15 Signs You Are Financially Mature

You know, up until a certain point in life, money comes and money goes, and that's about it. You just made a couple of purchases, you've got a stable place, a stable income, and things seem to settle. At this point, you start to be more financially mature and responsible. These are 15 signs that you are financially growing up. Welcome to Alux.

First up, you actually have a budget to work with. Up until this point, your budget meant whatever was left over from your monthly paycheck after the bills were paid and the fridge was full. Whatever was left over was considered free money until your next check came in. You didn't really plan things out ahead of time. Maybe you saved a little bit, but nothing too out of the ordinary.

If an unforeseen event comes along, you think about the months you have until then, not the money itself. If you have a wedding coming up in 3 months, well, you've got three paychecks' worth of time to gather that money for a gift. That used to be the old you, but the new you doesn't see money as time left in the month until the next paycheck. Now everything is counted for. You have different imaginary bags where money is thrown into, so everything is covered. Your vacations are budgeted, your health checkups are covered, holiday gifts are already paid for.

You know you're good with budgets when you have money for things that are highly unlikely to happen. Speaking of the emergency fund, it is not an emergency in and of itself. Everyone knows they need an emergency fund for when life inevitably throws some kind of curveball at you, but almost everyone treats this fund as like the last priority on their plate. The old you panicked at the thought of having to come up with some cash really fast.

In most cases, emergency meant straight up bankruptcy. Car broke down? Well, it's the bus from now on. Tooth fell out? Time to chew on your other side. Got laid off? Well, at least your parents didn't transform your old room into storage just yet. But the new you is protected from all of these things. You know how much it costs to continue to function on a monthly basis. You know how much time you need to get back on your feet, and the first thing you did was to make sure that time is paid for.

This isn't a rich versus poor thing; everyone from all economic classes can fall into the emergencies-don't-happen-to-me trap. You don't have unemployed dollars. For money to have any sort of value, it must have a job. You can think of it as running a business where every dollar you have is an employee. Some work on securing the roof over your head, some work at procuring food, some others are out there in the field recruiting more employees, and some are security guards protecting you from life's curveballs.

But if you have a large percentage of dollars that are just sitting there doing nothing, well, they'll eventually find a job somewhere else. Debt reduction is a major focus. The reality is debt is keeping people poor just as much as it keeps rich people rich. It's a fascinating financial instrument and a very dangerous one at the same time. Having major debt will absolutely stunt any kind of progress, but you've gotten to a point where you understand how this works.

Now, imagine already owing the money you didn't even make yet, while also not having a guarantee that you'll be able to keep making it or not. This makes you extremely debt-conscious, and your major focus is to get rid of any kind of debt that's holding you down. You expect to make more money in the future. There are three types of people when it comes to making money: those who hope to start making some, those who hope they'll still have a job next year, and those who expect to earn more and more as time goes by. It's just a different way of viewing things.

You know you're financially mature when you know how much you're worth, how much you can charge, and what will allow you to charge more. Insurance policies are in place. You know you've matured financially when your protection against unfortunate things is a well-defined contract, not just hopes and prayers. Your life's work can literally burn down overnight; everything could be gone in a minute, and you know this.

It's pretty irresponsible to think bad things will never happen to you; it's best to be prepared for the worst but never have to actually deal with it. Retirement planning is underway. Retirement is basically an escape from the financial rat race, one that you're kind of forced to think about because you won't be working from your deathbed. So it makes sense. But despite this, many either expect their government to take care of them when they're old or blame the same government when it's clear that it's not going to happen. Nothing is coming to save you; you need to save yourself, and financially mature people are well aware of this.

Credit score monitoring and improvement. First of all, credit score, as you know it, is only really a thing in North America. Some countries in Europe have something similar in nature, although it does work a bit differently. But the point remains the same. If you're bad with money and people know it, you're going to have a bad time. Everything will be a bit more expensive because people don't trust you with cash, and while this system is still in the works, you have to work with it.

Financially mature individuals know this. Living below your means. When people hear they should live below their means, they kind of get offended sometimes. They worked for that whole paycheck, and they're going to use that whole paycheck. That's how they got into what's called lifestyle inflation, and that is how you get people making six figures a year living paycheck to paycheck. So think about it this way: you suddenly get $10,000 in your bank account. What do you do?

Financially mature people will first look at any debt they can get rid of. Then they check the emergency fund. If everything is covered, then they'll find a good job for the newly acquired dollar employees. You make financial decisions with your accountant, not with your stylist. Financially mature people treat themselves as a business. They have cash flow, expenses, and operating costs, and they manage everything as a business owner. They either have their own accountant or they use an accounting service to keep things in check. At least they've got an Excel spreadsheet where everything is laid out clearly.

They can see in real time how different numbers modify the big picture, and this makes financial decisions pretty straightforward because, look, okay, numbers don't lie. You've read at least one book on what to do with your money. Nobody teaches you about money; you have to do that learning yourself. Financially mature people read at least one book about money or have talked with at least one person who's more knowledgeable than they are.

Look, you don't have to be an investment banker to understand the basics. So if you haven't already, research the best books about money and buy one. We suggest buying a physical copy, and we have so many videos suggesting exactly these kinds of books to you. But getting a physical copy will have a deeper impact when you hold that thing in your hands.

A big bonus tip from us: reading a physical copy while listening to the audiobook version at the same time is a great strategy for optimum learning. You understand tax and how to maximize returns. Here's the thing, okay? Everything money-related can be hyper-optimized for retirement accounts like the 401K or health savings accounts. Everything can affect your tax bill, and tax law seems complicated at first glance, and probably at second glance too, to be honest, because, well, it's not exactly kindergarten material.

But the point is financially mature individuals invest time and energy into understanding this stuff because it makes a huge difference. If you're not going to do it yourself, financially mature people hire a good accountant. You look for ways to make money long-term. Financially mature people have a set amount of money they'll use to open up new doors, and while it's a smaller size for some and a bigger one for others, the idea is the same: they know their earning potential is never maxed out. There's always something extra they could do if they really wanted to, so they are open to the possibility. If an investment opportunity opens up, they have the money for it.

If their skill can be used at any time somewhere else, they go for it. Talking about money doesn't make you emotional. You know someone is financially immature when they get angry or agitated anytime someone mentions money. This is a sign that money has control over your emotions, and you can't get a grip. You feel like things are out of your control, and there is little you can do about it. But that doesn't happen with financially mature people; they accept how things are and work on what they can improve. For them, it's business as usual.

You don't make unplanned purchases. Financially immature people cannot resist chasing the new and the shiny. The reason this is so appealing to them is because they think that people will take them more seriously. I mean, if you've got the new VR glasses from Apple, you must be somebody important, right? Well, financially mature people either already have the things they want, or they wait for when it becomes financially viable for them to get them.

And lastly, as a bonus for sticking with us until the end, your assets buy you the things you want. The ultimate sign of financial maturity is when you use money to build assets, and the assets pay for your life. If this is you, consider yourself a financial elder. From this point forward, all you have to do is to make sure your assets remain intact, and you, my friend, are set for life.