From a young age, you’ve probably been told that to be good with money, you need to save and spend wisely. But how do you know if you’re on the right track? Here are 5 tell-tale signs.
1. You feel at peace knowing you have a safety net
Unexpected setbacks like medical emergencies, sudden job loss, or another pandemic could really be scary. But you may not be so fearful when you know that you’ve done what you can to prepare, like setting aside an emergency fund.
An emergency fund ideally contains at least 3 to 6 months of your essential living expenses. This will serve as a financial cushion or a buffer to fall back on when the unthinkable happens.
Having an emergency fund also means you’re less likely to spend the money that you’re earning and saving for other purposes just to cover emergencies.
2. Money is no longer a huge source of stress
Financial insecurity can be a constant source of worry and anxiety. This often happens when your income is not enough to cover your needs and you turn to bad debt to make ends meet.
Once you’re free of debt or at least have it under control, you can clear out the stress and focus on the rewarding aspects of life.
When thinking about money no longer stresses you out, you won’t avoid checking your financial health by tracking your spending and calculating your net worth.
It might even become an exciting part of your routine to check how far you’ve come and periodically monitor your progress.
3. You rarely dip into your savings
Making frequent impulse purchases of non-essentials can wreak havoc on your savings. If you find yourself thinking about long-term plans before indulging in short-term wants, then it’s a sign you've got your priorities straight.
You’ll only spend the money you saved up for the right reasons and at the right time.
4. You always pay bills on time
Effective budgeting involves knowing what you need to pay for, how much, and when, then setting aside those amounts accordingly. You might even take things a step further by automating your bills payments.
Early or on-time payments ensure you’ll avoid penalties like late fees. They can also keep you from overspending because you’re putting obligations before luxuries.
5. Growing money for the future is a priority
When your immediate financial needs are well taken care of, it’s much easier to prepare for the future. You can turn your attention to long-term goals such as further education, homeownership, or retirement.
Since you’re no longer in survival mode, “pay yourself first” may become your go-to method for saving or investing money as the future becomes a priority instead of an afterthought.
If you can relate to all or most of the signs above, then you can rest easy knowing you’re managing money responsibly. But don’t be discouraged if you’re still missing a few things.
This only means your best years still lie ahead if you’ll work on building a healthy relationship with money and commit to doing better for yourself.
