How to Become Financially Stable

Being financial stable means not only being debt-free, but also that you can cover your living expenses and unexpected costs without struggling. In other words, it means that you’ve done your planning to keep a balance between your income and expenses. This will give you the freedom to do what you want without stressing about money. 

Here are a few signs that you can resolve problems without worrying about money:

1. You have peace of mind over your finances: Prioritise your financial wellbeing to create a sense of security. Having enough money to cover your everyday and emergency expenses, as well as freedom to do the things you like, such as enjoying holidays, will make you feel more secure and optimistic about the future, since you’ll be able to resolve any financial issues that might come up.
   
   
2. You’re using Credit Cards for convenience and rewards: Using your Credit Card wisely and being able to repay your balance in full at the end of the month can also positively impact your financial stability. This gives you the chance to enjoy benefits, such as earning cashback and rewards that you can spend on retail and travel experiences.
   
   
3. You’re able to pay your bills on time: Having enough money to cover your bills on time is an important aspect of taking control of your financial life, as well as avoiding late fees. Falling behind on payments can lead to debt and even affect your credit rating and borrowing power.
   
   
4. You have money saved in an emergency fund for unexpected costs: Facing a car breakdown or medical emergency? Having an emergency fund to cover any unplanned expenses or financial surprises that life throws at you could help you avoid making bad financial decisions, such as borrowing at a high interest rate.

Here are a few steps you can take to reach financial stability:

1. Learn how to manage your money: Creating a budget is the first step towards financial literacy, as well as stability. However, you need to make sure it reflects your priorities and values. Tracking your expenses and creating a plan could help you get a clear picture of your finances, address bad spending habits and even make better financial decisions. It could also make it easier to pay bills on time, reduce unnecessary costs, as well as build an emergency fund or achieve your future goals.
   
   
2. Invest in yourself: Being financially literate could help you achieve your money goals. Invest in learning new skills that could help you work towards a financially stable life. Start reading finance books, subscribe to financial newsletters and listen to podcasts to improve your financial knowledge. Try talking to a financial advisor who could help familiarise you with investing, understand your options and pick the right strategy to optimise your money and grow your income.
   
   
3. Prioritise paying off debts: There are two methods for getting out of debt, the snowball and the avalanche. The former means that you’ll need to list your debts by total amount and repay the smallest ones first, and the latter that you’ll need to prioritise paying off loans with higher interest rates. However, you’ll also need to make the minimum monthly repayments for all your other loans. Once you pay off your debt, you can start building your savings.
   
   Need help with debt management? You can look for free debt-counselling services from charities such as StepChange, National Debtline and Citizens Advice.
   
   
4. Save and invest: Set up a monthly payment into a saving account to make sure you stick to your saving goals. Remember to keep an amount to build an emergency fund for unexpected costs that might arise, saving enough for six or, at minimum, three months’ worth of expenses. If you don’t need the money in the next few years, you could consider investing to make the most out of it. But keep in mind that you’re taking a risk, as investments can increase or decrease, meaning you could also lose money. To feel more confident that you’re making the right choices, consider asking for professional financial advice.