Personal Improvement

Are You Financially Stable? 19 Markers of Financial Stability

Updated on August 15, 2023 Updated on August 15, 2023
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Table of Contents  
  1. 19 Markers of Financial Stability
  2. Saving
  3. Debt
  4. Investing
  5. Making Money
  6. Social
  7. How’d You Do?

    Being financially stable will mean something different for everyone. Some people won’t feel financially stable until they have a few million dollars in the bank. Some of us will feel as though we’ve achieved financial stability with far less. But being financially stable isn’t all about dollar amounts.

    There are so many other factors which is good because not all of us are going to be millionaires, but we can all be financially stable. Some things are easy to achieve, you can do them in just a few minutes like checking your credit score. Some things will take years to accomplish, like saving enough money for retirement.  That’s okay. Think of this as a checklist that you can work your way down, a little road map to creating a sound financial future.

    The list is long, but none of the things on it is particularly difficult or beyond the capabilities of anyone reading this. A lot of people make a lot of money by convincing us that achieving financial security and peace of mind is so complicated that we should read their books, spend money attending their seminars, and pay for their advice. But personal finance is not that complicated. 

    And to prove it, we’re going to lay out all of the markers you need to check off on the road to becoming financially stable and show you how you can accomplish each one. Ready? Here we go.

    19 Markers of Financial Stability

    I debated how to organize this list. Should it be in chronological order; do this then this then this? Or should it be broken down by category instead? I decided to go with Category because I thought it would be easier to reference. But some things are more urgent than others so I’ll note the most urgent markers of financial stability, so you know how best to prioritize this list.


    Americans are not saving enough money. 

    “The finding that four-in-ten adults couldn’t cover an unexpected $400 expense without selling something or borrowing money is troubling, Nothing is more fundamental to achieving financial stability than having savings that can be drawn upon when the unexpected occurs.”

    This is a shocking statistic but not necessarily surprising when you consider that 78% of us are living paycheck to paycheck. You can’t be financially stable if you’re not saving.

  1. An Emergency Isn’t a Catastrophe: High Urgency
  2. An emergency fund can be the difference between a bump in the road and a flaming car crash. When you have an emergency fund, you’re giving yourself peace of mind. Car needs new tires? No problem, your emergency fund can handle it. You get sick and miss a few days of work, but you don’t have paid sick leave? Good thing you have an emergency fund!

    Of all the things on this list, saving $1,000 for an emergency fund is the most urgent, even ahead of paying off credit card debt. It’s a significant achievement to save $1,000, but your work isn’t done. Ideally, your emergency fund contains 3 to 9 months’ worth bare-bones living expense.

    This is a lot of money for anyone but if you suffer a job loss and it takes you a while to find new employment, $1,000 isn’t going to go very far. Reaching that 3 to the 9-month threshold is not as urgent as that first $1,000, but you should actively work towards it.

    There is a lot of debate around where to keep an emergency fund. The money needs to be liquid and quickly accessible, but you don’t want to save tens of thousands of dollars in a savings account where it’s losing money to inflation. We say split the difference. Keep enough money to pay for six weeks of regular expenses in your checking account, enough for 7 to 10 weeks in a high-yield savings account and the rest in one of these short-term investment options. 

  3. Mint is Your Friend: High Urgency
  4. Where exactly is all of this money for your emergency fund coming from? You can often find at least part of it when you create a budget. Most of us spend way more than we realize and spend on unnecessary things.  A budget will show you how much you’re spending and where you’re spending it. 

    We like Mint because it’s a budgeting app that’s free and easy to use, but you can use whatever works for you; You Need a Budget (great for those with irregular income), Personal Capital, or a good old fashioned spreadsheet.

    Mint Budget

    Budgeting doesn’t have to be complicated. Use the 50/30/20 method. Once you have your budget set up, go through the last 1 to 2 months’ of transactions and see where you’re wasting money. Start cutting that waste and funnel that money into your emergency fund.

  5. Spending is Optimized
  6. A budget will show you where your money is going but can’t optimize your spending. But some tools can help you with that. Trim is like having a personal assistant who goes through your transactions and finds waste.

    If you have recurring expenses like a gym membership or subscription services (Spotify, Audible, makeup boxes, etc.) Trim will ask if you want to cancel them. And really, are you getting your money’s worth out of these things? If you are fair enough. But often we don’t use these things, but we can’t be bothered to cancel them. With Trim, you don’t have to. The app will cancel them for you.

    ways to save money trim app

    Bill Shark is another excellent money-saving app. It will negotiate better rates with your cable, wireless phone, satellite TV and radio, internet, and home security providers. You don’t have to search around for a better deal or spend time calling those providers to get it. Bill Shark handles it for you.

    You can save money on a move, shopping online, your electric bill, cleaning your house, eating out, and nearly anything else you spend money on.

  7. You’re Close to 760
  8. Your credit score is close to 760, that is. What does your credit score have to do with saving money? A lot. The higher your credit score, the better interest rates you can get when you borrow money for a personal loan, a business loan, a car loan, a refinance, and a mortgage. And even getting an interest rate 1% lower will save you thousands of dollars, tens of thousands when it comes to buying a home.

    You don’t need the highest credit score possible (850 depending on which model) but if your score is 760 or higher, you’ll get the best rates. If you don’t know your credit score, you can get it for free, including the factors making up that score, at Credit Karma. 

    Credit score

    If your score is not at 760 or better, there are lots of things you can do to improve it and certain things like lowering your credit utilization will increase it by a lot and fast.

  9. You Live Within Your Means
  10. The key to becoming financially stable has less to do with how much you make than it does with how much you spend. Spend less than you make and you’re halfway there. The most significant expense for most of us is housing. The rule of thumb is to keep total housing expenses at a third of your net income or less.

    We all like to spend money, but you can’t have the best of everything. Well, some people can, but they’re not reading this article. Ramit taught us that you are allowed to spend on the things that are important to you so long as you’re saving on things that matter less.

    Is your hobby photography? Excellent, buy the best equipment you can afford, but you’ll need to cut back somewhere else. Are you a jeans and t-shirt kind of a person? You can buy plenty of well-made jeans and t-shirts at Target. No need to hit up Barney’s. More money for camera stuff.

  11. Fun is Free
  12. Spending money is fun; I get it. Going out to eat, going for drinks, going shopping. But you should be able to entertain yourself (and others) and have a good time without spending money, or at least without spending a lot of money. Here are cheap date ideas and free things to do on a Saturday night. 

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    Not only do many Americans lack savings, but they are also in debt up to their proverbial eyeballs.

    Consumer debt was approaching $14-trillion in the third quarter of 2018, according to the New York Federal Reserve. It was the 17th consecutive quarter for an increase.

    Home, auto, student loan, and credit card debt are classed as consumer debt. Not all debt is bad debt, and some kinds of debt are worse than others, so you don’t have to be 100% debt-free in order to be financially stable. But less debt is better, so let’s see how to reduce or eliminate debt.

  13. No Credit Card Debt: High Urgency
  14. Credit card debt is an emergency. There are only two things you should put ahead of paying it off as quickly as possible; saving a $1,000 emergency fund and contributing enough to your 401k to get the match.

    After those things are done, every spare penny you have goes towards paying off these debts. There are ways to accelerate paying off high-interest credit card debt. The best option is a balance transfer credit card. You’ll typically have 6-24 months during which the credit card has a 0% APR. You roll the balance from a current credit card to this card, and during the introductory period, all of your payment goes to the balance. If you can get the balance paid off before the 0% APR period ends, you’ll save a ton on interest.

    A personal loan is another option. You still have debt, but if your credit score is good enough, the interest rate is lower than the interest rates on your credit cards. Upgrade offers personal loans to pay off credit card debt (or for any other use).

    Tally is a relative newcomer to the personal finance world. Tally is an app that helps you manage credit card payments and pay off credit card debt using a line of credit.

    These options all require a credit score that isn’t in the toilet. If your score is, you can still pay off credit card debt efficiently with the snowball or stacking method. Stacking will save you the most money but snowballing is more psychologically satisfying, which may make it easier for some people to stick with.

    However you pay off your credit card debt, get it done fast. There is no way to become financially stable when you’re in credit card debt. 

  15. Student Loans are Manageable
  16. Ideally, none of us would have student loan debt, but millions of us do. 

    There are more than 44 million borrowers who collectively owe $1.5 trillion in student loan debt in the U.S. alone. Student loan debt is now the second-highest consumer debt category – behind only mortgage debt – and higher than both credit cards and auto loans. Borrowers in the Class of 2017, on average, owe $28,650.

    And student loan debt is not the worst kind of debt to have. The interest rates on student loans, particularly federal loans, is relatively low. If your student loans are private, the interest rate is higher, but there are ways to reduce your interest rates for both. Lowering your interest rates with a student loan refinance can save you thousands of dollars over time. You can refinance with Earnest as their rates are some of the lowest available.


    Credible will show you offers from up to 10 lenders so you can choose the best rate. This window shopping won’t impact your credit score. And don’t forget, you can refinance more than once. If your credit score goes up or your debt-to-income ratio improves, shop around again and see if you can get an even lower rate.

    The marker of financial stability when it comes to student loans isn’t necessarily to have them all paid off. You can typically expect a higher return on long-term investments than you’re paying in interest, so you don’t want to forego investing until your loans are completely paid. You can’t make up for that lost time. Your goal should be to have a student loan payment that is manageable.

  17. You Don’t Drive a Ferrari
  18. Many of us behind LMM don’t drive. We live in cities with excellent mass transit, so we don’t need cars. So cars are not something we prioritize, and our advice is to save up and pay cash for a car. But we get it that everyone does not share our perspective.

    In fact, recently, we made the executive decision NEVER to mention anything about cars again. Not even in an example, because it seems to be such a hot button issue for many people and we get all sorts of crazy, angry emails whenever we bring them up.

    So our advice on car loans is to keep them manageable. You know how much car you can afford and you know when you’re trying to act like a baller by buying a crazy expensive car that you cannot afford.

  19. Or Live in a McMansion
  20. Just like you shouldn’t drive more car than you can afford, you should not live in more house than you can afford. Remember, your total housing cost should not exceed a third of your net income. You should also save enough for a 20% down payment so you can avoid the expense of PMI.

    And your home should not be considered a real estate investment. It isn’t. A real estate or any other kind of investment is something that makes you money, something a home does not do. Even if you’re mortgage-free, you’re still spending money on things like property taxes, homeowners insurance, and maintenance. A house doesn’t make you money until you sell it and sometimes not even then.

    Not every decision has to be financial. There are plenty of legitimate reasons people have for wanting to buy a home to live in, but your home is not an investment or a retirement plan.


    Most of us are not going to become rich from our jobs alone. For every investment banker, there are a thousand teachers, firefighters, and postal workers making low to mid-five figures. And yet there are more than a few teachers, firefighters, and postal workers who manage to retire as millionaires. How? Through investing. 

    Opening an investment account gives you access to the biggest money-making vehicle in the history of the world — and you don’t have to be rich to do it.

    It’s investing and not a six-figure salary that makes people the millionaires next door. So if you want to be rich, but you’re afraid of the stock market, get over your fear of investing. 

  21. You Know Your Number
  22. If you’re going to have a goal, you need to know how you’re progressing toward that goal and when you’ve reached it. How much should you have in your 401k? What is your end goal retirement number? We like the 4% rule as a way to determine your final retirement number.

    The 4% rule is a benchmark that can be used to calculate how much money to withdraw from your retirement accounts every year for at least thirty years without depleting those accounts and outliving your money.

    Here’s how the 4% rule works. You can withdraw 4% of your retirement money each year for all of your expenses. If you have $500,000 saved, you can withdraw and spend $20,000. But you need to account for inflation too, so you increase the amount of that first withdraw ($20,000) to reflect the impact inflation has on your buying power.

    If annual inflation is 2%, the second year of retirement, you take out $20,400. The next year, $20,800, and so on. You continue these 4% withdrawals and the extra amounts to preserve your buying power no matter what the market is doing or how your portfolio is performing. Adding in the amounts to account for inflation will ensure that you have the same purchasing power in your first year of retirement as your last.

    There are plenty of other rules of thumb you can use to get your number, but we like the 4% rule because it’s easy to understand.

  23. You’re Investing For Retirement: High Urgency
  24. Investing and retirement investing are two different things. Retirement accounts like 401ks and IRAs are tax-advantaged. Those advantages are essential for retirement savings. The two most expensive things in life are interest and taxes. We showed you how to minimize interest; investing in retirement accounts is how you (legally) reduce taxes.

    There are also penalties for withdrawing money early from a retirement account. That sounds like a punishment, but it’s a good thing. Retirement saving is long-term. That money needs decades to grow so you shouldn’t use a retirement account as a piggy bank. That’s what your emergency fund is for.

    Your priority is to contribute enough to your 401k to receive matching funds from your employer. This is free money and the reason we suggest you do it even if you have credit card debt. Not all 401ks are great. Sometimes the fees are high, and sometimes the investment options aren’t great. Blooom can take a look and show you how healthy your 401k is. Even if it’s not great, contribute for the match. If it is good, max it out.

    If your 401k isn’t great or you max it out, you can move onto an IRA. We’ve covered the differences between a Roth and a Traditional. You’ll have much more flexibility with an IRA than your employer’s 401k.

  25. And Investing More Short-Term
  26. You don’t want to have all of your money locked up in a retirement account. Some of your financial goals will be more short or medium term. Short term is five years or less, and medium-term is six to ten years. A short term goal might be to pay for a wedding. A medium-term goal might be saving for a rental property.

    This money doesn’t have decades to ride out the ups and downs of the stock market the way the money in your retirement accounts does, but it’s a lot of money to have sitting around in a high-yield savings account making jack interest.

    Betterment is our favorite Robo-Advisor, and they have several options to help you choose the right investment depending on your financial goals including saving an emergency fund, a significant purchase, educational expenses, and general investing.

    Betterment Betterment mobile app

    We also love Vanguard for both everyday and long-term investing.

  27. You Have a Little Real Estate
  28. Remember, the home you live in does not count as an investment, real estate, or otherwise.

    No, you don’t have to have enough money to buy a vacation home or even buy any home at all to add some real estate to your portfolio.

    We love rental property as a form of passive income.

    You don’t have to be a hands-on landlord or even own a rental property near where you live, something that is impossible for people who live in high cost-of-living cities.

    Using a turnkey rental property strategy lets you invest from a distance. In fact, Andrew started investing in real estate by following this model. He now owns three properties.

    He and his wife documented their experiences and created a course, Rental Properties for Passive Investors, which details their entire process.

    If you’d like to learn more about the steps they took to generate this passive income stream, you can see the course here. 

    Rental Properties for Passive Investors

    Our proven, data-driven approach to building a portfolio of income-producing rental properties that perform in the long-term.

    If you can’t afford or don’t want to own rental property, you can still invest in real estate. Fundrise is an eREIT, and you can invest in real estate for as little as $500.

    Making Money

    At some point, you’ve optimized spending, and you need to look for ways to make more money. Or you suck at optimizing expenditures, and you have to make more money. This is my philosophy. I’m pretty self-indulgent and would rather make more money than fret over every penny I spend. Or as Andrew once famously said, “I’d rather have the wine.” I’d rather have the wine too. In fact, sometimes I’d rather have the champagne!

    Whichever camp you fall into, you gotta make more money.

  29. You Know Your Worth
  30. Employers love to scare employees into remaining silent about how much they make because it’s a way to keep wages low. But it’s, in fact, illegal to fire employees for discussing salary. 

    That said, a lot of people are uncomfortable talking about their salary. Lucky for us, we can find this information on sites like Glassdoor, PayScale, and Salary Expert. Use these sites to find out what people in similar jobs in similar areas, in similar companies to yours are making. Knowing what you should be earning is the first step to making more.

    Armed with this information, you’re going to ask for a raise. But you have to justify it. Why do you deserve a raise? If you’re offered a raise, negotiate for a better one. If you’re turned down, polish up your resume and start looking elsewhere. 

  31. You Have a Hustle
  32. I know, everyone hates the term side hustle. Fine! Propose a better one, and I’ll start using it. The point is, everyone should have at least one side hustle. Even making a little extra money each month can go a long way to helping you reach financial stability.

    It can help you get out of debt faster, grow your emergency fund, or accelerate your investing goals. And if you suffer a job loss, that extra money is better than nothing. Ideally, one of your side hustles brings in passive income.

    We all only have so many hours in the day, and we don’t want to spend all of them making money. A passive income side hustle brings in cash without much or any effort from you (Eventually. Sometimes it takes some effort to get the hustle up and running).


    Money is often a taboo topic, but it hangs over many social interactions and relationships.

    Some people are so poor all they have is money.

    Tweet This

    Money should not ruin relationships, but it should never be a taboo thing to discuss in your relationships either. Bringing money out of the dark is healthy for your relationships and your wallet.

  33. You Have Some Financial Friends
  34. Who you choose to allow into your life has a tremendous impact on your behavior. 

    Renowned businessman Jim Rohn once said, “You’re the average of the five people you spend most of your time with.” Bottom line: The people around you matter. You need people — whether it’s co-founders, mentors, family or friends — who will challenge you and make you better, thereby raising your average or helping you maintain a high one.

    Make sure some of the people in your life can be considered financial friends. People who have a similar money mindset to yours and who have goals similar to yours. Sure, those slacker friends from college are fun, but you’re an adult now, and you need to surround yourself with people who are financially stable and responsible.

  35. You and Your Partner Are on the Same Financial Page
  36. Money can be one of the most contentious subjects in a relationship. There is a lot of room for compromise, but when it comes down to brass tacks, you and your partner have to agree about most money issues. 

    Get financially naked as soon as it seems you’re heading down the path of joining your lives. It can be tough when there is financial inequality in a relationship, and some men will struggle when she makes more.  These things can lead to financial infidelity, which can be as devastating as romantic infidelity.


    If you and your partner can’t talk openly about money and come to an agreement about your financial future, you’re heading for a split, and it can get ugly. Your partner must be your best financial friend. 

  37. You Know How to Buy Happiness: High Urgency
  38. I’m the last person in the world to tell you not to spend money to have a good time. I moved to New Orleans because I wanted to have a never-ending good time. Three years in and les bons temps roule my baby! But I don’t spend money on things. Buying things is not the same as buying a good time, although some people mistakenly think it is.

    Buying experiences has been shown to make us happier than buying things.

    Initially, their happiness with those purchases was ranked about the same. But over time, people’s satisfaction with the things they bought went down, whereas their satisfaction with experiences they spent money on went up.

    So take that vacation, go to that concert, have the wine! But don’t buy the new car, the bigger house, or the flattest TV. Come to New Orleans! Mardi Gras is possibly the most fun and costs exactly $0.

    Mardi Gras

    I marked this one as High Urgency because everyone reading this works hard and deserves to be made happy by the money they work hard for. So think of a few things you want to do that would make you happy. And then go do them, preferably with one of your financial friends. Making memories with someone close to you is part of the reason buying experiences makes us happier than buying things.

    How’d You Do?

    How many of the 19 markers of financial stability can you check off? I can only check off 13 (I’m not telling which 13!) and I do this for a living so if you can’t tick all the boxes, don’t sweat it. I didn’t write this to make you feel bad but to give you a guide on how you can become financially stable.

    But for real, get on the High Urgency ones as soon as you’re done reading this.


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Candice Elliott - Senior Editor Candice Elliott is a substantial contributor to Listen Money Matters. She has been a personal finance writer since 2013 and has written extensively on student loan debt, investing, and credit. She has successfully navigated these areas in her own life and knows how to help others do the same. Candice has answered thousands of questions from the LMM community and spent countless hours doing research for hundreds of personal finance articles. She happily calls New Orleans, Louisiana home-the most fun city in the world.
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