Financial security is the state of finally not worrying too much about money. You've reached financial stability - your income covers your expenses, but you'd like to eventually stop living paycheck-to-paycheck or with only a sliver of margin for unexpected expenses. Achieving financial security is all about understanding where that security comes from. It comes from fewer debts and more savings, from backup plans and insurance that really covers what you need.
Let's dive into our top seven smart moves to achieve your financial security.
Start At Stability
The best place for financial security is to start at financial stability. Make sure your income is greater than your expenses and you have a little extra at the end of each pay-period. Get your bills, debts, and subscriptions under control so that it's assured your income can support you in the future months.
Start a Rainy Day Savings Fund
With that little bit of money left over, start a savings account with a fair interest rate. This is your emergency fund, your margin for unexpected expenses, and also a little nest egg for the occasional treat. Emergency funds are critical for financial security because they protect you when there's a sudden unusual demand on your finances. The occasional treat is important so you don't go crazy being frugal all the time.
Use Credit Like It’s Debit
Get rid of your credit cards except for one unused card for emergencies. If you do use credit, use it like a debit card: only spend as much as you can easily pay off before the month is over. In other words, stick to your budget and slowly improve your credit score by immediately paying off any spending you do.
Tackle Your Debt Payments
If you have debts (as most of us do) start paying them down as fast as you can. The faster you have no debts or controlled debts, the sooner you will each real financial security.
Invest a Little
Consider investments. It sounds like a big step but with just $20 you can get started on little stocks with good potential. Build a modest portfolio and add a few new investments every few months. This will eventually grow to be worth more than you paid and something like a second savings account. The right investments can grow into a real money-making portfolio.
Audit Your Insurance
Make sure your insurance covers your needs and potential risks. Make sure your health insurance covers the RX prescriptions you need. Make sure your car insurance covers collision and uninsured motorists. Insure your house or rental property against damage. This way, unexpected costs may be covered by your insurance - based on your lifestyle and realistic needs.
Retirement and Estate Plans
Finally, start planning for the distant future. Get your first will and estate plan into place. Assess all your assets, finances, and accounts in the process - which will help you get your current financial ducks in a row. Plan your finances to live until you're 120 but plan your estate for an untimely event at any moment. You'll be surprised how much these two projects can help you plan for future financial security.
Ready for financial security? So are we! Contact us today for more personalized advice on reaching the financial security you crave.