Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
I would say where your expenses(including savings) < income. Within the last year I stopped budgeting and writing everything down, because I didn't have to anymore - it became a tiresome pain in the butt rather than a necessity. Everything is set up to automatically come in and out of our bank account, and it balances nicely every month. If we have a big expenditure (trip), I transfer money over from a different savings account to cover.
Obviously, everyone's answer will be different because we all have different spending and saving styles. I'm all about saving one income and spending the other (preferably spending the smaller one).
My definition of someone who is financially stable, is someone who is:
-Analyzing their monthly expenses
-Making monthly contributions to retirement fund
-Making monthly contributions to child's car and college fund
-At least 8 months of income saved (For those inconvenient events)
-Has life insurance
-Takes one vacation each year (That's only because I love traveling!)
-Only debt is mortgage (On a 15 year plan and an interest rate less than 3.5%)
Ok but you missed a very important item. Disability insurance.
Obviously, everyone's answer will be different because we all have different spending and saving styles. I'm all about saving one income and spending the other (preferably spending the smaller one).
My definition of someone who is financially stable, is someone who is:
-Analyzing their monthly expenses
-Making monthly contributions to retirement fund
-Making monthly contributions to child's car and college fund
-At least 8 months of income saved (For those inconvenient events)
-Has life insurance
-Takes one vacation each year (That's only because I love traveling!)
-Only debt is mortgage (On a 15 year plan and an interest rate less than 3.5%)
You're extremely specific....
"Analyzing" expenses....perhaps, may be too strong a term for those who have done so in the past and it has become a lifestyle to live a certain way.
I'm surprised you don't say "maxing out" retirement funds or specify 20% of gross income?
Many would disagree with funding a child's car
Emergency fund size differs by proportion of discretionary expenses, stability of current job, whether two incomes, etc.
Not everyone needs life insurance - if you have no dependents
Taking a vacation has nothing to do with stability...if you are using that as a proxy for having saved enough money to do something discretionary, then perhaps...even with stable income there may not be a lot left over, especially after saving
Working toward no debt is admirable...even people with stable income may decide to replace a 15 year old car using a 1% loan because they value liquidity more, etc.
Mortgage rates have been double digits in the not so distant past - it is the luck of your timing to be born that you can take advantage of such low rates...who knows how long they will last.
Ok but you missed a very important item. Disability insurance.
DI doesn't work for everyone. It can be expensive for certain professions and only pays based on W2 income. Lots of people don't get W2 income or if they do it is minimal and commissions make up the real money.
Obviously, everyone's answer will be different because we all have different spending and saving styles. I'm all about saving one income and spending the other (preferably spending the smaller one).
My definition of someone who is financially stable, is someone who is:
-Analyzing their monthly expenses
-Making monthly contributions to retirement fund
-Making monthly contributions to child's car and college fund
-At least 8 months of income saved (For those inconvenient events)
-Has life insurance
-Takes one vacation each year (That's only because I love traveling!)
-Only debt is mortgage (On a 15 year plan and an interest rate less than 3.5%)
To me, if your friends or family decides to ask you to go on a vacation to say Europe for a month, and you don't even hestitate and can pay for your vacation in cash and still have your emergency fund intact, I think you're financially stable. Plus while on your vacation, you don't have a set budget per say so that you can spend money (within reason) and not worry.
Obviously, everyone's answer will be different because we all have different spending and saving styles. I'm all about saving one income and spending the other (preferably spending the smaller one).
My definition of someone who is financially stable, is someone who is:
-Analyzing their monthly expenses
-Making monthly contributions to retirement fund
-Making monthly contributions to child's car and college fund
-At least 8 months of income saved (For those inconvenient events)
-Has life insurance
-Takes one vacation each year (That's only because I love traveling!)
-Only debt is mortgage (On a 15 year plan and an interest rate less than 3.5%)
Quote:
Originally Posted by packer43064
Those sound like pretty good definitions, besides the save for kids car and schooling. Not everyone wants to nor should do this. If you can do it fine, but don't sacrifice retirement or anything like that. I figure if I can make it (or you) without my parents giving my a silver spoon certainly my kids can too.
My definiton is simple. If you can pay bills, save for retirement, have X amount of savings, still have some fun you are doing fine.
Obviously it's your money, your life, and your kids, but I agree wholeheartedly with Packer. My dad's definition of helping me with a car was to look through the classifieds and Craigslist, find one that looked ok, and check it out mechanically. I didn't even realize till many years and a few used cars later that the reason why I was still using Craigslist and literally didn't know what a "car note" was until someone explained it to me was because of his help. He may not have bought that $2,000 used car but I'd guess that his help saved me many thousands down the road.
Similarly his idea of helping me with college was encouraging me to keep the GPA up in highschool, helping find scholarships, and looking at in state schools. My first year cost $3,000 total including room & board.
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.
Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.