Financial maturity isn’t directly related to wealth, at least not wealth using the most common definition – having a lot of money. Financial maturity is more closely associated with stability and self awareness. Here are a few ways we identify financial maturity in an individual.
You don’t avoid money talk
A financially mature person doesn’t cringe when someone brings up retirement, insurance plans or savings rates. You don’t have to love talking about money, but actively avoiding the discussion with phrases like “I’m too young to talk about this stuff” or “I’d rather not think about it” is a clear indicator you’re not there yet. If you have a lot of debt to pay off or need to work on creating a budget that includes the present and the future that’s fine. Embracing financial conversations shows you’ve matured in regard to your money.
Financial maturity doesn’t mean having your life together, it means understanding that you need to learn, engage and think about your financial future.
You have goals
Alongside being willing to talk about money is dreaming about it. Don’t mean imagining closets full of cash or leprechauns and rainbows, we mean accomplishing things that will take financial support. Buying a home, adopting children, retiring, exploring Europe and many more common dreams come at a cost. We all love the American dream, especially when the dreamer is the underdog who went from rags to riches after incredible amounts of hard work. Dreams are not a success in themselves, the success comes in the active steps taken to achieve them.
A financially mature person has goals and understands the role money will play in attaining them.
You’ve thought of best and worst case scenarios
Dreaming is fun, but what if the worst happens? Tragedy is an unfortunate and very real part of life. Maturity is being safe, stable and understanding the best laid plans don’t always work out. Emergency funds, contingency plans, and insurance are all a part of a financially mature person’s budget and financial picture.
Most of us understand life doesn’t always follow a perfect plan. We often think of what we would do if the best thing happens. What if we somehow stumble onto a ton of money (impossible right)? Or what if we actually get a bigger raise than we asked for? A dream job? There could be many reasons you are somehow propelled into a better financial situation.
This may seem like an unlikely scenario, but consider musicians, athletes, actors and other major income earners who become bankrupt. Consider stories where someone receives a large sum of money and somehow spends it within a few months. This is a sign of someone who didn’t consider what it would mean to have MORE money and how to realign their money with their values.
A financially mature person reevaluates their circumstances with every significant increase or decrease to their income .
You ask for help
We can’t reiterate this enough, financial maturity is not determined by your wealth. Nor is it how much you appear to “have it together.” The most mature people are those that acknowledge they don’t always have the answer. Understanding that there are others more informed or knowledgeable about- well anything really but especially- finances is essential.
A financially mature person asks others who have made sound financial decisions in their own life for advice.
This is one of the most responsible things you can do as you take steps toward building a stable financial future. This shows incredible maturity, in both your finances and character.
What are other signs of financial maturity?