30-Nov-2018 written by : FSI-Team
For most part of our adult lives, we find ourselves worried about finances. After all, there are million things to take care of, and even after working hard, you may find it difficult to achieve financial stability. You may be telling yourself that financial stability can be achieved when you earn a higher salary or simply when your cash flow increases. The truth however is you can achieve financial stability even with your present income. Here are five ways in which you can assess your financial stability.
The first sign of financial stability can be assessed from your credit score. A CIBIL score of 750 and above out of 900 is indicative of the fact that your financial health is in order. You are doing things right to keep your credit health in order, such as making timely repayments of loans and credit cards bills and keeping your overall credit utilisation (the amount of credit you are using as against the total amount made available to you) under 30%. A high CIBIL score will also put you in good stead when you are seeking a line of credit. On the other hand, a low CIBIL score, can cause some difficulty for you when you need a loan.
The other indicator of financial stability is that you are in complete control of your credit card spend. This means that you do not spend more than you can pay within a billing cycle, and pay off the entire outstanding balance at once. This is indicative of the fact that you are conscientious about your credit health, and will reflect well in your CIBIL score. Further, as a judicious credit user you also keep a periodic check on your credit health, by accessing your free CIBIL report annually.
You are only too aware of the fact that life is uncertain and can throw a curveball at you at any moment and the next thing you know is that you are facing a financial emergency where your cash flows come to a sudden halt. To prepare for such situations, you have been investing regularly. As a result, you have a contingency fund that can fall back on for at least 6 months till your cash flows resume. This means that none of your loan or other credit repayments are impacted that can lead to a low CIBIL score.
Financial stability equals domestic peace. If you are in a situation where both you and your spouse are running the house like a well oiled machinery, investing at least 25% of your income towards meeting your financial goals, your life is pretty much sorted. You are probably habituated ti saving from a long time and have been enhancing your investments with every annual raise. As a result, money matters in general, do not send either of you flying off the handle impacting your physical and mental health.
However, do remember that maintaining good credit health is also integral to your financial stability. If both of you are breadwinners and are each servicing credit, remember to access your credit report periodically. You can make the best use of the CIBIL’s facility of accessing one free CIBIL report. in a year to check whether your credit health is in order.
If you find that there is much to be desired as far your financial health is concerned, do not panic. It is never too late to get started. All you need is basic financial discipline to get your financial life sorted.