Chances are, you’re not giving yourself enough credit.
When it comes to personal finance, it’s easy to beat ourselves up whenever we fall short of perfection. At the same time, there’s no shortage of shamey personal finance advice out there insisting that the occasional Starbucks is singlehandedly keeping us from ever reaching our money goals. But the reality is is that the all-or-nothing approach to money is self-defeating at best and entirely counterproductive at worst.
Even if you’ve just experienced a major setback or are struggling to make meaningful progress towards your goals, giving yourself credit for what you’re already doing right can give you the motivation you need to get going again. Below are15 signs that you’re much better with your money than you think. Even if you can only check off one of these, you’re still well ahead of the pack.
Sign #1: You can afford an emergency
Only 37% of Americans can afford a $500 emergency. If you can do this, you’re much less likely to fall back on credit cards and land yourself in a mountain of high-interest consumer debt when life inevitably happens. Even if you don’t have a full three- to six-month emergency fund saved up yet, keeping a starter emergency fund of $1,000 at all times can provide you with a significant margin of safety as you pay down debt.
Sign #2: You can pay your routine bills without dipping into savings
This shows that your income is not only stable and sufficient to meet your needs, but it also shows that you can and do consistently live within your means. While only living a life that you can afford may sound like financial common sense, not everyone manages to do this. In fact, 19% of Americans are living above their means for a variety of reasons.
Sign #3: You don’t use credit out of need
Credit cards are wonderful tools for building credit history and earning a little cash back on the side. That said, 43% of American consumers carry over a balance each month. This prevalence of revolving credit indicates that almost half of consumers are using credit to fill gaps in their budgets, which is then only spiraling them further into debt every month. In fact, the average American carries $6,194 in credit card debt, according to a 2019 Experian review. If you’re able to meet your financial obligations between paychecks and have remained out of credit card debt, you’re clearly ahead of the game.
Sign #4: You have good credit
Per the major credit bureaus, “good credit” generally means having a score of 680 or higher. And according to FICO, only 21% of Americans fall into this category. A score in this range comes with a number of benefits, such as having an easier time qualifying for loans, saving thousands in interest over time, and even avoiding some security deposits. But arriving at a good credit score isn’t always easy. It requires a consistent record of on-time payments, low utilization, and at least several years of history. So if you have a score in this range, be proud that you’ve managed your financial obligations well.
Sign #5: You’re not constantly stressed about money
You may not be able to buy yourself everything you want and may even be a ways away from reaching even one of your financial goals, but being able to provide the essentials for yourself without wondering how you’re going to pay for them is another clear sign that you live well within your means. Taking a minute to appreciate the peace of mind that being able to do this provides can really keep things in perspective as you work towards those bigger goals.
Sign #6: You don’t argue about money very often with your partner
This does not mean never having disagreements on the topic. Respectful differences of opinion are natural and show that both of you are invested in your shared future. That said, constant fighting over money has shown to be a leading cause of divorce and may signal that you and your partner do not share a common set of financial priorities.
Sign #7: You’re able to go somewhere — even if it’s just camping for the weekend
Having even $20 of flexibility in your budget shows that you can afford the little experiences that make life so much sweeter. And it also shows that you’re not spending every last dollar that comes in each month, which allows you to be much more intentional about how you allocate your discretionary funds.
Sign #8: You can pay your bills early
This shows that you not only have a sufficient income, but that you also have a budget that works. Rather than using your next paycheck to play catch-up on the month’s financial obligations, each paycheck is being used to get out in front of your coming expenses. Using your paychecks to proactively cover bills drastically reduces your likelihood of living paycheck to paycheck.
Sign #9: You’re able to give without sacrificing your finances
Being able to give shows that you’re not only able to take care of yourself, but that you also have enough bandwidth to help others. As long as you’re giving after paying your bills and saving at least 20% of your income, this shows that you’re able to use your budget to make room for what matters to you most.
Sign #10: Other people come to you for advice
More often than not, we’re our worst critics. And this is especially true when it comes to our finances. If even one friend, coworker, or family member has ever asked you what to do about their finances, this is a sign that you have your financial life a lot more together you think you do and it shows.
Sign #11: You know what you have, what you earn, and how you spend
Knowing where you stand financially is half the battle. And a shocking number of people don’t. According to Intuit, 65% of Americans don’t know how much they spent last month. If you know down to the cent how much you have, how much comes in at every paycheck, and where your money goes, you’re much less likely to live above your means and far more likely to set yourself on the path to long-term wealth creation.
Sign #12: You have money goals and track your progress toward them
According to Investopedia, only 30% of Americans have a long-term financial plan. While just having a plan doesn’t guarantee your financial success, it does take a significant amount of willpower and guesswork out of the many spend vs. save decisions we have to make every day. Further, having financial goals that you track on a consistent basis significantly increases your chances of reaching them over time. Additionally, visualizing your progress can motivate you to take on new, even more ambitious, financial goals as you continue to focus on what you need to do to achieve your current ones.
Sign #13: You’re aware of your financial to-dos
Whether it be filing your taxes or merging 401k plans because you just changed jobs, knowing what you need to do and making a plan to get it done on time can save you thousands over time in late fees, penalties, and opportunity cost. While keeping a paper list of these outstanding items is more than sufficient, plotting them on a calendar or using an app to manage them can keep them top of mind when life gets especially hectic.
Sign #14: You don’t need to check your account balance at checkout
Even when money’s tight, knowing what you have in your account before you run to the store allows you to shop with less stress by picking up what you know you can afford vs. winging it as you navigate the aisles and hoping for the best at the checkout counter. In better financial times, having the money you need in your account before you need it allows you to stay on top of your bills so that your leftover funds can be used to make significant progress towards any outstanding goals rather than being eaten up by late fees.
Sign #15: You know what your bad money habits are and are working to curb at least one of them
Whether you’re a boredom shopper or are constantly forgetting to pay your utility bill on time, you know where you stand and have a stepwise, time-bound plan for improvement. Using mobile apps and site blockers to help you change your habits also significantly enhances your chance of success by taking much of the willpower you’d normally have to rely on out of the equation. Kicking bad spending habits is also much easier when you make a list of your spending triggers and modify your routine to avoid as many of them as possible.