What Does Financial Stability Look Like

And Why Most Americans Aren’t There

“Mister, I can see there’s something you ain’t learned yet. You gotta crawl before you can walk,” important wisdom from 1960’s international father figure Jed Clampett.

Most Americans never reach the foundational level of wealth building which is financial stability. In today’s article, I will explain what financial stability is, review lifestyle habits that lead to financial stability, and the importance of reaching this level of success.

We live in primarily a paycheck-to-paycheck society. Americans are plagued with having more month than money. 57% of Americans have less than $1,000 in a savings account. 56% of Americans carry a credit card balance month after month.

There are several keys to reaching financial stability. The first is to have a budget and exercise discipline over spending habits. If someone is living in the constant credit card spending cycle, it will take sacrifices and adjustments to reach financial stability. Making smart decisions on consumption expenses such as housing and automobiles is a crucial part of the equation. Continually building individual skill sets to increase income is also a factor.

However, perhaps the biggest key is simply understanding delayed gratification. Reaching financial stability is a result of habits that result in regularly spending less than you make. An interesting side note is that reaching this status is not income based. A couple who makes $500,000 a year and spends $600,00 a year will never be on a glidepath to reach financial stability.

Here are some signs that someone has reached financial stability. They have a basic emergency fund that covers their highest insurance deductible and should be at least the equivalent of one month’s worth of expenses. Secondly, they are investing enough money to at least get a full employer match on their 401K. Also, they are not paying expensive consumer debt on credit cards. That is to say, they don’t use credit cards, or their credit cards are paid off in full each billing cycle.

Reaching financial stability is important because if someone has the discipline to reach this stage in life, which almost 60% of Americans will never do, they most likely have the discipline to move forward in the wealth building process (having a long-term emergency fund, opening a Roth IRA, maxing out retirement contributions, etc.). My advice for anyone on this journey is to avoid excuses that legitimize failure. Find ways to succeed, celebrate success, enjoy the process, build a better tomorrow.