How to be financially secure beyond your job•
Financial security doesn’t have to be a pie-in-the-sky kind of goal. However, reaching that goal does require careful planning and consideration. Although accepting a steady job with a reliable source of income will help you get one step closer, you can improve your financial stability through other means as well.
Here are some ideas for how to get started getting financially secure beyond your job:
Set long-term financial goals
Before you can achieve financial security, you have to define what that term means for you. Maybe your primary aim is to cover rent and groceries without scrounging at the bottom of your pockets, or maybe you hope to retire fifteen years early. Financial peace can mean something different for every individual, so you have to articulate those goals and definitions to make a plan to move forward.
After you define financial security for yourself, you should research appropriate insurance policies in case of any unexpected difficulties or catastrophes. We’re talking not just health insurance or car insurance – disability or life insurance policies are vital to full financial security, for yourself and your loved ones. Even if you’re currently single, your parents could be at risk if they co-signed your student loans or mortgage. Insurance can feel like a drain on your paycheck, but it’s a valuable preventative measure that could protect you from bankruptcy if you find yourself in a financial crisis.
Create an emergency fund
As an additional preventative measure, start saving money in an emergency fund. Experts say you should save enough money to stay afloat for at least six months – but studies suggest most American adults have less than $1,000 saved for emergencies. If you tend to spend money that you ought to save instead, look into options to help put money-saving on autopilot. Plenty of mobile banking apps now offer optional features like automatic savings.
Save for retirement
Financial security is a long game. You might feel stable right now, but if you’re not contributing to a 401(k) and otherwise making smarter decisions about regular savings, you could find yourself stuck when retirement rolls around. If you haven’t started saving for retirement, make that a priority. If you have started saving, look into increasing your contributions. Many employers will match your retirement contributions up to a certain amount.
Make a plan to pay off your debt
Credit card payments, car loans, and other forms of debt can just end up costing you more over time because you will pay increased interest. If you have room in your budget to increase your payments, try to pay more than the monthly minimum so you can get ahead of that burdensome debt. Once you eliminate those payments, you will have new pockets of cash to use for other expenses. The idea is to go above and beyond the bare minimum (a great life and career tip we mentioned before) to put yourself in a way better position in the future.
Maintain responsible lines of credit
With that said, you should not write off using any lines of credit whatsoever. When you’re ready to buy a house, for example, you will likely rely on your credit to secure a mortgage. Even if you plan to rent an apartment rather than buy a home, many landlords check credit scores to review a new tenant’s financial situation. Closing too many credit cards could lead to a shortened average credit age, which can reduce your score. So keep those accounts open, as long as you ensure the balance remains low.
Eliminate unnecessary spending
Evaluate your monthly spending and bill payments to determine whether some of those expenses could be eliminated. Are you paying for a subscription you haven’t used all year? What about TV channels you’re not watching or mobile data you never use? Increasingly apps, chatbots and other tools can do the legwork to analyze your spending, then make intelligent recommendations about how to trim your budget.
These steps can help bring financial security into closer reach for you and your loved ones. You don’t have to apply each suggestion all at once, but phase them in individually whenever you feel able to take another step.
Kelsey Down is a freelance writer in Salt Lake City who covers money and tech as well as home and parenting—and the areas where all those subjects intersect. Her work has been featured on publications including Venture Beat, HomeLight, and Working Mother. Follow her on Twitter @kladown23.