A lot of people have money, but not many have the skills to handle it.
Financial literacy is a virtue. It allows people to make the best use of the money they currently have, no matter how more or less, to make better-informed decisions that can help enhance their financial status. But, how do you know that you have achieved financial literacy? How do you know that you are doing good with your money? Well, certain signs show that you’re brilliant with your money. Want to find out? Read on then.
1. You Don’t Have Any Debt
One of the tell-tale signs that you are doing absolutely well financially is that you don’t have a debt of any form. This includes money owed to friends and family members, loans, mortgages, credit card payments, and other forms of debt. Eliminating debt helps free up money that you can use for other purposes like investment, savings, or emergency funds.
2. Your Money Is Invested in Multiple Places
You understand the importance of having a diversified portfolio. If you have put your money in different places such as real estate, stocks, bonds, insurance, or retirement accounts, then you will be better able to maintain financial stability at different stages of life.
3. You Have Multiple Income Sources
Having only a single income source is not enough in today’s time. That’s why most people live paycheck to paycheck with barely any savings. Thus, to live a comfortable life with substantial savings protecting you from unwarranted times, you need to have multiple income sources.
You can start a side gig, invest in the stock market, rent your room on Airbnb, or leverage other opportunities to have multiple income sources.
4. You Understand Inflation
You understand that the cost of most products, including essential ones, goes up over time. But at the same time, your income doesn’t increase at the same rate. This reduces your purchasing power. This increases your expenses and reduces your monthly savings.
If you understand inflation and how it impacts you, you are better suited to make earning, spending, and savings decisions to maintain the same lifestyle and purchase power.
5. You Live on a Budget
Budgeting is one of the most important ways to ensure to have detailed information about not only the income coming in but also everything going out. If you stick to a budget, you are in better control of your expenses. This ensures that you don’t overspend and have regular savings. Budgeting also helps you determine and create future financial goals without putting a strain on your finances.
6. You Have an Emergency Fund
If you have an emergency fund, you are better equipped to handle nasty curve balls life throws at you. Otherwise, you’ll have to take a loan or downgrade your lifestyle to cover the tab. Thus, if you have an emergency fund having around six months’ worth of expenses, you can handle the most difficult situations with ease.
If you can relate to any one or all the signs mentioned above, then be assured that you are doing well with your money. If not, it’s time to start managing your money better so that you can be financially stable, no matter what situation you might have to face at any instance.
