Almost everyone wishes for financial security, but only a small percentage of people are able to achieve it. If you are one of them, you are not alone. In fact, in the United States, one of the most common causes of significant stress and depression among individuals is a lack of financial stability.
If you want to say goodbye to financial stress, make sure you read all the way to the end of this post. Even if you are currently in a lot of debt or have made many money mistakes in the past few years, you can still achieve financial security by directing your efforts in a specific direction.
Let’s define what financial security actually is, and then we will discuss the different ways of achieving financial security.
What is Financial Security?
Financial security means reaching a point in life where you are completely stable in terms of your finances, covering your personal expenses every month without falling into debt, and keeping some budget for investing in the retirement phase of your life. In most cases, financial stability also includes being able to keep some money aside to use for emergencies.
Some people define financial security as the confidence that comes from knowing that they will not run out of money in any area of their life. It is the assurance that comes from knowing that even if unexpected circumstances arise, you and your family will be fine. Being in a position where, even if you lose your current job, you do not go bankrupt is a sign of greater financial stability. It is the peace of mind that allows you to take care of your family financially.
Financial security is not something to merely hope for. It cannot be achieved automatically by daydreaming about it. It is something that you must work hard for. However, if you work hard enough and in the right way, you can achieve it much sooner than your retirement age. When you achieve financial security, it becomes clear why you need it and why it is so important.
Importance of Achieving Financial Security
Some people believe that it is unnecessary to plan financially for unexpected events. It seems silly to them because they already struggle to make sure their monthly bills are paid. When you're living paycheck to paycheck, it's difficult to concentrate on situations that aren't part of your daily routine.
When these people are faced with an emergency, they are not able to cover the extra bills at that time. The truth is, you never know what life throws at you and at what time. Besides your grocery bills and mortgage payments, there are other expenses that can hit you suddenly without giving you time to prepare for them. That’s why financial security is essential to life.
We may not be forced to deal with a global pandemic indefinitely. Life, however, can still happen in unexpected ways. What if your washing machine decides that your current load will be its last? What if your car tyre blows out on the way to work the following week? What if your spouse comes home one day and informs you that they have been laid off?
Such emergencies will only feel like minor inconveniences if you are financially prepared to deal with them. However, if you do not understand the financial stability concept, unforeseen circumstances such as this can cause serious trauma in your life.
Difference Between Financial Security and Financial Stability
People frequently mix up these two terms. Their meanings are nearly identical, but there is one minor distinction. Financial security is more about being able to breathe freely, knowing that even if an emergency arises, you can support yourself. It is the ability to pay your monthly bills and cover any unexpected expenses without stress.
Financial stability, on the other hand, is more concerned with the here and now than with the future. It goes a little further than just financial security. When you are financially stable, you can keep a little extra cash to add to your monthly savings after meeting your monthly cash requirements and paying for any emergencies that arise.
4 Ways to Achieve Financial Security
Here are four ways to achieve financial security, starting from whatever your current financial condition is.
1. Say Goodbye to Your Credit Cards
Assume you wake up one morning owing nothing to your credit card company. Wouldn't that be fantastic? This is only possible if you cancel your credit cards today. Most people continue to use their credit cards because of the additional benefits they receive, not because they can buy things first and pay for them later. The cash back offers, airline miles, free pizzas or other meals, and other such rewards are what most entice them to use credit cards.
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These perks are not as real as you believe. They are simply a skewed version of the financial schemes offered by credit card companies. These companies are masters at drilling such concepts into our heads so that we are completely convinced that if we stop using our credit cards, we will lose a lot of money. In reality, it is the opposite.
Have you ever heard a wealthy person claim that the secret to their financial success is all the credit card points they've accumulated over time? Using credit cards does not put you on the road to financial security. They actually take you in the opposite direction. When you have the mentality that you are buying now and paying later, you end up spending much more than you would otherwise. If you truly value your money, you should pay for everything you buy right away.
2. Build an Emergency Fund for Your Household
Nothing beats a household emergency fund for financial stability and peace of mind. During times of emergency and financial crisis, an emergency fund serves as a safety net. Everyone will experience an emergency at some point in their life. As a result, it is critical to plan for and prepare for them. It is hard to maintain financial security if unexpected scenarios in life keep putting you in debt. Keeping some money in your bank account to handle situations like this is one of the first steps you need to take to achieve financial security.
Many people look for their credit cards when a car tire breaks down. All that accomplishes is to turn your car problem into a money problem. The interest you pay on your credit card bills later turns your money problem into a debt problem. Before you know it, your debt has accumulated to the point where it is causing stress and mental health issues.
However, if you set aside a portion of your finances for an emergency fund from the start, you can have your car repaired and pay for it on the spot. This will save you from all of the stress and drama.
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It may appear difficult to start an emergency fund. But the good news is that you can start with as little as $100 and gradually increase it as your spending habits change.
3. Live on Less than You Make
As strange as it may sound, this is actually very practical advice. If you want to achieve financial security, you will have to start living on less than you make. This means that your monthly expenses should be slightly less than your monthly income. If you have dependents, keep everyone's combined monthly expenses at a level that is slightly lower than your monthly salary. Achieving financial security requires you to be able to budget your regular expenses properly, and keep them under control in relation to your income.
People frequently overspend to obtain instant gratification for various reasons. This is a bad habit that can land you in hot water from time to time. You can enjoy more financial stability in your life if you can make yourself happy with your current situation. Making minor sacrifices like this can go a long way toward bringing you closer to financial security.
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4. Save Money by Using Technologically Advanced Tools
There are numerous technologically advanced tools available on the market these days that really help you save money on getting the associated tasks done. An example of this is the website building platforms or tools that allow you to create a website on your own, without having to hire a web developer or pay a professional programmer.
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For example, if you build your website on Strikingly, you can add content to it without writing a single line of code. Our tools are designed in such a way that even the most inexperienced user can use them and have their site up and running in less than a day.
Using Strikingly for website building helps you save a lot of money as well as time. People who believe in financial security and want to achieve it as quickly as possible use such platforms to make their jobs easier.
It takes only a few seconds to create an account on our platform. Once you've signed up, you can access our web development tools by navigating through the dashboard and editor that will be provided to you.