How to Know if You are Financially Well Off

Like it or not, money does rule the world, at least to some extent. Everyone wants to have a good financial life, or to lead a rich life. They want to earn enough to enjoy life and save up at the same time, they want to save up enough to lead a happy retired life, enough to never fall into debt, and to meet everything life can throw.

However, everyone can’t achieve the Rich Life. Not everyone’s financial health is strong enough. 

Do you want to know what separates those who have a strong financial health from those that don’t?

Here are the 5 signs which shall tell you the truth.

You have almost no debt

A little debt is fine. In fact, you may not be able to get loans if you don’t have a high enough credit score, which in turn comes from having taken loans and repaying them on time. Loans and credit cards can make your life easier, but their repayments can really affect your monthly savings. The money you save up from eliminating debt can be used for investing, for meeting emergencies, for home improvements, etc.

You are able to pay your monthly expenses with just your income

If both you and your spouse are earning, there’s good news. You can perhaps meet all monthly expenses by your income and your spouse can use his/her income for things like saving, vacations, eating out, and other expenses.

You always pay your bills on time

Want to know what is one of the biggest signs that you are financially strong? It is that you always pay your bills on time. If you are financially well-off, you won’t have problems in paying all your bills on time, especially since you know that if bills are delayed, you’ll have to pay interest soon. And that’s a total loss. And so, you do your best to pay bills on time, which is helped by the fact that you have enough money saved up, apart from income.

Your emergency fund is enough to help you in any situation

Let’s face the facts: a lot of people still do not have an emergency fund to fall back on. When disasters like Covid-19, unemployment, job loss, furloughs, medical emergencies, etc. hit, they fall in a lot of problems. But if you are financially strong, you know the importance of having an adequate emergency fund. This can help you tide over any crisis, and saves you from falling into a debt trap.

Your net worth rises each year

One of the biggest signs is that your net worth rises each year. This is fueled by your savings, investments and getting investment returns. 

If your financial life is not this strong yet, don’t worry. With some smart financial planning, you can be well on your way. Have a good insurance plan as it helps you to stay on track of your financial goals, for instance.