“When will you feel financially secure?” This is a question that I often ask myself, and as I get older my answer changes. What is your definition of being financially secure? Is it no longer living paycheck to paycheck.? Maybe it is having 10, 20 or 30 thousand dollars in the bank, maybe it’s making a certain amount of money in the bank, maybe it’s owning your own home. Whatever it is, I think it’s an important question to ask yourself and ask yourself frequently.
I used to think I would be financially secure when we made a specific dollar amount (and sadly that amount kept getting higher and higher and higher as we kept increasing our lifestyle). Now, however, my feeling of being financial secure is based on a percentage of our pay that we can save. After a discussion with the Mr. I decided, that for me, being financially secure means that we can pay all of our bills and expenses with the first paycheck of the month and still have $500 left over, leaving the second paycheck to be saved. I know this isn’t everyone’s idea of being financially secure, but this is what mine is. But what am I supposed to do with this revelation once I figure it out? Make a plan!
- Make a plan…a doable plan that starts today. Don’t start your plan by saying “when I get my next raise or bonus I’ll bank it”…start today. If your idea of being financially secure is to have $10,000 in the bank, sit down and figure out how much you have to save every month to make that happen in 5, 10, or 15 years.
- Make a budget. Everyone needs a budget. A budget doesn’t mean you are poor or that you don’t have money. It just means that you know where you money goes. It’s ok to have line items in your budget for coffee, dinners out, alcohol, or gold plated decks of cards, the point is that you need to account for those expenses. Once you know where your money is going you can sit down and figure out if you have money to save or if you maybe need to cut back to one dinner out a month. Need inspiration or help starting a budget? Check out Budget Is It The Elephant In The Room?
- Stop comparing yourself to everyone else. Just because your friends have new cars and big homes doesn’t mean that they are as well off as they seem. A lot of people are barely keeping their heads above water financially to keep up appearances. Make sure that you are spending money on items that are for the benefit of you and only you. It shouldn’t (and most likely doesn’t) matter to your coworker if you drive the fanciest car. If you are happy with your possessions just be content and save those bucks!
- Find money to save. There are two ways to get more money in your savings account. Earn more money or save more money. Picking up a second job is an easy way to make your financial dreams happen sooner. Need suggestions on how to make a few extra bucks? Check out my post about side hustles (Side Hustles That Dont Make You Feel Hustled). If a side job isn’t an option (and it isn’t for some) go over your budget and see if you can cut down in any area. Maybe switch your phones to a carrier like Republic Wireless, or ditch the cable in favor of Netflix or Hulu.
- Review, review, review. Make it a monthly practice to check in on your budget and your bank account. Make sure you budget is realistic and that you are sticking to it. I have an awesome spreadsheet that I update at the end of each month that has all of our bank account balances, credit card balances (which are at $0 baby!), balance on the car loan, IRA amounts, etc, so that we can see, month to month, how we are doing (and usually we are saving more and more each month). If you aren’t saving money or reaching your goals figure out what your problem is and get to the root of it.
For me, wanting less and scaling back has also helped us get to a place where we are very close to feeling 100% financially secure. It is amazing when you take a step back and realize all of the awesome things you already have and then you really don’t have a need or desire for more.
Being financially secure really does mean so many things depending on the person you talk to, so make sure you figure out what it means to you. And above all, make sure you are living within or below your means. If you are constantly charging things to you credit cards and carrying balances you will never be financially secure. Imagine the peace of mind you will feel when money is no longer at the forefront of your thoughts.
What does being financially secure mean to you?