Here are 5 signs you’re financially healthy in America even if you don't feel like it — how many do you show?

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If you're feeling uncertain about your financial well-being, you're not the only one. A 2024 Gallup poll discovered that 36% of Americans think their financial situation is only okay, while 17% rate it as very poor.

It's possible that your view of your financial situation may be more negative than necessary, you might actually be in a more stable financial position than you realize. Here are a few signs that you're financially strong despite occasional financial worries:

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1. You have a completely filled emergency fund

In 2023, nearly 37% of Americans wouldn't have enough savings to handle an unexpected bill of $400 without straining their finances. If you already have an emergency fund set up, you'll be well-equipped to handle an unforeseen expense or a period of unemployment, putting you in a strong financial position.

Financial advisors usually suggest setting up a financial reserve that covers three to six months' worth of expenses. If you're the sole breadwinner in your household, you may want to aim for the higher end of that range. On the other hand, if you have a partner who contributes financially, a three-month savings cushion might be sufficient, since it's less likely that you both will lose your jobs at the same time. However, if you both work in the same field or for the same company, you may want to aim for the longer six-month buffer.

2. You can usually handle an increase in your monthly bills.

It's not unusual for living expenses to go up. If you've got some extra room in your budget to handle a rise in rent or a higher cable bill when your introductory rate expires, it's a good sign you're doing well financially. A useful budgeting guideline is to dedicate 50% of your income to necessities, 30% to discretionary spending, and 20% to saving.

Having the ability to absorb an increase in expenses means you're not living paycheck to paycheck, but rather, are living within your means. So, even though you might not be thrilled about a rise in your essential costs, the fact that you can handle it without having to cut back or tap into your savings is a sign that you're doing a good job managing your finances.

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Your housing costs shouldn't be more than 30% of your income

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If your housing expenses, including your mortgage payment, property taxes, HOA fees, and homeowners insurance premiums, are no more than 30% of your monthly take-home pay, it's a good sign that you're not over-extended. This means you're less likely to miss payments on your housing expenses and also less likely to fall behind on other bills.

4. You don't have to have a large amount of debt on your credit cards.

Experian estimates the average U.S. credit card debt is $6,699 as of the second quarter of 2024. If your credit card balance is much lower, or if you pay off your balance every month, that's a good indication that you're managing your finances effectively.

When using a credit card, make sure you're being responsible, especially since interest rates are currently at historic highs. Credit card debt is generally considered a form of bad debt that can harm your financial future.

You've built up a strong retirement fund based on your current age

It's generally recommended that your retirement savings should be equal to or greater than your annual salary by age 30, three times that amount by age 40, six times by age 50, eight times by 60, and ten times by 67. This assumes you have invested more than 50% of your portfolio in stocks over time and plan to retire at age 67.

Fidelity says these are "aspirational targets" so if you're close to reaching them with your IRA or 401(k) balance, you're probably on track for a secure retirement, which is a key part of your overall financial well-being.

The truth is households of Americans aged 35 to 44 had a median retirement account balance of $45,000 in 2022, according to the Federal Reserve. Meanwhile, households of Americans aged 45 to 54 had a median retirement account balance of $115,000. Being aware of these numbers may help you understand how you're doing by comparison and make a plan for your future.

Found that nearly three in ten Americans have saved no money for their retirement.

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This article is for general information purposes only, and its content should not be considered as advice. It is provided with no guarantee or warranty of any kind.