It’s easy to forget how well we’re doing in life when we focus on what’s going wrong. However, by putting things in perspective, you can s...
It’s easy to forget how well we’re doing in life when we focus on what’s going wrong. However, by putting things in perspective, you can see that you might be further ahead than you thought. In this article, we look at 17 signs that might indicate that you’re in a better financial position than the average American.
You Have an Emergency Fund
![Emergency fund](https://www.criticalfinancial.com/wp-content/uploads/2024/01/Emergency-fund.jpg)
Having an emergency fund means you’re prepared for the unexpected without derailing your finances. Fortune reports that about 22% of Americans don’t have any savings at all. Not only does an emergency fund show that you are financially stable but it is also a sign of good financial education.
Your Debt-to-Income Ratio Is Low
![](https://www.criticalfinancial.com/wp-content/uploads/2024/01/Automate-Your-Savings-To-Pay-Yourself-First-1.jpg)
If your debt obligations are manageable compared to your income, you’re in a stronger financial position than most people. You can calculate your debt-to-income ratio by dividing total monthly debt payments by gross monthly income. Ideally, this ratio should be below 36%.
You Invest Regularly
![couple happy](https://www.criticalfinancial.com/wp-content/uploads/2024/01/Investing-In-Real-Estate-%E2%80%93-Nigh-On-Impossible.jpg)
Investing regularly puts compound interest to work, which is crucial for building true wealth. Investments include precious metals, stocks, bonds, and retirement accounts. All these can be great for ensuring that your money doesn’t lose value and instead continues to grow every day.
You Have Multiple Streams of Income
![](https://www.criticalfinancial.com/wp-content/uploads/2024/01/money-siam.pukkato.jpg)
Most people rely on one source of income, which is usually their salary from their jobs. So if you can get money from other sources such as rental properties, side businesses, freelancing, and dividends, you’re doing well for yourself. The good news is that it’s never too late for those relying on their salaries to start.
You Stick to a Budget
![](https://www.criticalfinancial.com/wp-content/uploads/2024/01/Make-an-Actual-Budget-and-Stick-to-It-1.jpg)
Sticking to a budget means you control your money, rather than it controlling you. If you can stick to the 50-30-20 rule for financial management, your income is likely in a good place. The rule states that 50% of your after-tax income should be spent on needs, 30% on wants, and 20% on savings and investments.
Your Credit Score Is Above Average
![](https://www.criticalfinancial.com/wp-content/uploads/2024/02/Pay-Your-Credit-Cards-in-Full-Every-Month.jpg)
An above-average credit score opens doors to the best financial deals at the most favorable terms. Business Insider reports that the average credit score is 717. If yours is higher, you’ll be able to get loans at much lower interest rates, allowing you to make big moves like buying a home or starting a business.
You Have No High-Interest Debt
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Being free from high-interest debt means more of your money can be directed toward saving and investing. High-interest rate debt includes credit card debt, payday loans, and some forms of student debt. If this debt isn’t paid off, it only continues to snowball into bigger amounts later.
You Contribute to a Retirement Account
![](https://www.criticalfinancial.com/wp-content/uploads/2024/04/Retirement-account-money-budget-invest-savings-Sirikan-Aka.jpg)
Saving money in retirement accounts like a 401(k), IRA, or Roth IRA is a smart move. When you start saving early, your money has more time to grow thanks to the interest it earns. Experts often suggest saving a certain percentage of your income each month for retirement. Doing this regularly is a great way to prepare for your future.
Your Net Worth Is Increasing Yearly
![](https://www.criticalfinancial.com/wp-content/uploads/2024/02/Male-tech-DIProduction.png)
Keeping track of your net worth, which is your assets minus your liabilities, is important. If this number goes up every year, it means you’re doing well financially. U.S. News reports that the median net worth in America is about $200,000, so if you surpass this at some point, you’re doing better than the average person.
You Have Insurance Policies in Place
![](https://www.criticalfinancial.com/wp-content/uploads/2024/01/Medical-Insurance-Not-Covering-Dental-or-Vision.jpg)
It’s important to have insurance like health, auto, home, and life insurance. These help protect you from big financial problems if something unexpected happens. Picking the right insurance requires you to balance the cost with how much coverage you really need. Having good insurance means you’re ready for unexpected costs in case of an emergency.
You Can Afford to Travel
![](https://www.criticalfinancial.com/wp-content/uploads/2024/02/Photo-Credit_-PeopleImages.com-Yuri-A_Shutterstock.jpg)
Being able to travel without worrying about money is a sign you’re doing well financially. People who can save money for vacations and travel regularly are often less stressed and happier. This kind of financial freedom is a real luxury and means you’re managing your money well.
You Don’t Stress About Bills
![](https://www.criticalfinancial.com/wp-content/uploads/2024/01/Male-paying-debt-in-living-room-tech-fizkes.jpg)
If you’re not worried about paying bills each month, you’ve probably got a good handle on your finances. Using strategies like setting up automatic payments or reminders can help you stay ahead. Not stressing about bills reduces your anxiety and shows that your financial planning is working.
You Can Make Large Purchases Without Worry
![](https://www.criticalfinancial.com/wp-content/uploads/2024/04/Buying-car-male-car-dealership-talking-Standret.jpg)
Only people with money can buy big things like cars or home upgrades without worrying about the cost. Most people need to save for years to be able to buy these things, especially if they’re getting the nicer options. So if you can make these purchases without sacrificing much, be grateful for your situation.
You Save for Big Goals
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Saving for big goals like buying a house, paying for your children’s education, or going on vacation means your basics are already covered. Setting up special savings accounts for these goals and keeping track of your progress helps you reach these dreams without financial stress.
You Are Financially Literate
![](https://www.criticalfinancial.com/wp-content/uploads/2024/03/woman-with-money-Dobo-Kristian-Shutterstock.jpg)
Investopedia defines financial literacy as “the ability to understand and effectively use various financial skills, including personal financial management, budgeting, and investing.” People who are financially literate usually make better decisions with their money and are therefore able to grow their wealth much faster and more sustainably.
You Don’t Need to Live Paycheck to Paycheck
![](https://www.criticalfinancial.com/wp-content/uploads/2024/01/money-MintraTH.jpg)
If you don’t have to live paycheck to paycheck, you’re definitely doing well financially. To break free from this cycle, it’s important to develop good financial habits, like saving for emergencies and cutting back on unnecessary spending. When you start seeing your savings grow and feel less stressed about money, you know you’re making real progress.
You Can Support Charities
![](https://www.criticalfinancial.com/wp-content/uploads/2024/01/woman-happy-house-Krakenimages.com_.jpg)
Being able to regularly support charities indicates you have financial room to give back. When you budget a part of your income for donations, whether it’s money, your time, or goods, you’re helping others. This not only helps build a sense of community but also brings personal satisfaction.
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