Often, wealth in the society is measured by expensive cars, big bungalows or branded clothes. But in real life, this show-off is not the measure of financial success at all. The truth is that your financial condition is determined by your bank balance as well as your everyday habits, which the world cannot easily see. According to Rahul Patel, founder of ‘Alps Global’ along with wealth management firm ‘Alps Wealth India Pvt Ltd’, it is enough to look at just four key indicators to check how financially secure a person is. The interesting thing is that about 75 percent of the country’s population fails in this basic test. If a person passes these four parameters, his financial condition will be considered much stronger than that of most Indians.
Rs 1 lakh test in trouble
The first major proof of financial strength is how calmly you face any sudden financial crisis. Here, spending Rs 1 lakh means that you have this much cash in your bank account for immediate use. To raise this amount, you should not have to sell your jewellery, house or any long-term investment. Experts believe that if you can tolerate such a big sudden expense without any mental stress or spoiling your household budget, then you have gone far ahead of a large section of people.
Complete freedom from high interest loans
Financial progress is not limited to just increasing your income, but it also depends on how you manage your debt. Market experts clearly say that no person should carry a loan with interest rate more than 10 percent for a long time. However, a home loan with a rate of eight to nine percent comes in a safe category, because it also provides tax exemption. On the contrary, if someone is holding a personal loan or credit card outstanding at 15 to 18 percent interest, it is hollowing out your pocket from within. Wise people always insist on eliminating such expensive debts by paying them off first.
Investing a large portion of your income every month
The third important sign of being on a good financial path is your investment habit. If you are regularly investing 15 to 20 percent of your total income every month for the future, then you are on the right track. This investment includes schemes like PPF, EPF, mutual fund, stock market or SIP. However, its full benefit is available only if this investment continues without any interruption and you avoid withdrawing this money in between. This part of the income should be used to build wealth.
Saving yourself from the competition of ‘looking rich’
In reality, people who are on the path to becoming rich never spend money to gain applause from others. Their focus is not on expensive gadgets or branded things, but on quietly increasing their wealth. Such people do not care what new vehicle has arrived in their neighbourhood. They are very peacefully engaged in fulfilling the real financial goals of their family. Wealth creation is actually a very quiet process, in which there is no noise. This is why it is usually very difficult to estimate the actual wealth of people who are actually rich.
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