Financial security is something everyone wants but not a lot of people actually have. I get it. You never know what life will to throw at you ahem, remember ? Life as we knew it hit the giant pause button—except on the light bill, the mortgage payment, and the grocery bill.
But life happens in all sorts of ways. You get a tire blowout on your way to work. Your spouse is laid off from their job. People always ask what the difference between financial security and financial stability is. They sound practically the same, right?
Remember, financial security is being able to breathe deep and move forward in confidence—especially when the unexpected shows up on your front door maybe in the form of a new HVAC system, a burst pipe, or a broken-down car. Financial stability is just slightly different. Here are five ways to help you get there. That can totally be you one day. The biggest argument I hear for keeping credit cards is the rewards.
Oh, people love their credit card points. This will help you to make realistic projections and plan accordingly. Saving a lot of money is great, but the benefits are eroded or even nullified if it means you have to use high-interest loans to pay your living expenses.
Therefore, preparing and working within a budget is essential. Your retirement savings should be counted among your budgeted recurring expenses in order to ensure that your disposable income is calculated accurately. According to Gallup, the average American will retire at age 66 and live until nearly As you get closer to retirement and your financial needs, expenses, and risk tolerance change, strategic asset allocation must be performed on your portfolio to allow for any necessary adjustments.
This will help you ensure that your retirement planning is on target. If your lifestyle, income, or fiscal responsibilities have changed, it may be a good idea to reassess your financial profile and make adjustments where possible, so as to change the amounts you add to your retirement nest egg.
For instance, you may have finished paying off your mortgage or the loan for your car, or the number of individuals for which you are financially responsible may have changed. A reassessment of your income, expenses, and financial obligations will help to determine if you need to increase or decrease the amount you save on a regular basis.
If you are married, consider whether your spouse is also saving and whether certain expenses can be shared during your retirement years. If your spouse hasn't been saving, you need to determine whether your retirement savings can cover not only your expenses but those of your spouse as well.
Unless you are experienced in the field of financial planning and portfolio management , engaging the services of an experienced and qualified financial planner will be necessary. Choosing the one who is right for you will be one of the most important decisions you make.
That depends on your age, income needs, and financial objectives. Broadly speaking, financial stability means being free of debt and being able to comfortably pay off monthly expenses with plenty left over for savings. Financial security, on the other hand, means having enough money to cover your expenses, emergencies, and retirement without the fear of running out.
The best ways to protect your financial security include:. In order to be financially free in five years, consider the following steps:. What we've discussed here are just a few of the factors that may affect the success of your retirement plan and determine whether you enjoy a financially secure retirement. Your financial planner will help you to determine whether you should consider other factors. As we said above, starting early will definitely make the task ahead easier, but it is not too late to adopt some of these practices , even if you are already retired.
Retirement Savings Accounts. Personal Finance. Retirement Planning. Portfolio Management. Your Privacy Rights. You may be interested in our articles:. Is it too late to grow my super. How do I even start planning for retirement. Paving the path towards financial security is an important part of any financial plan and is something you should carefully consider. While your individual goals may vary, you must ensure that you are on the right path to reach your personal financial goals and your very own feeling of financial security.
The key to financial security lies in starting early. Savings follow a butterfly effect, and even the smallest change in lifestyle, spending habits, investing regime, and savings can bring about the biggest changes and help you to be closer to your financial goals. You may decide to make voluntary super contributions from your salary while you are working to help build your retirement fund and in doing so may also be able to utilise tax benefits.
Any lump-sum payments you receive such as tax returns, inheritance or gifts could also be considered to invest or put aside for your future. The sooner you pay down debts, the sooner you can get on track to being financially secure. While debts such as home loans on investments properties may build up part of your long-term investment strategy, other debts such as personal loans and credit cards should be a high priority in paying down.
This will avoid you spending unnecessary money on interest and will enable you to have more money available to contribute to your savings goals. There are various ways you can create additional income for your retirement.
A great way to do this is through investments; you may decide to buy an investment property or two that can provide you with an income over time, or build your portfolio of stocks and shares. You may decide to do this inside or outside of your superannuation. Free educational resources from our money experts. Featured Blog Post. Understanding the Statute of Limitations on Debt Collection.
Your legal responsibility for a debt doesn't last forever. Here's what you need to know. Log in. Blogging for Change. The needs are: Physiological Safety Belonging Esteem Self-actualization The hierarchy is basically a pyramid, with physiological needs at the bottom and self-actualization at the top.
So what does it take to feel secure? What does this mean for you? Article updated November Professional Budget Advice. Make the most of every dollar and start building toward your dreams! Learn more. Visit our blog Browse our budget guides Learn about our services.
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