How would you know if you have reached financial stability? Does having a high position in your company with a decent paying job automatically make you a candidate for one? Or could it be seen in the assets that you own from luxurious cars, modern and contemporary house and the likes? For a great number of people around the world, that is the standards of being financially dependent. Unfortunately, this is a totally wrong concept that they have in mind.
Good for you to stumble in this article. It’s because we are going to discuss more accurately and deeply ways on how you would know whether you are standing on stable and solid ground or are you still on a quicksand when it comes to your financial stability.
Questions that’ll make You Realize Your True Financial Status
As a matter of fact, this is a fairly easy process and you can find the answer by asking yourself these questions.
Question #1. Are you spending less than what you are earning?
The primary factor for reaching financial independence or stability is assuring that you are not spending beyond the amount you are earning. Come on! This is basic and only needs common sense.
But for accuracy, you will have to check all expenses you have made for the entire year.
This will include literally everything from real estate taxes, income taxes, car registration fees, mortgage and everything in between.
After doing so, subtract that amount to your total income per year including the 13th month pay as well as other bonuses.
This is how would you know whether you gained or you made losses for that year.
Question #2. Are you liquid?
A sign that you are getting into financial stability is when you have enough money to pay for short term debts. Cash is basically the money you have in your wallet as well as saving accounts. Short term debts on the other hand are the money you owe which must be paid in a given period (usually few months up to a year).
Personal loans as well as credit debts fall into this category.
Question #3. Are you solvent?
It is integral to establish a positive net worth. Assets are basically the present monetary value of your cash, investments and properties. Liabilities however are referring to your short-term debts including the remaining balance for other long-term debts you owe.
To know how you can make financial stability a reality, now is the time to check more about Need Money Now.