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1. You don’t try to signal your wealth

Using big ticket items to flaunt how much you’ve got is “a zero sum game” of winners and losers, he says. “If you’re buying a Lamborghini, you’re probably just trying to show to outsiders that you’re successful enough to buy a $300,000 car.” Yang says instead of borrowing large sums to buy expensive things and elevate your social status, you should be seeking freedom and peace of mind through building wealth, which he says is a "positive sum game" where everybody can win.

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2. You have an emergency fund of at least $2,000

You're on the right track if you have a $2,000 rainy day fund you can tap. The truth is that unexpected bills will pop up. Yang cites a Bankrate article saying 57% percent of Americans can’t afford a $1,000 emergency expense. Having at least double that in a high-yield savings account will mean you're ahead of most Americans, and he adds that it’s ideal to shoot for a cushion worth three to six months of expenses.

3. You’re able to meet your spending and savings targets

Yang sees this as evidence that you have defined financial goals and a budget or a way to track your expenses. He says if you’re making $75,000 annually and spending $60,000, then you should be “making a plan for that extra $15K." You should also be reviewing expenses to identify areas to cut back and identifying ways to earn more income.

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4. You live below your means

While it’s not exactly glamorous to spend less than you make, “this is one of the number one ways to increase your wealth over time,” Yang says, because it frees up more money for investing and paying down debt. Smart spending also gives you the flexibility and freedom to entertain choices such as a career change and retiring earlier with a smaller nest egg, according to the 4% rule.

5. You keep your debt manageable

High-interest credit card and other types of consumer debt can put serious dents in the finances of otherwise savvy adults. According to credit bureau Experian, the average credit card balance on its database grew 10% to $6,501 in Q3 2023 from the same period in 2022. Yang adds, “... but if you do have some debt, if you’re able to manage those payments every single month, and not really miss any payments, that shows me that you’re doing well financially.”

Unfortunately, the credit card "serious delinquency" rate surged in 2023, reported CNBC.

6. You set your own standards for success

Again, this boils down to avoiding the temptation to compare yourself to others and feeling like you don't have enough. "If you're able to gauge your own financial success based on your own standards and beliefs, I think that this is a huge sign that you're doing well financially," says Yang.

7. You build your net worth steadily

People doing well financially see consistent growth in their wealth over time as investments build up and compound. Don’t panic as the markets go through their gyrations. Yang compares it to the dips and peaks of his YouTube viewership. “Your net worth may ebb and flow throughout the year. In fact that's completely normal, especially if you have investments” he says. "But as long as it's trending in the right direction I would argue that you're doing really well financially.

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Lou Carlozo Freelance writer

Lou Carlozo is a freelance contributor to Moneywise.

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