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10 Signs You Are Going to Be a Financial Success
10 Signs You Are Going to Be a Financial Success
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Money Management

10 Signs You Are Going to Be a Financial Success

Money254
Eunniah Mbabazi
July 19, 2022

No one can predict the future, but there are a few things that can give you a good idea of how things could turn out.

Ever worried that no matter how much you earn, save, or invest, it’s not enough to meet your long-term financial goals?

Many people are unaware of the steps required to achieve financial success. Some people believe that the only way to become wealthy is to obtain a high-paying job, others believe that being born into a wealthy family can also make you a financial success. 

Even though either of these scenarios could significantly improve your financial situation, financial success is possible when you maximize your financial resources to their highest potential, translating to never worrying, ever, about your money, or falling into a financial dress.

Here are 10 pointers that you are on the right track to achieving financial success:

You Started Investing Early

When it comes to building wealth over a long time, time is your greatest advantage. 

When you are young and have twenty to forty years before you retire, even the smallest investment has enough time to grow and multiply with the power of compounding interest.

The younger you are when you start investing, the more time it has to work on your behalf.

Read Also: The Life-changing Magic of Compound Interest

You Have Set Specific Financial Goals

What exactly does financial success look like to you? Do you want to own a home? Do you want your children to school in the most prestigious schools?

Without setting your eyes on what you want to achieve, then you will be groping in the dark, with no direction.

If you want to secure your children's future education, then you should start saving towards it as early as now. You could take an education insurance policy, or simply, set aside a separate savings account for the same.

Read Also: Money Mastery: How to Set & Actually Achieve Your Financial Goals

You Live Below Your Means

Living below your means, i.e., spending less than you make, almost always requires short-term sacrifices for you to reap long-term financial rewards. Living below your means implies that you are not incurring unnecessary debts like paying a car loan, and you don’t finance a new flat screen television just because it is bougie.

It means leaving a larger sum of the money you make to go into your investments, and savings (retirement and emergency).

You can have as many sources of income as you would like, but it will only make sense for your finances if you can live on less than you earn so that the difference can be put to better use to improve your life.

Read Also: 10 Warning Signs You are Living Beyond Your Means

You Stick to Your Budget

No matter what level of income you have, budgets ensure you stay on track with the financial goals that you have set for yourself.

Someone earning Ksh50,000 a month can save more than someone making Ksh150,000 if they are more committed to living below their means, sticking to their spending budget, and going further to automate their savings every month.

The 50/30/20 budgeting rule is one of the easiest tools you can use, which implies that 50% of your income is spent on needs, 30% on wants, and you save 20%.

You could consider automating your savings so that you do not have to stress about what exactly you should put away as savings.

Read Also: The Ultimate Personal Budgeting Guide

You Defer Gratification

When you set financial goals, stick to your budget, and live below your means, you will always defer gratification until you have the cash to afford the items you want.

You’re Prepared for the Unthinkable

Preparedness for the unthinkable protects the financial success you’re working so hard to achieve.

Even though misfortunes are an uncomfortable reality, you have planned for everything: healthcare insurance, life insurance, disability insurance, and car insurance. You also have a living will/last will and a healthcare proxy.

You also have an emergency reserve of cash to cover three to six months of your living expenses just in case.

Read Also: 7 Financial Emergencies Everyone Must Be Prepared For

Your Net Worth is Rising

Your net worth includes all of your debts (student loans, mortgages, etc), and your assets (cash savings, retirement funds, and investments, your home equity, and the value of your car).

With time, you would want this net worth to rise. Even though it’s normal for young adults to have a negative net balance because of car payments and student loans, just to cite a few examples, you want to get rid of this as soon as possible.

One way to do this, if you already living below your means and sticking to a budget, is to increase your sources of income. The extra income could be used to pay off these debts so that with time, you have more assets than liabilities.

You Have an Emergency Fund

A sudden loss of a job/source of income, or an urgent need to buy a car or cover huge medical expenses may throw you into financial distress if you do not have an emergency fund.

Experts recommend maintaining an emergency fund with enough funds to cover three months of living expenses.

However, if that’s more than you can currently afford, save what you can now and make incremental contributions to the fund until you’re able to reach this level.

Read Also: Easy Steps to Create an Emergency Fund in 100 Days

You Keep Debt to a Minimum

Debt is the biggest obstacle standing between you and financial freedom. Getting rid of debt ensures that you always get the most out of your finances. 

This means that the money you could have used to pay the high interests or penalties could go into your savings and investment options, and still leave you with more for spending.

Leading a debt-free life will also free your mind of the worry and stress that come with debt.

Read Also: Coping With Debt: How To Deal With Debt of Any Size

You Have Multiple Sources of Income

Creating multiple income streams insulates you from the financial shocks of job losses, closed down businesses, huge financial emergencies, etc.

If you have an 8 to 5 job, consider working part-time, online, and make more money (side hustles)

You may not need the money now, but it could go into your retirement savings, enabling you to retire early. The extra money earned could also be used to pay off your debts.

Read Also: 8 Ideas to Create Multiple Sources of Income

Wrapping Up

Achieving long-term financial success, for many people, may appear as a path riddled with lots of uncertainty and doubt. However, by starting small and following the above-mentioned pointers, you’ll put yourself in a position to become a financial success.

Eunniah is an experienced business writer and editor. She is also a published author with two titles under her belt; Breaking Down and If My Bones Could Speak. You can find Eunniah on Twitter @Eunnyversal

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