How To Achieve Financial Stability By Next Year

Happy Young Couple Calculating Bills | How To Achieve Financial Stability By Next Year | what is financial stability | Featured
Share on pinterest
Share on facebook
Share on twitter
Share on email
Share on print

You’ll need financial stability if you want to get ahead in life, and while money can’t buy happiness, it can bring you better opportunities and resources. Here’s a step-by-step guide to help you become financially stable.

RELATED: 9 Steps To Stop Making Excuses And Reach Your Goals Faster

12 Steps to Help You Achieve Financial Stability

Step 1: Define What Financial Stability Is for You

Generally speaking, financial stability occurs when a person no longer has to worry about money. Financial stability should form part of your smart financial goals before 40,

Are you reaching your full potential? TAKE THE QUIZ NOW!

Financial stability is more of a mindset rather than a set amount of money. However, you can say that you’re financially stable if:

  • The timeliness of getting payments is predictable, which happens when you have a stable job or business
  • The cash that comes in meets or exceeds the cash that goes out
  • You have savings for an emergency
  • You have some investments that are expected to beat inflation

Each person has different needs and expenses, so the definition of financial stability also varies. However, these are the general benchmarks everyone can check to see where they’re at financially.

Step 2: Understand That Proper Financial Stability Starts with Transparency

Asian business woman working in in coffee shop cafe with laptop paper work | How To Achieve Financial Stability By Next Year | prayer for financial stability
A lot of people fail this first step not because they don’t want to be financially stable, but because they do not know where to start.

Stop making excuses for why you can’t reach your goals. Start right by knowing yourself in an accurate way without any biases.

To start the financial journey right, you should know where you currently are. To do that, write down an honest and accurate list of your finances.

From there, you have to evaluate where you’re at. Some questions to ask include:

  • How much money comes in each month?
  • How often does money come in?
  • What expenses remain the same, or grow at a predictable rate?
  • What expenses have variable amounts?
  • Which expenses are wants? Which are needs?
  • Can you minimize or eliminate unnecessary expenses?

Unfortunately, not everyone has self-awareness or has different viewpoints that can cloud their judgment. If you think this applies to you, it might be good for you to talk to a financial adviser or get the opinion of fiscally mature friends.

A good rule of thumb is to prepare at least three months of complete and accurate records. Your tax returns can be a good way to check how much you’re earning and how much of it goes to your taxes, which is an unavoidable expense.

Aside from your taxes, list down everything else you spend on. Once you’ve tallied income against expenses truthfully and completely, you can identify opportunities to help you achieve financial stability.

Once you spot opportunities to increase income or minimize expenses, you can create a personal workbook

Step 3: Make a Personal Financial Stability Workbook

Anyone who wants to be successful should know about budgeting and financial rules. Making a good financial roadmap or workbook can you achieve financial stability.

The records you made in the previous step are part of the workbook, but that’s just one part. The financial stability roadmap workbook should also include your:

  • Income goal for each month and the entire year, as well as the inflation rate
  • A table of expenses you can minimize or eliminate
  • The specific date when you stopped having those expenses
  • At least a day in the week of refraining from unnecessary expensive activities
  • Budgeting for the remaining months of the year

For you to successfully reach financial stability within the year, it’s necessary to have some sacrifices.

Important: Be kind to yourself. Even if you missed a few goals, you don’t need to punish yourself or feel guilty. Just continue the plan.

However, the plan works best if you have a “responsibility and accountability” partner who’ll ensure you’ll stay on track.

Step 4: Gain Additional Sources of Revenue

Financial stability can start with optimizing your capabilities. Here, you can consider getting another job or a side gig.

Some work two or even three jobs and still don’t optimally use their time and make good money. For cases like these, one good-paying job may be better than three low-paying ones.

In some cases, quitting your job may be the more financially-optimal decision. If you don’t want to leave your current job or it’s not ideal at the moment, a side gig can help you reach your savings goal and provide investment funds.

It can be as simple as tutoring kids or getting online gigs. If you have a specialized skill, like bookkeeping, you can even work freelance.

Step 5: Monetize Your Passions

Young blogger recording video at home | How To Achieve Financial Stability By Next Year | financial stability is when you
Another untapped resource most people ignore is their hobbies and interests. With the Internet, almost anything can be monetized.

Love gardening and plants? You can become a content creator and produce online tutorials on gardening basics.

If you’re not camera-shy, you can upload these on Youtube and earn from ads. If you’re more into writing, you can start a blog.

Later on, once you’ve created a community, you can partner with brands and even sell your own merch.

Of course, don’t forget that based on IRS guidelines, you can declare your hobby expenses as business expenses once you start your business. When you transition to a side gig business, then the tax breaks come in.

The sooner you monetize your passion the easier and faster financial stability comes.

Step 6: Invest in the Highest Yielding Investment: Yourself

These days, it’s getting more and more important to stand out in the job market. One way to make yourself more competitive is by investing in your most important resource — yourself.

It’s important to keep your skills updated to ensure you remain competitive in the industry you’re in. Likewise, if you’re thinking of transitioning to a new industry, you’d need to learn new skills.

Some employers also give opportunities to learn new skills, which you can take advantage of. You can also search for online courses and get certified through them, which will give you an edge.

These new skills can help you land a promotion, or if you’re looking for a new job, help your application stand out. Avoid being complacent and always strive to learn something new.

RELATED: 19 Eventual Millionaires Mindset And Habits

Step 7: Avoid Promotion Inflation

Splurging and celebrating once in a while is necessary for your mental health. However, promotion inflation may creep in and rob you of your cause for celebration.

What is Promotion Inflation? Promotion inflation occurs when a person upgrades their lifestyle after a promotion or an increase in income. In some cases, the increase in spending exceeds the income increase.

To really reach financial stability in a year or less, keep a look at your spending. Even if you feel like you’re not spending much, the numbers never lie.

Step 8: Save at Least Two Different Bank Accounts

Open a Bank Account | How To Achieve Financial Stability By Next Year | financial stability examples
You must have at least two bank accounts. The first account serves as your salary and income wallet, and the second as your savings account.

The first account is for receiving and sending money (i.e. bills payments). From this account, you can get miles and other rewards from the bank.

The other account should focus on saving for an emergency. Saving at least three months of expenses would be a great start.

For those looking for faster methods in wealth building, you can make a third account. The third account focuses on opportunities, like a necessities sale fund and learning and growth account.

Step 9: Pay Off Debts First

Before you start investing, paying off debts can help you jumpstart to financial stability. However, it’s understandable for large debts like mortgages and student loans to take a while.

What you can do is allot only a set percentage of your income, like 30%, to these debts. This 30% will entail you to either lower other expenses or increase your income.

Step 10: Burnouts Destroy Your Budget, so Don’t Be so Hard on Yourself

We work to live, not live to work. There are a lucky few who make work their life and get satisfaction from it, but for the rest, we work primarily to survive.

Six Figure Income Opportunities? SIGN ME UP!

However, always remember that a good work-life balance is always important for your wellbeing. Having a good life outside work can help you feel recharged and fulfilled even when you spend eight hours at your day job.

Step 11: Invest in Your Retirement

After debts and savings come investments. Whether through an IRA, 401(k), or other tax-advantaged account, your future self will thank you if you invest early.

Albert Einstein once said that compounding interest is the eighth wonder of the world. Whoever owns it, earns from it, and whoever doesn’t understand it pays it.

Step 12: Follow Your Financial Stability Plan

Most importantly, the earlier you start working on your plans, the better your position will be. Once your plans are in place, get started as soon as possible.

However, be prepared for things not to go according to plan all the time. Be flexible and don’t get frustrated about the little things.

Always keep in mind your goals and reasons for doing this. By taking small, yet significant, steps, you can achieve the financial stability you aspire for by next year.

Financial stability is a very personal thing since no two people have the same financial circumstances. Thus, it’s important that you tailor your financial roadmap to you.

We hope this guide has helped you learn the steps you can take to hopefully become financially stable by next year.

What does financial stability mean to you? Let us know in the comments section below.

Up Next: 

How To Achieve Financial Stability By Next Year |

Tell Us What You Think!