There's so much advice on managing your money that it can be difficult to not only sort through, but to know where you really stand financially.
I got reacquainted with finances when I left my corporate job for the life of an entrepreneur. Living off of variable income (versus a steady "guaranteed" monthly paycheck) will do that to you. So I've learned a lot in the past several years about what really constitutes financial success.
Here are six signs that you're doing better financially than you think you are.
1. You have clear and commensurate financial goals.
First, the clear part. You won't know where you're going financially and how well you're doing without clear financial goals. A survey by Charles Schwab found that only 1 in 4 people have sound financial goals and a plan to back it up. I admit that when I was in corporate, I didn't have a plan. My wife and I would basically spend what we made without worrying about it because we knew next month would bring another paycheck.
No longer. We have a crystal clear financial goal now, tied to exactly how much our entrepreneurial ventures need to make relative to the lifestyle we want to live. Which brings us to the commensurate point.
My wife and I set a financial goal assuming we'd be trading down our lifestyle and shedding all those expenses that didn't bring us joy (Marie Kondo style). We set goals commensurate with what was really required to make us happy. You can too.
2. You believe it's not about net worth, but net worthiness.
Let me be careful here. An increasing net worth (your assets/what you own minus your liabilities/what you owe) is a good thing and a basic measure of how you're doing financially year to year. I'm suggesting that freeing yourself from net worth goals and comparisons is a sign of financial maturity and perspective -- a different kind of success. Sure, Draymond Green of the Golden State Warriors recently announced he wants a net worth of a billion. But for what? What if he doesn't obtain it, was he a failure? And if he does, was he a success? Maybe. In the shallowest of ways.
I propose a different measure than net worth. Net worthiness. Did you live a life in which you were financially comfortable enough, but one structured around adding value to something bigger than yourself? That's what drives my wife and I now. To us, net worth is not worth the paper it's written on.
3. You don't fight over money with your spouse.
This one might sound strange but I know many couples whose worst fights have been about money. If you're not mashing each other over money, you're doing something right. You can prevent fights about funds by having a clear goal and plan, over-communicating about it, and sticking to it.
4.You spend for needs and save for wants.
I'm not saying don't buy things just because you want them. (You can't take it with you, after all) I'm saying in general be cognizant of when you're spending on a need versus a want, and be careful with the balance between the two.
Saving for wants helps curb the need for instant gratification, which gets many couples into financial dire straits. And saving for wants serves an alternate purpose -- using the savings instead for an emergency fund if needed. Most financial advisors will tell you saving three months worth of income is a good target for such a fund.
5. You have multiple streams of income.
Now, I never said I wasn't a capitalist. I like to maximize revenue too, but I also don't like to have all my eggs in one basket. Profound Performance, the Mautz business, brings in 10 different streams of revenue. To me, it's a new measure of success to be bringing in income from a side hustle or two (even if it's a small percentage overall). It speaks to resourcefulness and creativity, important values my wife and I share.
6. Debt is a thing you manage, it doesn't manage you.
This is admittedly basic, but too important to pass over. I think it's a real victory if you can pay off credit card balances each month, maintain a good credit score, and keep a good debt to income ratio (your monthly bills divided by your gross monthly income). From my very early days as a mortgage underwriter, I know a ratio of 36 percent or lower is a good target.
Success should always be what you define it as. There's even room for interpretation on what constitutes financial success, too.