What Does It Mean to Have Financial Security?
While the pulse of America’s economy has held steady in recent years, an alarming majority of Americans still struggle to find financial security.
Authoritative sources have reported that even small-sized families with “good jobs”, earning them a moderate income of $40,000 to $80,000 a year, are still struggling to make ends meet. But why is that?
In order to get to the bottom of this financial illness that’s been infecting America for decades, we’ll need to take a deeper look beyond the pulse to see if we can find some underlying symptoms.
What Do People Consider to Be a “Good Job”?
Before we dive in, we should probably go over what people consider to be a “good job”. The truth is, having a good job (or a job that earns plenty of money) is only good by perspective. In other words, it’s all relative.
A good job to some people, may not be good at all to others. It depends on your standard of living. So, what it means to have a good job can’t be pinned down to one small window of income. If your job makes you enough money to meet all your financial commitments, it’s “good”.
What Is Financial Security?
Financial security is measured by a consumer’s ability to pay all expenses without any struggle or difficulty. If you are constantly worried about not having enough money, not being able to pay a bill(s) on time, or are carrying more debt than you can pay back, you are financially insecure.
By the same logic, if your income is sufficient enough to pay all your bills, pay down debt, put away 10% to 15% of your monthly income in savings, and still have plenty of money left over to carry you to your next payday, then you are technically financially secure.
If you’re still not sure where you stand on the spectrum, try asking yourself the following questions:
- Are all my bills getting paid on time? Not only should your bills be getting paid on time, but they should be paid even earlier than they’re due. Paying bills at the last possible minute could be an early sign of serious financial problems down the road.
- Do I have at least $1,000 saved up for emergencies? No matter who you are or where you're from, you're bound to get struck by a financial emergency sooner or later. Don't wait until it's too late. Start piecing together your emergency fund today. Your future self will thank you!
- Am I able to save money regularly? After your bills have been paid for the month, do you have enough to stash away in savings? You’re already paying everybody else – pay yourself too!
How Can I Be Financially Secure Then?
Contrary to popular belief, financial security doesn’t relate to how much money you have. It’s what you do with the money you have that makes all the difference.
For example, even if you make plenty of money to satisfy all your financial needs, if you're not using that money to meet those needs, you're still considered financially insecure. Using your hard-earned cash to pay for non-essentials like entertainment, dining out, collectibles, etc. won't get you any closer to financial wellness.
Maybe the underlying symptom here is a misplaced priority. Consumers today are so accustomed to getting what they want when they want it that they're willing to put themselves in financial distress to get it. That's a problem!
Simply because money is supposed to be a means of provision, not profusion. This is why having a budget plan is so important. If you take a good look at every financially healthy person, they all have one thing in common: they have a budget.
Where Do I Start?
What is a budget, you ask? To put it simply, a budget is a guide that shows you where your money is supposed to go. Every dollar should have its assigned job. “X” amount of dollars goes towards rent, “x” amount of dollars goes towards utilities, “x” amount of dollars goes towards groceries, and you get the picture.
If you don’t know where to start, there are plenty of free recourses you already have at your disposal. Listen to these 5 podcasts for becoming financially fit to help you kickstart your new path to financial wellness!
Where Can I Find Financial Relief Right Now?
Part of being financially insecure is not having an emergency fund in place for, well, emergencies. If you’re currently facing a gap between paydays, consider speaking to your local payday loan lender for short-term financial relief options.
Note: The content provided in this article is only for informational purposes, and you should contact your financial advisor about your specific financial situation.