5 top signs you’re doing well financially in America (even if it doesn’t feel like it)

1. You’re financially literate

If you understand financial terms and concepts — such as compound interest and how it works — then you’ll be in a better position to make smart financial decisions. Being financially literate can help you create a budget, track spending, manage debt, invest your savings and plan for retirement.

For example, if you understand inflation, then you’ll understand how to plan for retirement while taking inflation into account. And if you know your way around inflation calculators, you can calculate how much time and monthly savings you’ll need to reach your goals.

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2. You have a budget — and actually follow it

The median salary for full-time workers in the U.S. was $1,143 a week as of the second quarter of 2024, according to the U.S. Bureau of Labor Statistics. That amounts to $59,436 per year.

Even if you fall below the median salary, it doesn’t necessarily mean you’re not doing well financially. If you have a budget, spend less than you make and set a portion of your income aside for emergencies and retirement savings — and you avoid lifestyle creep as you earn more money — then you’re building healthy habits that will help you build wealth over time.

3. You understand good vs. bad credit

Have debt? That doesn’t mean you’re a financial mess. There’s good debt and bad debt, and having good debt isn’t necessarily a bad thing.

Bad debt is rather obvious. It means racking up debt to buy things you don’t need (and can’t really afford). Or, you fund your lifestyle — such as eating out at ritzy restaurants every weekend — with credit.

The average credit card balance among U.S. consumers was $6,501 in the third quarter of 2023, according to data from Experian, up 10% from the same period a year earlier.

Credit cards aren’t necessarily bad. In fact, you can use them to build credit by making on-time payments in full, rather than carrying a balance.

But if you’re only making the minimum payment each month, then you’re likely paying a portion of your ever-growing interest — not the principal — on your ever-growing debt. This can hurt your credit score, which means it could be harder to get approved for loans later (or you could end up getting less favorable terms on those loans).

Good debt, on the other hand, can help improve your net worth. Mortgages and student loans are often considered good debt, since it’s expected you’ll get a good return on your investment.

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4. You’re saving your money

No matter how much you earn each month, saving a portion of those earnings is a sign you have your financial house in order, since even small amounts add up over time. It’s even better if you’ve set up automatic contributions from your paycheck to an employer-sponsored 401(k), so you never miss a month.

Ideally, you’ll want to have at least a few thousand dollars accessible in an emergency fund and a portion of your salary going toward retirement savings.

Another sign you’re doing well? You’re willing to build wealth over time, taking the ebbs and flows of market volatility in stride — meaning you don’t panic or make rash decisions when the markets dip.

5. You understand that money is a means to an end

The problem with money is that it can never feel like enough. Doing well financially isn’t just about accumulating dollar bills in a bank account. And it’s not about making more and more money to buy more and more stuff that you don’t really need.

It’s about knowing how much is enough to live the life you want, so you still have time and energy for the things you truly care about — such as spending time with loved ones or pursuing a passion — instead of burning the midnight oil.

Maybe you don’t feel rich. But if you’re doing well in these five areas, then you’re doing better than you might realize.