Financial security is something most people want but are not always able to achieve. According to a study conducted by Harris Interactive, 38% of Americans regularly worry about their money. It’s time to get back to basics and start focusing on what matters most: your health and your financial security.
Financial security is a set of factors that can help people maintain their financial stability. It means reaching a point where you can live without debt, have a steady income and save for retirement. Having financial security is confidence that you can survive even when the unexpected hits.
Why is Financial Security Important?
Being able to prepare for the unexpected feels silly sometimes. However, it can be very helpful to start planning now. According to a survey, 78% of Americans are living paycheck to paycheck. Despite this, only 44% of Americans can afford to pay for a $400 emergency.
You never know what life will throw at you. Having financial security can help you get through big bills and breathe a bit easier when something unexpected happens.
Ways to Become Financially Secure
- Get Rid of Credit Cards
Get rid of all your credit cards. Imagine waking up tomorrow with a bill that’s zero. The biggest reason people keep their credit cards is the rewards. Not only are they happy with their points, but they also love the endless marketing campaigns that credit card companies run. The more people use their credit cards for rewards, the more they spend on themselves. It’s like buying something that they already paid for.
- Have an Emergency Fund
Having an emergency fund is the first step toward financial security. It can help avoid getting into debt if you regularly save and pay bills. Too many people get into credit card debt when their car breaks down because of the endless interest accruing.
Having a money emergency fund can help avoid credit card debt altogether. To start, start with a $1,000 emergency fund. It can be used to cover smaller emergencies and pay off debts once you pay off the balance.
- Get Rid of Debt
This is an important part of getting financially secure. Unfortunately, being in debt can take away from your income. It can also be very annoying to make all the monthly payments. Try the “snowball” method. Pay off the smallest debts first while making the minimum payments on the other bills.
Once the smallest debt is done, roll over the remaining debt payments to the second smallest one. This method will help you pay off the debt faster and avoid accruing interest.
- Don’t Live Beyond Your Means
One of the best ways to build wealth is by taking advantage of your income. Having a secure income can help you pay down debts and build an emergency fund. If you’re not content with what you have, you’ll be in trouble more often than you have in the past. No more overdraft fees, no more spending money that you don’t have. These are the kinds of minor sacrifices that will pay off in the long run.
After paying off debts, you’ll be in a good financial position for the long run. Having an emergency fund will allow you to enjoy a sweet financial life. Setting up a secure retirement is a huge part of having good financial security. It can mean planning for the future and enjoying your golden years traveling.
Discover your unique financial tendencies so you can get over them and feel confident in making money decisions. You will soon find your way to financial freedom.