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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%)
Being financially ok for years if you lose your job.
8 months income is not enough.
5% savings isn't maxing your 401(k) let alone funding your taxable portfolio.
Childs college fund is mandatory but a car fund?
Take as many vacations as you can afford after funding investments, college funds, etc. Being resonsible does not mean not to enjoy life. Get season tickets for a local pro team.
Try to do most through payroll deduction. If you work for a major corp you should have 401(k), a family of funds for taxable account, additional insurance of several types, credit union through payroll deduction.
Simple. Accustomed to a lifestyle that can be easily afforded by one's minimum earning potential.
You can always deliver pizza. You are financially stable if you have learned to live on that and have not accumulated financial commitments that exceed that.
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, 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
Not necessarely, I don't analise them... I set aside some, have others earmarked for others, and keep the rest of my spending under the $ amount.
-Making monthly contributions to retirement fund
So my yearly is not OK?
-Making monthly contributions to child's car and college fund
Don't have kids and if I ever do they will get a paid for cash clunker to wreck
-At least 8 months of income saved (For those inconvenient events)
Not enough
-Has life insurance
Why? I'm single with no kids.
-Takes one vacation each year (That's only because I love traveling!)
This has nothing to do with financial stability, it's lifestyle. And I take many
-Only debt is mortgage (On a 15 year plan and an interest rate less than 3.5%)
I don't see why these restrictions would apply...
To me it would be more about outgo:income ratio, liability:assets, and income stability.
Guaranteed income that exceeds my expenses until I expire. That's stable but not ideal. Ideal is guaranteed income to pass down generations that will exceed the expenses of generations.
Guaranteed income that exceeds my expenses until I expire. That's stable ...
I think that would be "financially independent".
Financially stable would be a situation where you're working toward becoming financially independent, but haven't gotten there yet.
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