College freshmen, graduates, newly married couples, parents — in one word, everyone is seeking financial security. Getting up in the morning, going to work, running errands and just living a regular life with the thought of having a financial backup is a huge relief. Unfortunately, no one has come up with a gift card or a certificate that makes people financially secure overnight.
However, since that person has not appeared yet, we need to move along with conventional methods. To get to the point, everyone needs to undergo a set of steps. Financial security is not about opening a savings account and putting money there every once in awhile. There is much more to it, and this article will expose the “behind the scenes” of financial security. Without further ado, let’s jump into it.
Learn Personal Finance
Education is the key to everything: want to become a doctor? Go to medical school. Want to be a swimmer? Learn how to swim.
The same notion applies to financial security. Thus, the key to the latter is what we call financial literacy. It’s one of those terms that sound simple, yet when you’re asked to define it, your brain goes blank. So, what does personal finance entail? The most straightforward definition is how to correctly handle money: the practices of earning, saving, investing and spending. In the 21st century, everything seems to revolve around money, therefore, new methods of managing money come around. Credit cards, mortgages, investments that promise to generate passive income — getting lost in these options can happen with a snap of the fingers.
There are various ways of learning personal finance. If you’re determined to grasp as much as possible, then go ahead and take a respective course offered at a university. On the flip side, if basics are enough for you, get ready to spend days with your best friend: Google. Recall your years in school and differentiate between reliable and unreliable sources. Or you can thank digitization at least for online courses and sign up for one. There are a lot of prestigious universities making their courses accessible for a wider audience through online courses. Take advantage of the Internet and register for online courses.
Keep Track of Spendings and Wastings
If there are spendings, then there are wastings too. There is no need to pretend like not wasting is an option and to be financially stable, people should stop spending money on pointless things. The truth is, it does not work because a) it’s hard to define what is futile and what’s not, and b) perfection is from the planet called “Impossible, ” and everyone is going to buy or do a thing that someone else finds unnecessary. But having control over the wastings as well as spendings is very real and mandatory for financial stability. Recording will allow you to know the correlation between your income and expenses. Very often people feel like after paying for utilities, mortgage, car, and other monthly fees they have leftover money that can be wasted. However, unless they are on Forbes World’s Billionaires list, it is not so. Once they start keeping track of their spendings, it becomes obvious that the balance between necessary expenses and not so essential ones has been disturbed. Whether it is an excel sheet or an old-school notebook, allocate time to write them down for future reference. For a better result and less of a pain-in-the-neck experience, you can download apps, which allow you to set limits, helps you budget and tracks your spendings. Convenient, right?
Be On Time
Procrastination is not a characteristic that financially stable people share. Paying taxes and bills are not fun, we all know that, but they are legal obligations. Mark the day of payments on your calendar with big and bold letters. Separate the money for these purposes and don’t postpone the payments. Not only will you put yourself at the risk of having issues with banks but, also, impulsively spending the money and collecting more debts. Keep in mind that you’re trying to save and not spend. And again back to our digitized world, where you can pay the bills online, there is no excuse to put off paying them.
Goals vs. Savings
Saving as much as possible is not going to do anything. There is one quality in people that is essential to financial security – being goal-oriented. Those who know what their future plans and short-term goals are, will end up in a much better place in terms of financial security. Whether it is paying off the mortgage or investing for retirement, plans can eliminate the vague idea of future and set up clear goals. One more thing, those who do not know what they are saving for tend to use the money and become demotivated. Whereas, the picture of the perfect retirement in Florida or seeing your child throwing the graduation cap in Harvard pushes you forward and serves as an incentive to save.
Adulthood comes with responsibilities and getting finances in order is one of them. As different as the journey of financial security is for everyone, there are rules for everyone to follow – financial literacy, budgeting, and goal-orientation.
If you decide to give these steps a try, do not expect to add zeros to your savings account or investments after two months. It is not going to happen. Be ready for a trial and error stage before getting the hang of it. Show some self-restraint and bear with the process.