Signs You’re Doing Well Financially

Many of us are on a journey , tightly entwined with financial success. It is true we all begin at different levels, some from below the ground with no education, no inheritances, sometimes with no roof over their heads and all odds stacked up against them while others begin at the ground level at least with some education and other starting points. While others above the ground, with inheritances, employment lined up, businesses set-up, positions int the right places at the right time for opportunity to strike, all they have today is say yes. Such is life, isn’t it? In a similar way, Financial success is often subjective, as it encompasses various aspects that aren’t always visible. If I came from Katanga slum in Kampala, my definition of financial success may be different from the ones born in Lavington , Nairobi. However, there are several key indicators that can help you assess your financial well-being. Understanding these signs can reassure you that you’re on the right track and guide you in making informed decisions for your financial future.

Are You Taking the Right Actions?

One of the most significant indicators of financial success is whether you’re consistently taking the right actions toward your financial goals. It doesn’t matter where you are at, but if you have decided on taking the journey and you are drilling, it’s ok.. 

There are two primary paths people follow: the comparison path and the wealth creation path. The comparison path often leads to dissatisfaction, as it focuses on external factors like the size of your home or the brand of your clothes. This path centres on how you rank compared to others. In contrast, the wealth path emphasises building value through actions that generate long-term financial security. This includes having money in the bank, making smart investments, and continuously improving yourself. By focusing on the wealth path, you’re likely doing better financially than you might realise, as this path prioritises sustainable growth over superficial comparisons and short term gains

How Much Should You Be Earning?

Another way to gauge your financial standing is by considering average incomes. Taking the examples of the United States and the United Kingdom, average income varies based on factors such as location, industry, experience, and job role. For instance:

• United States:
  • Median household income (2022): $67,149 (U.S. Census Bureau)
  • Average annual salary (2022): $58,131 (U.S. Bureau of Labor Statistics)
  • Average monthly salary: around $4,844
• United Kingdom:
  • Median household income (2022): £34,400 (around $44,700 USD) (Office for National Statistics)
  • Average annual salary (2022): £35,423 (around $46,100 USD) (Office for National Statistics)
  • Average monthly salary: around £2,952 (around $3,842 USD)

These numbers, however, matter less to our self-assessment than the earnings of our friends and peers. You should also know that the fear of loss—the pain of losing being twice as powerful as the pleasure of gaining—impacts our financial satisfaction. If you discover you’re earning more than your peers, you might feel content briefly, but if you find out you’re earning less, it has a greater impact on your happiness and lets say well being. This cycle of comparison can lead to discontentment, even if you’re doing well financially. Breaking this cycle involves focusing on personal growth and setting your own benchmarks for success.

The 3 Fundamentals to Get Right

There are three fundamental aspects of financial health that you must get right to ensure long-term success:

1. Understand your love hate Relationship with Money: Track your income and expenses, and live within your means. This involves either increasing your income or reducing your outgoings to save or invest or even both. Using a budget or a financial tracker can help you understand your financial position and make informed decisions.
2. Have an Emergency Fund: An emergency savings cushion sets you ahead of many others. For some it may not be necessarily a fund but an easy to sell asset, I remember , my grandmother usually maintained several bags of coffee in the store, whenever she needed to travel or buy something, she would sell a bag, very wise indeed!! According to a recent survey, 40% of Americans don’t have enough savings to cover a $400 unexpected expense. Start by saving enough to cover one month of living expenses and gradually build this buffer.
3. Manageable Debt: Avoid unnecessary debt and don’t rely on debt to pay your bills. The average credit card balance per household in the UK is £2,300 (around $3,000 USD), and the average credit card debt per adult is £1,900 (around $2,500 USD). If you can save, have an emergency fund, and pay bills without incurring debt, you’re ahead of most people. But debt is also how many nations run or households manage. It is not bad to be indebt but try and take on the debt you can manage both as an individual and as a household

Even when you have these fundamentals in place, the fear of loss can still cause discontentment. This brings us to the importance of setting and achieving financial goals.

Are You Setting and Achieving Financial Goals?

Having clear, measurable financial goals is a strong indicator of financial success. Whether you’re saving for retirement, buying a home, or paying off debt, setting goals gives you direction and motivation. Regularly review and adjust your goals to stay on track. We should also constantly remind ourselves of our goals, like just towards we are some months into the year but what were your financial goals as you started off the year?  Are you following through, are you doing something? This matters a lot? Celebrate your milestones as they come and use them as motivation to keep progressing. 

Are You Continuously Learning and Growing?

Financial success often comes from continuously improving your skills and knowledge. We don’t stop learning until we leave this world. But if you have stopped, there is a problem! Whether through formal education, professional development courses, or self-directed learning, investing in yourself is crucial. This not only increases your earning potential but also helps you adapt to changing economic conditions. Keep a growth mindset and seek opportunities to learn and develop new skills. Learning whether informally or formally exposes our mind to opportunities, which sometimes we would never see without this exposure. Once i chatted with a friend who didnt have an idea that mushrooms are grown commercially, their idea was that these are only found in the wild!

The Lens of Society Vs. the Individual

Lastly, it’s essential to view financial success through your own lens rather than society’s. Society often values lavish lifestyles and external achievements, but true financial success is about achieving your own goals and finding value in what you do. Albert Einstein once said, “Strive not to be a success, but rather to be of value.” This underscores the importance of internal validation over external recognition. By focusing on your true achievements rather than societal benchmarks, you free yourself from the pressure of comparison and can enjoy a more fulfilling financial life.

Financial success is not just about numbers or external appearances. It’s about taking the right actions, setting and achieving goals, continuously learning, and viewing success through your own lens. By focusing on these indicators, you can assess your financial well-being more accurately and take steps to improve it further. Remember, financial success is a journey, and staying on track involves ongoing effort and self-reflection.

You’re doing just fine if you started and you are on track

Do not forget to check out our articles on retirement planning  and the rat race