5 Tips for Achieving Financial Security

Calculator and pen with paper

No one likes the fear of meeting disaster around the corner.

This is true in all areas of life, and money is certainly no exception. The threat of finances spiralling out of control from a few hefty unforeseen bills or life circumstances produces anxiety for millions of people every day. Yet, people often live in such a way that they are less financially secure than they are actually capable of being.

Here’s what security means: not being a short step from disaster, not being buried by heavy debt, and having contingency plans. Sounds like a sigh of relief, doesn’t it?

Check out these five tips for achieving financial security to watch a measure of anxiety seep away from your life.

Calculator and pen with paper1) Check Your Credit Score

Knowing exactly where your credit stands is crucial for financial security. As Experian has said, it gives you a realistic idea of your ability to apply for new credit, can help you catch any discrepancies, and can be a critical tool for catching identity theft early, among other benefits.

That last one is worth dwelling on, particularly as we talk about security. A credit report will reveal unfamiliar accounts and social security numbers, which will raise major red flags as soon as possible.

And of course, you can easily get a credit report annually for free, so the only cost can be counted in minutes.

2) Don’t Operate From Zero

It’s natural to look at all the money in your checking account and decide how and where to spend or save it. In other words, it’s understandable that all of your money would regularly be part of your budget.

But that isn’t a secure place from which to operate when it comes to finances. The slightest unforeseen expense or ill-timed paycheck could send you into the red, with all associated consequences.

Instead, build to a base in your checking account. This could be $500, $700, $1,000—or any amount. It’s less about saving for an emergency (which we’ll cover in a minute) and more about giving yourself margin for error as money flows in and out of your account.

3) Budget

Speaking of budgeting, it may seem obvious, but the easiest way to lose control of your finances is by ignoring them.

Regular budgeting—whether weekly, twice-monthly, or monthly—is a built-in security method for identifying financial difficulties before they spiral. The more you know (about where you’re spending your money), the more you know (about how secure you are).

4) Get Help

There are a lot of things you do in life that are better done with others, and that’s especially true for something as sensitive and emotionally straining as finances.

You probably don’t spend all waking hours analyzing your financial position, but you can speak to people who live and breathe such assessments every day and can guide you in what is and is not good for your security.

One example is the National Foundation for Credit Counseling, whose services cover everything from debt, bankruptcy, and foreclosure prevention counseling to proactive financial education. Other institutions have experts ready and willing to help as well. Find someone you trust, and be bold enough to ask how secure you really are.

5) Set Aside an Emergency Fund

The very definition of security is being able to withstand challenges and difficulties. That’s exactly what an emergency fund is for.

It might be $1,000, or it might be 2-3 months’ income. The choice is yours, but the point is to have something set aside for unforeseen circumstances like car trouble, sickness, and so on.

Conclusion

If you haven’t noticed, a running theme here is that you can make yourself more financially secure by practicing diligence.

Regularly creating a budget and checking your credit score are like looking under the hood of your financial “car” and making sure there’s nothing amiss.

Setting aside untouchable money in your checking account or starting an emergency fund helps put you in a position where you are ready to counter the unforeseen.

And getting counseling and financial advice is an act of building a window into the parts of your financial security that you are not able to properly assess.

It’s not that these things eliminate what lurks around the corner. Let’s just say they put you in “better gear” for when it comes at you.


By: Ryan Drawdy
June 27, 2017


The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official opinion or suggestions of CenterState Bank.