Financial security is reached when your income is considered to be enough to cover the expenses that you have. It indicates that you have enough money to handle any and all emergencies that may occur. Financial security is also saving and having enough funds for all future-based goals that you have in place. When you experience this type of security, you experience a peace of mind that results in lower stress levels and heightened satisfaction in life.
In this guide, you will be introduced to several money tips that will help you achieve financial security – regardless of how old you are.
- Saving – The first step to financial security is saving money. Money should always be saved before it is spent. Ideally, a minimum of 10% should be placed into either an interest-bearing savings account or a specially designated investment account. Regardless of how you obtain your money or what was done to earn it, a small portion should always be saved. It does not matter if the money is received as a type of gift for a special occasion, you are gathering up loose change, or you received it in exchange for performing work, pay yourself first and you will never have the endure the consequence of being “broke”.
- Track Spending – The next way to achieve financial security is to track all of your spending. You should first mark what you make. Then, you should evaluate all of the ways in which you spend what you make. It is quite likely that you will find yourself surprised at the amounts that you are spending and on what you are spending on. Once you know where your money is going, you should figure out how to stop that spending so that you are able to save more, over time.
- Create a Budget – In order to experience true financial security, it is necessary to create a budget. First, outline what you make. Then, specify that which you spend. Figure out if you are making enough. If not, you will need to either reduce what you spend or increase the amount of money that you make. Remember to include the 10% that you will save in your budget. Once the budget is created, it is imperative that you stick to it.
- Determine Your Needs Prior to Spending – When you are tempted to make a purchase, it is imperative that you really think about it before deciding to buy. Is it something you truly need? Is there an alternative that is cheaper? You should really research before making purchases. If you decide that it is a necessity, you should comparison shop to ensure that you get the best deal.
- Avoid Credit – While it is true that it is relatively easy to get approved for various types of credit, it is also true that it is even easier to buy things on credit. This leads to a lot of debt. By using credit, you will pay more for what you buy – due to interest. If you don’t have the cash to purchase something, it is best to wait until you do. Credit is the quickest way to get yourself into financial trouble.
Now that you know a few of the top ways to reach a point of financial security in your life, it is time to develop a partnership that will help you reach your financial goals. That is where we here at Somerville Bank come into play.
We can help with financial management, setting up a savings account, and even offer advice on how to help you reach financial security.