Financial security is what some also call financial freedom. It is the state where one is debt free, able to pay bills without strain, having investments and safety nets for every kind of emergency for you and your family.
Financial security is crucial because life is full of unexpected twists and turns. If you are living hand to mouth, you will be perpetually unprepared for the lows in life. A single event- a medical emergency or the premature end of your employment contract can leave you financially crippled.
Many individuals are aware of the risks of a lack of financial security but still fail to maintain the practices needed to attain it. So, how can you increase your wealth and live within your means? How can you build your assets steadily while keeping control of your debt?
Percentages and Accrual
Having financial discipline is one of the keys to financial security. Setting up an investment account that directly debits your account by a specific amount at a given time will tie up funds you could have otherwise diverted to impulse buys.
Instead of frittering away your hard-earned wages on consumable goods or assets that depreciate, you will be bulking up accounts that will earn you interest over time. Life expenses like insurance should factor in inflation and prices over time to remain in line with their expenditure. Interest-bearing bank accounts can help with that by measuring inflation’s impact on life insurance costs.
Debt-Free
You can’t fill a bottle with water when there is a leak at the bottom. Make a plan to pay off your debt, especially if it yields high interest. Paying off debts will release you from the chains of working to service loans rather than enjoying the fruit of your labor.
Once it’s cleared, use the extra money to build financial freedom. When you plug all the leaks in your finances, you will have enough to meet your needs and a surplus to save.
Be a Cheapskate
So, you got chicken noodles instead of that big mac; who cares, as long as you haven’t slept hungry? Or you started a do-it-yourself project to spruce up your room instead of hiring an expensive interior designer. At least you have a roof over your head and a comfortable place to sleep. Spend your money wisely.
If your lifestyle, income, or fiscal responsibilities have changed, reassess your financial profile. A reassessment of your income, expenses, and financial obligations will help determine if you need to increase or decrease the amount you save regularly. If you’re married, begin having honest money conversations with your spouse.
Consider whether your spouse is saving and whether they can share certain expenses. If your spouse’s income is erratic, you need to determine whether your savings can cover your expenses and those of your spouse. If not, you may need to look into diversifying your income streams.
Unless you are experienced in financial planning and portfolio management, engage the services of a seasoned financial planner. Choosing the one who is right for you will be one of your most important decisions.
Don’t Spend What You Don’t Have
Let’s say your gross income is $4,725. You pay rent for that garden view apartment for $3,000, your budget for food and groceries is $500, the gas bill is $100, your phone bill comes to about $114, and your energy bill is $122.
That cable bill you religiously pay despite hardly watching anything apart from Netflix amounts to $116. You love to party and shop so your miscellaneous expense comes around to $700. Such extravagant spending habits will only lead you to debt.
Saving Rather Than Spending
Find a roommate and split the rent on an apartment in a safe but less pricey location. Save for vacations, use group coupons or work as you travel programs. You don’t have to buy every shoe you pass by at a store window or see online that seems to be calling your name.
Budget your income to cover your expenses and retain enough money to help you attain financial freedom. Your financial freedom may depend on you being less dependent on that credit card. It only puts more strain on your finances by working off debt and interest.
Save more than you borrow; this financial tip will drive you toward financial freedom. Credit card debt only makes banks and lending institutions richer, but you can grow your wealth by putting your money in a nest that will accumulate interest. Earn interest instead of paying it off.
Give Me Life or Give Me Freedom
Play the field with the card life has dealt you. Contribute to financial security by having a savings plan and investments. Take control of your future, and remove the burden of financial stress.
Take the first steps towards achieving your financial freedom. You can change your life by changing how you use money. Let money work for you, not the other way around.