Everyone is working hard to have a secure financial future. Everything that we do, from the moment we started going to school until the time we build up our careers – all of these are done with the intention of securing our future. While we do not want to be materialistic, it is a fact that we need our finances to be intact if we want to live a comfortable life in the future.
But what is waiting for us in the future? It is hard to predict what will happen but we can always hope for the best. According to a recent survey done by Gallup, 6 out of 10 Americans believe that today’s youth will have a better life compared to their parents.
Of course, having it appear in a survey does not mean it will be a reality. We all need to work hard to make sure that our financial future will be secure. It is not just something that will fall into our lap. You need to set yourself up today in such a way that will ensure you will have a stronger and more secure financial position.
5 signs your financial future is secure
But before you can work on that, you want to check your current status first. How financially secure are you? There are 5 important signs that you are on your way to having a secure financial future.
You have enough emergency savings
According to a recent survey, 58% of respondents said that their emergency fund is bigger than their credit card debt. If you are one of these people, then you are on the right track. Considering what the average household has gone through a decade ago, the need to build an adequate emergency fund cannot be denied. Some people might not be aware but most debt situations can be avoided when you have sufficient reserve funds. For instance, if you lost your job today, you would probably rely on your credit cards to buy food and groceries. But if you have an emergency fund, you could use that to finance a frugal lifestyle until you are able to get another job to replace what you lost.
You are not missing out on debt payments
Another sign that you have a secure financial future is when you are not missing out on debt payments. The need for a good credit score means we cannot completely go without debt. But then again, if are set on having a secure financial future, you need to ensure that you only borrow what you can pay back. That does not only mean having enough money to meet your payment obligations but also the discipline to do it on time. Being able to pay your debts when it is due means you are in full control of your finances and you have not borrowed more than you can afford to handle.
You are on track with your retirement fund
Your retirement fund is another indication that you are on your way towards a secure financial future. It is important for you to contribute as high as you can because there are reports that a million-dollar retirement fund is no longer enough for you to live on by the time you retire. If you are employed, there is a high chance that your employer is offering a retirement plan. Some are even generous enough to match your contributions. That means if you contribute $200, they will do the same so you have a monthly retirement contribution of $400. You want to increase your contributions as early as possible so you can take advantage of the compound interest that can grow your investments at a faster rate.
You have investments
Consider yourself financially secure, or on the way to it, if you have a couple of investments. This is not just referring to stocks and mutual funds. You can also consider the equity that you have in your home as an investment. As long as you own something that grows in value over time, this is considered a good investment. Try to put your investments in multiple places to minimize the risk.
You are insured
Finally, a good sign that you are on your way to a secure financial future is the presence of an insurance. Take note that this does not have to be a life insurance alone. If you have a health insurance, car insurance, or even a property insurance, that is good enough. This is an indication that you have thought about your future. It also means you have prepared for emergencies by setting up financial aid when you need it the most.
If all of these signs are applicable to you, then you are in a very good financial position. Without a doubt, you are going to have a secure financial future – at least, if you practice the right habits.
Habits that will lead to financial security
There are certain habits that will lead to your financial security. These will help you achieve all of the signs mentioned above. Not only that, it will strengthen your finances so it stands a better chance of improving your life in the future.
If you really want to achieve financial security and stability, here are the habits that you need to develop.
You maintain full control of your finances
Having full control of your finances places you in the best position to make the right decisions. It means knowing your current financial position and understanding what you can afford and what you cannot. The knowledge that you will get from all of these will force you to seek out your options so you can make the right choices that will secure your financial future. The best way to maintain this control is by living with a budget.
You live below your means
Another habit that you need to work on is living below your means. Some people think that living within their means is enough. It is not. When you live below your means, you get extra money after paying all your expenses. This money can be used to save or invest. These two will help you improve your financial position. You can also use it to pay more towards your debts.
You pay your credit card balance in full
This is actually a great habit to develop. Unless you are sure that you can pay your credit card in full, do not use it. This is the best way to keep your debt level in check. Past due credit card accounts can be hard to handle. It is best to cut it off before it starts. You can set a budget for your credit card use every month. Make sure you set aside that money so you can pay off your balance within the grace period of your billing cycle. That way, you can avoid paying the finance charge on your card.
You never miss a payment
It is not just about missing a payment. If you can afford to pay them in advance, that puts you in a really great position. Try to develop this habit together with paying your credit card balance in full. It will not only help keep your finances in danger, it will also help you build a good credit reputation. This will make it easier for you to open new financial opportunities that will help secure your financial future further.
You are not enticed by recreational spending
This might be harder to do than the others. Who does not want to shop and buy new things right? While we deserve to reward ourselves, it should always be done wisely. Some people turn to shopping to cope with multiple issues like depression or low self-esteem. This is the wrong reason to buy anything. In fact, it is actually not advised that you buy anything when you are feeling any emotional high – whether that is happiness or sadness.
You do not keep up with the Joneses
Finally, a great habit to develop is not keeping up with the Joneses. This is one of the biggest dangers that can quickly ruin us financially. Our need to appear affluent and keep up with the material achievements of those around us can spiral out of control and ruin a secure financial future. The only time you are allowed to look at those around you is when you are trying to get inspiration from them. But if you are looking at them with jealousy or envy, you have to stop. Just focus on yourself and your own goals.