5 Signs You’re in Good Shape Financially

I meet with a lot of people who don’t feel like they’re in a good place, only to discover in our Money Date that they’re actually on solid footing. Being in good financial shape doesn’t mean everything is perfect, you can have debt or a negative net worth! It’s all about creating a situation where income exceeds expenses and you have a plan to address the debts you have.

Here are 5 signs you’re financially stable:

1. You have an emergency fund in place

   • Having an emergency fund equivalent to at least three to six months' worth of living expenses is one way to signify financial stability if you have consistent income. For those with variable income we recommend you have more like six to 12 months in the bank. This fund acts as a safety net, providing a buffer against unexpected expenses or job loss without disrupting your financial health.

2. You’re consistently able to save (or invest)

   • Regularly contributing to savings accounts, retirement plans (like a 401(k) or IRA), and other investments demonstrates financial stability. It shows a commitment to building wealth for the future, whether it's for retirement, a down payment on a home, or other long-term goals.

3. Your debts are manageable

   • Manageable is a pretty subjective term when it comes to personal finance, so here’s what I mean: If you are able to pay your monthly loan payments without having to sacrifice various aspects of your lifestyle, you’re probably financially stable. Not all debt is a good thing, but being able to pay it down is. You shouldn’t buy a car or a house that burdens you financially. I’m talking more than just cutting lattes and avocado toast (not that I want you to cut these), but rather having to make truly difficult decisions in order to pay all your bills.

4. You live within your means

   • Living within your means is the greatest key to financial stability. It means your income exceeds or equals your expenses. Ideally you have money left over at the end of every month to put towards your goals too. Living within your means doesn’t mean you have to live in depravity! It means you’re savvy about your expenses and make an effort to spend on things that align with your values rather than those of the people around you.

5. You have a budget and you stick to it

   • Having a budget is a great indicator of financial stability because folks who make and keep them don’t let them tip into the negative. Sure, there are months where we dip into savings for a car repair or a vacation, but very few folks intentionally consistently spend more than they earn when they are monitoring their expenses. Having a budget allows us to see our expenses all laid out. This enables us to be smart about how we spend our money and ensure that when we part with our precious life energy (see the prior blog post on that) we are doing so with care and intention.

Are you financially stable? Take a look at your personal situation and see if things are actually better than you thought they were. If you need help, schedule a Money Date with Prosperity and we’ll help you untangle your finances in no time!