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Financial Security: Take the step toward financial independence

We have already talked about the importance of being financially independent and being financially healthy. But what makes a person financially healthy or independent? Any guesses? The answer is financial security! And when we talk about financial security, we don’t mean having a fancy car or an expensive watch; we are talking about the safety net you have in times of hardship. Now, the problem is that most people do not understand what financial security is; they mix it up with terms like financial stability or living a lavish life. No, we are not saying that you should not be financially stable or live a luxurious life; we are just saying that you should be financially secure first to live a life of luxury!

Let’s start from the basics and understand what financial security is!

Though there is no official definition for the term financial security, it broadly refers to having a financial safety net for a secure financial future. A point when you can bear your monthly expenses, repay your debts in time (if you have any), have saved enough to handle emergencies, and save and invest your money for a secure future. In a nutshell, you are financially secure when you have a financial cushion to fall back on in case of unexpected emergencies. 

Now that you know the basics, you must be wondering why is it important?

Financial security is vital to help you financially grow and become financially independent without worrying about your finances during emergencies. Living a debt-free life and becoming financially independent is a dream; many people talk about it, but only a few are able to achieve it. Having financial security can also help you get out of the pay check cycle to focus on your long-term financial goals.

But how can you become financially secure?

We know and understand that everyone wants financial security, but we often get stuck on HOW. What exactly one has to do to become financially secure? Is there a formula to do so? The truth is there is none, but there are better habits one can develop to achieve financial security. Let us check them out:

1. Knock off your debts!

Debts can take up a significant chunk of your income. Getting rid of your debts should be your priority, especially if you have debts with high-interest rates. Credit card debt has high rates of interest and troubles the people most. But how can you do that?

You can use one of the debt management methods to get rid of your debts. The first thing that you need to do is list down all the debts you have. Listing everything down will give you a clear idea of what you owe and how long it will take. After that, you can pick a debt pay-off plan and clear all your debts to become financially secure.

Read to know more about debt pay-off strategies.

2. Start with saving

Yes, we know you have already heard it many times before, but have you ever wondered why everyone suggests the same thing? It is because saving money for unexpected circumstances can help you to get through financial hardships. And when we talk about financial trouble, we don’t just mean financial emergencies like unexpected medical expenses or unexpected expenses to repair your car; we also talk about job loss, salary cuts, and more. The future is uncertain (we mean who expected a global pandemic?), so it is better to be prepared for it.

Begin with an emergency fund that can reduce your stress in times of financial crisis. In case of job cuts or job loss, you should have at least three to six months of funds saved up in your account to meet your monthly expenses and not get stressed over it.

3. Break up with credit cards!

Remember your best friend telling you that your ex is toxic and you need to break up with that person? Well, in this case, consider us as your best friend and your credit card as your ex. It can make you happy for a while, but in the long run, it will hurt you. It sounds like your ex, right?

We are not saying that credit cards are bad, but if you are an impulsive buyer, you will spend more than you can handle and accrue high interest, which will become difficult to repay in the long run. Essentially, it is not harmful to have a credit card, but you need to know your limits, which is tricky. Many people don’t realize while spending the money as it doesn’t feel real at that moment because the money is not deducted from their bank account, but the burden becomes heavier with every purchase of the credit card.

So, we hope now you understand why it is crucial to break up with your credit card.

4. Shrink your expenses

The problem with most people who live on a paycheck is that they don’t think twice before spending. We understand that it is not easy, but it is the step that can help you to save and become financially secure. When we talk about shrinking your expenses, we mean you need to learn to live on less than what you make. It will help you get out of the paycheck cycle, improve your quality of life, and help you to save money for financial security. Moreover, it teaches you financial discipline. And if this isn’t a win-win situation for you, then what is?

5. Start investing at least 10% of your income

Financial security has a different meaning for different people, but its purpose is common. The primary purpose of financial security is to become financially independent. To become financially independent, you need to invest and save money so that you do not have to worry about being financially dependent on someone after retirement. After you are done repaying your debts, you should start investing at least 10% of your income in growing it for a better future.

Now that you know the importance of financial security and understand how you can secure your future. You need to take the first step, get rid of your debts, and become debt-free. After which, you can focus on growing your money to have a secure financial future. 

If you are overwhelmed by your debt and struggling to repay it, you should start looking for options to clear your debts. If you are struggling due to financial hardship, debt settlement can be one of the options you can explore. FREED helps people resolve their debt for lower than what they owe. The process is called Debt Settlement; we negotiate your debt with your creditors and help you get debt-free. If you are looking for help with your debts, you can visit our website to know more or call us on 0124-6663666.

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