What Does It Mean To Be Financially Stable?

"Having a significant amount in the bank," a friend once said. "If I can pay for all my needs and still have money left in the bank, then I’m financially stable."

But how much is a "significant amount"? What needs are you referring to? I asked.

My friend couldn’t provide a concrete answer. The amount kept increasing, and the needs kept expanding.

For many people, winning the lottery seems like the only way to achieve financial stability. Otherwise, managing money will always be a struggle. However, financial stability isn’t just about having a large sum of money—it’s about financial discipline, planning, and making wise decisions.

The Road to Financial Stability

I once read that becoming financially stable is achievable with focused attention on spending habits and future planning. The key is knowing where you are financially today and determining where you want to be in the future.

After researching various sources, I found many strategies for achieving financial stability. Most of them are easier said than done, requiring discipline and commitment. However, they are not impossible to implement. Here, I’ll share a few practical steps I’ve taken and my personal experiences with them.

Spend Less Than What You Earn

This advice is common, yet many people struggle to follow it. Had I consistently applied this principle throughout my working years, I would have a substantial amount saved by now. So, why is it so difficult?

The reasons are numerous—impulse spending, social pressures, and the tendency to prioritize wants over needs. I know this all too well because I’ve made these mistakes myself. I plan to write a separate post detailing these challenges and how to overcome them.

Have a personal financial plan

I briefly maintained a financial plan when I volunteered at a mission organization. It wasn’t a formal plan at first—just a simple record of my daily expenses. The benefit was clear: I knew exactly where my money was going and could evaluate whether I was making smart financial choices.

My real financial planning began when I left the organization and started earning an income. At that point, having a plan felt essential, especially since my income was irregular. It worked well for a while—until something changed. Somewhere along the way, I lost track of my plan. I can’t pinpoint exactly when, but I suddenly found myself in financial trouble.

My financial plan was simple. I didn’t want to complicate things for myself. I listed my "real" needs against my expected income. The keyword here is real—not just "needs," but essential needs. One of those essentials was forced savings.

Forced savings function like a sinking fund. It doesn’t have to be large—even a small amount is better than nothing.

A common formula for financial planning is:

Income - Savings = Expenses

You may have heard this before, and while it sounds logical, it’s not always easy to implement. The challenge is that nothing in the formula remains constant. Income fluctuates, expenses change, and savings goals shift. Adapting to these variations requires effort and discipline, but the key is to keep adjusting while staying committed to the principle of saving first before spending.

Financial Stability Is An Attitude

I’d like to conclude with the best definition of financial stability I’ve ever heard. Years ago, I watched a TV interview featuring three Filipino celebrities discussing the topic, "When is the right time to get married?" Financial stability was a key factor in their discussion.

Two of the actors had similar perspectives: financial stability meant having a certain amount of wealth or assets before taking major life steps. However, the third actor’s response caught my attention. He said, "Financial stability is an attitude towards money."

It’s not about how much money you have but how well you manage what you already have. No matter your economic status, you can achieve financial stability with the right mindset. It’s not just about increasing your income—it’s about practicing financial responsibility, making smart choices, and maintaining a healthy attitude toward money.

Final Thoughts

Financial stability isn’t about luck or sudden windfalls—it’s about conscious effort, discipline, and financial literacy. By spending less than we earn, creating a solid financial plan, and cultivating the right attitude, we can work towards financial security and peace of mind.

So, what does financial stability mean to you? Let’s continue the conversation and learn from each other’s experiences!