If you want to become financially free, you will need to be financially mature. This takes time but there are plenty of signs to help you realize you are a money grown-up along your way to becoming financially free.
Financially Free: The Moment You Became a Money Grown-Up
It’s not easy to earn money. Sometimes, you need to work more than eight hours a day. Many times, you have to sacrifice time with your family to meet those deadlines. You miss important occasions. You sleep during the day and work at night. Even in your rest day, you had to check your inbox for some updates.
But until the time you’ve become financially mature, it’s difficult to understand and appreciate the value of money. Sometimes we think that since it’s our hard-earned cash, we can spend it on anything we want, anywhere we want. It’s easy to mindlessly spend on travels, shopping spree, hotel staycations, etc. After all, we worked hard for it.
But to be a money grown-up, it requires a different perspective. A different approach to managing our finances.
How do you know if you are a money grown-up? For a start, you can review our wealth management resources that will help you begin your financially free journey.
7 Signs That Show You Are Financially Astute
A way to become financially free is knowing what you are doing. You will know when you are financially free, but will you understand when you’ve become financially astute?
These are the signs that you have become financially mature and independent:
1. You know how much money goes in and out of your pocket each month
Knowing how much money goes to your bank account each month is easy, especially if you are a regular employee with a fixed salary. But are you able to track how much goes out of your pocket? This is very important because it is the first step to understanding how you are managing your money. Even more, it is the first step to taking control of your finances.
Above all, you want to be aware of your financial status. Are you spending way too much? Are you allocating enough funds for important matters like savings and investments?
Are you paying your debts on time? Is your lifestyle appropriate to your financial status? Having a clear idea where your money goes is an easy way to tell that you’re a money grown-up now. Know the difference between a fiduciary vs a broker.
2. You have an emergency fund
If you’re among the 39% of Americans who have enough savings to cover a $1,000-emergency, great job! Saving seems to be the hardest thing to do for many adults. Many people save up for a 5-day vacation abroad, a new car, or a bigger house, but couldn’t save enough for emergencies.
A sign of financial freedom and maturity is understanding that you have to be prepared as the unexpected always happens. Job loss, sickness, calamity – all these can take place at any person’s life. While you can always take a cash advance to pay for emergencies, you will be in a better position to pay it easily when you have a cash buffer.
If you transfer money from you checking, here is how routing numbers work. It’s a pretty interesting process.
3. You think about tomorrow
Money grown-ups don’t just live for the day. They think ahead and strive to secure their future. They always have a plan B or C when plan A didn’t work. You know you are doing a good job managing your finances when you have clear goals. That is to say “financial grown-ups” spend more time working towards their long-term goals than just spending time on planning the future.
You don’t just quit a job just because you want to. When you do, you know you will have a bigger opportunity somewhere else, maybe in a different company or in a business venture.
If you haven’t signed up for Personal Capital, do it now. It is completely free and is a true sign that you are financially free. Their retirement calculator and net worth tracker ensures that I am on pace to becoming financially independent as soon as possible.
Pair Personal Capital with our retirement readiness checklist to build your financial future.
4. You understand your wants and needs
As a money grown-up, you definitely understand the difference between your “wants” and “needs”. You don’t deprive yourself of your wants because they give you joy. However, you know your limits and you prioritize your needs over other things. You set aside money as savings, pay your bills (such as your rent, mortgage, electricity, etc), before spending money on your wants.
Additionally, you understand how important it is to not be a consumer. It’s better to conserve natural resources, which saves the earth and saves money.
5. You seek financial advice
Lastly, you understand that money matters can sometimes be complicated. That is why you don’t hesitate to seek advice from professionals. Whether you’re shifting career, investing for the first time, buying a home, or entering the stocks market, you can always get professional guidance from the experts who will help you become even more financially mature.
Financial advice is not only for the wealthy. Whatever issues you have – getting rid of debts, enjoying your retirement, or starting a family, you may not always get the best advice from your friends or family members.
A financial planner is likely to have the answer to all your questions and concerns. If you are a millennial, here’s how to find a financial planner for millennials.
If you have reached out for financial advice, you realize the importance of refinancing your debt as soon as possible to ensure interest expense savings. I refinanced my student loans with SoFi, which enabled me to save more for my first home purchase.
See Related: How to Teach Your Kids About Money
6. You think about your credit score
If you have high credit score it truly says that you have reached the point “financial grown-up”. One of the biggest financial mistakes that you can make is ignoring the credit score.
As it is your pass throughout whole life to obtain the best deals in every purchase; home buy, business deals, and other borrowings. You have started to work on it now because it is the best time to build your credit.
Becoming financially free takes time. Ensure you are tracking your financial freedom from debt by using a free credit reporting agency.
7. Starting to follow the successes of others
You have started learning financial lessons of experts such as Warren Buffett or Bill Gates, which they learned early in their lives, those are people who made impossible decisions for their new achievements. It can give you the inspiration to apply some points of their wisdom in your situation.
Thus, trying to make most from your own experience. It doesn’t matter if you are millionaire farmer or you flip sneakers for a living. You have a passion. You follow successful people and you keep pushing forward.
I follow the successes through reading quotes from expert financial investors and influencers.
Consider these financial planning quotes to maintain your financial ‘astuteness.’
Conclusion on Being Financially Astute
Being older doesn’t mean being more financially mature. It takes a conscious effort to become aware of your financial situation (from the money that goes in to your pocket to what goes out), understanding the importance of saving, thinking ahead, determining your needs and wants, and knowing when to seek help. Here’s a personal financial plan example to help you.
Every cent you earn is valuable. It is important to manage your finances wisely in order to grow your money, save for the future, and secure your family’s welfare.
As an adult, you are going to take many responsibilities in life, there are going to be a lot of challenges that you will face. Thus, being financially free will help you a great deal, it will ease the solutions of many problems and ensure you are ready to any life experiences. You should understand how to invest in the stock market with limited risk.
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