Money isn’t everything. There’s an upper limit to how happy it can make you. However, it’s also true that not being financially secure can have a dramatic impact on your overall happiness. Constantly worrying about bills and other expenses can cause a lot of stress, which in turn can have a big and negative impact on your life. For that reason, there’s a lot of value in finding ways to become more financially secure. If you can have some security, then you’ll be able to enjoy other aspects of your life, secure in the knowledge that one of the main areas has been taken care of.
Of course, it takes work to become financially secure. In this blog, we’ll take a look at some of the key ingredients you need to put yourself on the right path.
You can’t reach financial security if you’re burying your head in the sand. It’s not always enjoyable to confront the state of your finances, but it is something that’s essential. To put it simply: without engaging with your bank balance, you can’t have a true sense of your current state and find areas where you need to improve. If you’ve been avoiding looking at your finances, suck it up and just do it — it might be better or worse than you thought, but in any case, you only need to do it once. Once you have, you can stop on top of things.
You might have a financially comfortable life right now, but what about in the future, when you’re unable to work? One of the big problems of our age is the number of people who do not have enough money for their retirement. Many people underestimate how much they’ll need and, as such, fail to save the right amount. Don’t worry if you haven’t been saving up until this point. The best time to begin saving would have been twenty years ago, but the second best time is right now. Even saving a small amount of money each month can add up to big savings when multiplied by many years.
The more money you earn, the easier you’ll find it to be financially secure. There are many ways to boost your salary. If you’re in a career where it’s possible to earn a good salary, then you may need to further your education to make yourself eligible for higher-paying jobs. If there’s a low glass ceiling in your current industry, then you may consider switching careers so that you’re in one with higher salaries. A career in finance or technology, for instance, could significantly increase your income. Making a career change can take some time, but it’ll be worthwhile in the end.
Not that your career has to be your only source of income. It may be your primary income, but there are ways to add some funds to your bank account outside of your work. Indeed, if you set up a side hustle or have passive income, then you can effectively create your retirement fund just using that. There are plenty of ways to add additional income: you could look at investing in real estate or setting up an online business. Even if something passively generates $300 a month, that’s still $300 more than you would have had — and once it’s up and running, you’ll probably only need to do a little bit of work each week.
What does it mean to be financially secure? There are plenty of ways to look at it, but the best is probably financially independent. And if you’re carrying debt, then you can’t be financially independent. You’ll find that your relationship with your finances is much, much healthier if you’re not wrestling with debt. You should pay yourself first each month (as in, into your savings account), but after that, you should focus on paying down debt before anything else. You may also want to see if you can switch the debt you have to more friendly terms. The aim is to be paying as little interest as possible.
Kill Your Desires
One of the main reasons people run into financial issues — or at least fail to have security — isn’t because of a lack of income. It’s because they simply spend the bulk of the money they earn. Of course, it’s normal to want to spend your salary — you’ve earned it! — but there are costs to doing so. Lifestyle inflation refers to when people spend more money because they have more money to spend. It’s best to “kill your desires,” by which we mean to overcome the temptation to buy something just because you can. You wouldn’t have longed for those things when you had little money; there’s no reason to risk your financial security now just because you could technically afford to purchase it.
You’ll also find it easier to save money and avoid financial complications if you know the art of simple living. There could be a big difference in the financial position of someone who cooks all their meals at home versus someone who only begrudgingly cooks meals once or twice a week.
You can’t predict what will happen. You can only be prepared to handle the situation if it does occur. You can create safety nets for yourself by having some money in a pot and getting extensive insurance. You might hope that you never need to use them, but if you do, you’ll be glad that you had the foresight to prepare.
Teach Your Family
Finally, remember that if everyone in your family understands the best financial practices, then the whole tribe will be more secure. Your financial future could be jeopardized if, for instance, one of your children doesn’t know how to be responsible with money. The earlier you teach your kids about these things, the better. Also, if you have a partner who’s a bit cavalier with cash, you may want to teach them too!