This is the first of a two-part series about establishing financial security.
Reaching a point of financial security is a process which takes time, effort and perhaps some sacrifices. However, the results are worth it. By starting early, you can put time on your side. When doing a few things right from the beginning, you can make the process easier and minimize the sacrifices you may be forced to make later.
Consider reaching financial security to be a project like building a house. You start with a foundation, you add the floors, you put on a roof, you finish the inside and then you move in. Fortunately, you have a long time to build your financial stability, and you can learn the skills and begin practicing them now.
What is financial security?
Financial security consists of several things including:
- Being able to afford your current needs.
- Having confidence you will be able to afford what you may need in the future.
- Enjoying some things you want now, but may not truly need.
- Being able to provide the type of financial lifestyle for your family you want.
- Having peace of mind knowing you are taking the right steps to reach financial security.
Why is a solid financial foundation important?
You, and you alone, are ultimately responsible for your financial well-being. Your decisions will affect how you live on a day-to-day basis and in the long term. Handling the financial issues associated with starting out, establishing a household and having more responsibilities can be stressful. A solid financial foundation can help you spend less time and effort worrying about your finances so you can devote your time and energy to other important matters like your job, your family and your future.
Build a solid financial foundation
First identify a few very broad goals. Some ideas include:
- I want handling my finances to be easy.
- I want to be able to enjoy my current financial lifestyle.
- I want to know I am making progress toward achieving financial security.
- I want to be confident I am doing the right things and not doing the wrong things.
Components of a solid financial foundation
- Not spending beyond your means.
- Building some financial net worth.
- Establishing a good credit record.
- Establishing some good financial habits.
Tomorrow, we’ll learn about monitoring and controlling spending, building net worth and establishing good financial habits.
The views of this article are for general information use only. Please contact and speak with a subject expert when specific advice is needed.