have an emergency fund set up with a check-off system to bank some money there every payday. This way, money meant for your emergency fund is out of the picture, and you won't even think about it as you plan out the rest of your monthly expenses.
It would be great also to have a separate savings account or a term deposit account that matures after, say, a month, three months, half a year, or annually. At maturity, you can roll it over or invest the funds elsewhere.
And if you're low on funds to prioritize any savings, you can always take some time to learn a new skill and monetize it. Or find a way to turn one of your hobbies into a side hustle. The extra money you make on the side will go a long way in boosting your financial stability.
Avoid impulse buying
Impulse buying or mechanical purchasing is a fancy way of saying unplanned purchases. Those can mess you up, especially if you impulse buy high-ticket items such as luxuries.
Rather than set yourself back a couple of hundred or thousand dollars, have a budget. It doesn't matter how bad you want something; if your pockets say no, you better listen.
Budgeting and automating your expenses is one trick we've found that works perfectly to escape all the trappings of mechanical buying. Create a priority list of your needs and only include the high-priority items in your budget. Automate the payment of your bills.
Guess what? You can't impulse buy when you have no extra money to spend. But then there are credit cards and overdrafts, which is the perfect segue to our next bite-size trick.
Do a debt-to-income analysis
You'd be a fool not to keep tabs on your debt profile. Whether it's student loans, credit cards, an auto or home loan, you need to have a plan to clear it as soon as possible or at least manage it efficiently.
It would be great to avoid debt at all times, but life happens. Besides, debt isn't necessarily a bad omen. And it's certainly not the end of the world for you.
The first thing you should do is grab a copy of your credit report. You can get one annually for free from the Federal Trade Commission's online portal or get one on demand from your credit reporting provider at a fee. The document gives you a snapshot of your debt standing in real-time.
It'll also help you do your debt-to-income analysis. It would be best to make more dollars than you owe. To ensure that happens, start by cutting down on debt. That means not maxing out your credit cards and paying your card expenses on time. Don't even think of using bank overdrafts because they're just as bad a debt item as the limit on your credit card.
Have a debt payoff plan and if possible, use the avalanche technique where you start by eliminating the largest debt or one with the highest interest payments from your debt portfolio.
Continually measure your financial stability
Believe it or not, you don't need expert advice to measure your financial health because simply tying up loose ends in your personal finance habits makes all the difference. Ask yourself these questions:
Do you have an emergency fund? Is it in the red?
Are your credit cards maxed out? Are you struggling to make the minimum payments on time?
Do you end up broke after planning your monthly expenses?
Are you borrowing money from family and friends to survive?
Are you drowning in debt and can barely meet the repayments requirements?
Do you have a retirement savings plan?
What is your credit score? Is it below 600 and dropping by the day?
If your answer to the above questions is yes, you have a problem, friend. It's time to invest in some financial literacy and learn a thing or two about money and financial stability.
That's where the services of the National Financial Credit Group come in handy. We help you get financial stability to reclaim your life. Our first concern is your credit score, as it will guide us in developing a strategy to repair your credit and open a new pathway for your financial stability.
We examine your credit report to ascertain your personal information, debt inquiries, and payment history and then raise disputes in case of any inconsistencies.
To learn more about financial stability and how to get an excellent credit score, reach out to us at https://www.nationalfcg.com/for-better-credit.