Being financially secure is going to change your life. And no, I’m not just being dramatic here. It’s not an understatement. It is literally going to change your life and if you don’t believe it then you aren’t yet realizing how much of your life energy you spend worrying about money and money-related things.
I’m not even talking about complete financial independence, just basic financial security.
Financial security is having enough money to cover all your bills and then some, having money in savings for emergencies, having money set aside for future needs such as retirement, and being able to afford to pay for insurance that will adequately protect you from financial ruin.
How can financial security benefit you?
- Do you and your spouse argue about money?
- Do you dread paying your bills every month?
- Are you living paycheck-to-paycheck, always having to check to make sure you will have enough until that next payday?
- Are you stuck in a job that you hate, but you can’t quit because of money?
- Does it make you anxious when you consider what an emergency trip to the hospital would mean for your financial situation?
- Do you have debt that keeps you awake at night or do you have debt collectors calling you for payment?
- Are you worried that even short-term unemployment would mean not being able to pay your immediate financial obligations?
- Are you just worried about your entire financial situation???
Even if you answered yes to just one of these questions, you’ll be surprised at how big of a difference it makes in your life to get rid of money-related worries!
As poor newlywed full-time college students, we had a notebook where I kept running totals of our income and expenses for the month just to make sure we’d be able to pay the bills before our next paycheck hit the account. An unexpected bill was a big stress on our tiny budget and we had our fair share of arguments when one person wanted to buy something that the other person thought was an unnecessary expense.
We graduated college (although it does seem like it takes forever, right?), started full-time jobs, bought a house and cars and still were basically at the same point for a while where I was tallying up the timing of the income and expenses to make sure that the paychecks would come before the bills were due.
Eventually, through career advancement and time, we were able to put money aside in savings, which we then used as a down payment on a larger home to accommodate our growing family. And yet again for a while, I was tallying up money to make sure that our income and expenses were aligning to make all those payments on time, not necessarily living paycheck to paycheck but without enough savings to make me feel really comfortable with unexpected expenses.
To make a long story short(er), we ended up as expatriates in Asia for four years, an experience that changed our entire lives, both financially and in every other way. We received some extra bonuses that more than made up for me no longer working, we sold our cars, rented out our house and our international rent and utilities were paid for by the company. Our travel budget went up, but our lack of other expenses meant that we were able to save enough to pay off all our debt, increase our retirement contributions, nearly pay off our mortgage and still have a cash reserve that would cover essentially any emergency.
BENEFITS OF FINANCIAL SECURITY
Having this financial peace of mind is something that I wouldn’t trade for any tangible object in the world. It changed my life, just as I promise financial security will change yours. This is what happened:
- We no longer need my second income to make ends meet and I can stay at home with my 2-year old (sometimes it’s a great thing and sometimes it’s HARD though!).
- I have ALL of my bills, even my credit card bills, to pay in full on automatic bill pay and I don’t have to check first whether I will have enough to cover them until payday.
- I track my expenses not because I’m worried about making ends meet, but because I want to make I am spending within my budget so that I’m in line with meeting my financial goals. And if I go over-budget a little some months, I just move on. It’s not a big deal AND it doesn’t put me in debt.
- We’ve had a few “emergencies” that we only considered minor annoyances because we have a cash reserve to cover them-a drain backup at a rental property, a broken air conditioner in August and a home renovation with unexpected expenses that put us way over budget to name a few recent ones.
- We are able to set aside a monthly allowance for each member of our family that carries over each month so we don’t argue or even have to ask if we want to buy something that isn’t in the budget. This has avoided years of arguments and bitterness between a spender and a saver. 🙂
- Even if someone in my family had a medical emergency this year that required us to pay the maximum-out-of-pocket amount for our medical insurance, we would be able to pay the bills without financial strain.
- If my husband, currently our sole income-earner, was to become disabled we would be adequately covered by both insurance and savings.
- If my husband was to lose his job, we could currently live for an extended period of time without his income.
- I just don’t worry about money at all basically! Instead of worrying about having enough money today, I spend that energy planning for our financial future!
We are working toward being completely financially independent, but we are at a point where we can enjoy a life free from money concerns already, even without being incredibly wealthy.
HOW TO GET THERE
You may not have a sudden drastic change in financial circumstances as we did, but you likely have an annual bonus, tax refund check or other unexpected income that you can put toward your goal of financial security instead of something that you’ve been wanting but don’t really need. Little amounts do add up and you can likely find somewhere in your budget to start adding to this on a monthly basis if you realize how much peace of mind it’s going to give you. Where do you start?
- Think of at least one goal that you are passionate about achieving.
- See where you’re at financially by creating a list of all your assets (cash, investments, etc.) and liabilities (debt) to reach your current net worth.
- Set up a budget and stick to it. Track your expenses to make sure you are in line with your budget.
- Fund a cash reserve and emergency fund.
- Make a plan to reduce your debt.
- Make sure you’re adequately covered by insurance.
- Invest for your future.
That’s the shortened version-if you’re following the classes, you’ll set all of this up and more! If you’re visiting for the first time, start Orientation here.