How Can Someone Achieve Financial Security?

 

How Can Someone Achieve Financial Security?

 

5 Proven Ways To Achieve Financial Security

Related Post:   What Is Financial Security 

When you think about your earnings, how do you feel?

Do you hate opening your budget or logging into your bank account?

Do you worry about not getting enough money in case of an emergency?

You're not the only one who feels this way.

According to the Financial Wellness Network, fewer than one-third of Americans is deemed financially stable in 2019. In addition, 20% of women said that a lack of financial stability causes them "a great deal of tension."

This is due to the fact that money normally elicits an emotional response. It can range from absolute elation after receiving an unexpected bonus at work to apprehension or anxiety when approaching a budget discussion with your spouse.

However, I believe that money should be enjoyable rather than exhausting for you!

And in order for that to happen, you must have a firm financial foundation.

Try these five things if you want to be financially secure in your life:

1. Say goodbye to your credit cards.

Can you imagine waking up tomorrow owing a credit card company exactly $0? If you cut up your credit cards now, it might be you one day.

The rewards are the most common reason I hear for holding credit cards.

People are crazy about their credit card points. Manipulative credit card companies have done an excellent job of instilling this idea in our minds, from cash back to airline miles.

However, I've never met a rich individual who said, "The key to my prosperity is all in the credit card points." Credit cards are not the path to financial security. They'll actually send you in the opposite direction.

Consider how much money you're spending to "earn" those airline miles.

People who have a "buy now, pay later" mindset tend to spend more than they would with their own money. And that's before the interest begins to accrue.

What's more, rather than credit card points, you can use them to book flights and hotels. You have real money in your bank account. Yes.

With a credit card, the only thing you get is a lot of debt, uncertainty, and worry.

Random bonuses, airline miles, and free pizzas from your credit card provider aren't worth paying exorbitant interest rates and jeopardizing your financial security.

2. Put money together for a rainy day.

An emergency fund will provide you with financial security and peace of mind. An emergency fund will serve as a safety net in the event of an emergency—which will inevitably occur, so be prepared. It's difficult to achieve financial stability if you're constantly in debt due to unforeseen circumstances, so putting money in the bank is the first step toward financial stability.

When a car breaks down, so many people reach for their credit card, but this just turns a car problem into a money problem.

Then, compound interest turns the money problem into more and more debt, stress and worry.

When you have real money set aside for emergencies, though, you can easily get the car repaired. There is no need to be concerned. There will be no drama.

Building this up can be daunting at times, but if you make it a priority, it will happen.

Start with a $1,000 emergency fund as a starting point.

When you're getting out of debt, this will cover smaller emergencies.

Once you're debt-free, increase your emergency fund to three to six months' worth of expenses.

3. Go after your debt.

Get out the confetti because this is an exciting step on the path to financial stability!

Your income is your most powerful wealth-building asset, but debt robs you of it. Furthermore, making all of those payments is inconvenient. So it's time to get rid of your debt for good.

The debt snowball is the most effective way to get out of debt. The following is how it works:

Except for your mortgage, list all of your debts from smallest to largest in order of balance, not interest rate.

Pay off the smallest debt first, and make minimum payments on the rest. You must become enraged by this debt! Take as much money as possible and apply it to the smallest debt on your list.

If that's paid off, roll over the money you were paying on it to the next smallest debt, and so on until you're debt-free!

Since it approaches the root of the issue, this is the most powerful method of debt repayment.

It's not only about math and interest rates when it comes to money; it's also about how you spend it. As a result, you get a fast win by paying off the smallest debt first. And don't we all like that? Put it on the ledger, even though it's a $300 credit card debt from a department store. Cross it off your list and move on to the next one when you're done.

Quick victories keep you focused in the process and prepare you for the task of repaying larger debts. And once you're debt-free, you'll be on your way to true financial stability.

4. Make do for less than you earn.

If you want to be financially secure, you need to make the most of your most valuable asset: your money. So, if you're trying to save money for an emergency fund, pay off debt, or invest for the future, the best place to start is with your paycheck.

What steps would you take to increase your take-home pay? Spend it wisely!

Instant gratification will land you in hot water again and again.

You'll be more financially secure than you've ever been if you can learn to say no and be comfortable with what you have. There will be no more overdraft penalties.

No longer do you have to live paycheck to paycheck.

No more wasting money on things you don't need to please people you don't like.

Keep in mind that making small sacrifices now would benefit you in the long run. Know what you want to do in the end, and then go for it!

5. Save 15% of your salary until you've paid off your credit card debt.

Knowing you'll be taken care of in retirement is a big part of financial security.

That may mean retiring early to try your dream business idea or traveling like you've never traveled before in your golden years. (I'd like to go to Disney World at least twice or three times a year.)

You'll be in a pretty decent place in life once you've paid off your debts (except your mortgage) and have three to six months' worth of expenses left in your emergency fund, right?

With no bills and a nice safety net, you'll feel more financially secure every day.

It's time to start saving 15% of your income into retirement once you've established a solid financial base.

And subsequently start investing.

When it comes to investing, there are a million rules and facts to consider, so you should always work with an investment professional you can trust.

This person can clarify how these investments function to you in terms you can understand.

You're Closer to Financial Security Than You Think

Many people are stressed about money, but you don't have to be one of them.

Don't let debt, anxiety, or stress get in the way of your financial goals. Do not give up!

As much as I wish there was a magical genie who could grant all of our financial wishes, that is not the case.

The truth is that you can live the life you want, but the true magic lies in getting to know yourself and your personal financial habits.

#wealthisearned