The Five Best Habits to Build Financial Security

What Does It Mean to Be Financially Secure?

Financial security boils down to one word: confidence! When you’re financially secure, you’re confident in your ability to pay your bills, tackle debt, cover any emergencies, and achieve your future goals. It means you can spend less time stressing about money, and more time focusing on the other important aspects of your life.

A common misconception about financial security is that it takes a lot of money. But here’s the truth: You don’t need to be fabulously wealthy to be financially secure. The secret to financial stability isn’t how much you have. It’s what you do with it. There are tried-and-true habits that all successful savers practice that ensures their financial security—and, luckily, we happen to know a few of them.

By adopting these five positive habits now, you’ll set yourself up for success in the long term.

One: Set the Right Goals

It may sound a bit cliché, but it’s true: successful people tend to be goal-oriented. They don’t just set broad goals and leave them; Rather, they break them down into an executable plan of action. Know what you want in the future, but make sure you’re setting a series of specific, measurable, and realistic short-term goals to get there. For example, instead of having the broad goal of paying off your student loan debt, say that you will pay off your student loans in two years by contributing $350 per month.

As you reach your mini-milestones, celebrate! This pattern of establishing and achieving short-term goals paves the way for you to achieve your more significant objectives. And as a bonus, becoming a goal-oriented person makes you a more active participant in your life—an essential step in achieving financial security.

Two: Always Save for Retirement

Retirement may seem like a long way away, especially if you’re young. You may think to yourself, “Ah, I’m only 30. I can plan for retirement later on.” Yet planning for your exit from the workforce is a vital slice of the financial security pie. Even if you have demanding expenses right now, you’ll still want to start saving as early as possible. After all, the sooner you start, the more money you’ll accrue—and thanks to compound interest, that money will work for you in the future!

Even if you’re paying off debt, don’t be afraid to put money away for retirement. Focus on starting small and dedicating around 3 to 5 percent of your salary towards retirement. Once you’ve conquered your debt, increase that percentage to whatever you can comfortably manage and maintain. And if your workplace matches contributions to your 401(k), even better! Try to put away the maximum amount that they will match to sustain your financial security long after your salary stops.

Three: Build Your Safety Net

Disaster is prone to strike when you least expect it. Whether it’s a week or two of missed work or a large, unexpected bill, a minor inconvenience could spiral into a financial disaster if you’re not prepared. That’s why you should always have a savings safety net a.k.a. an emergency fund.

The concept of starting a savings safety net is relatively simple. Get started by setting a goal to save two weeks’ pay in a separate savings account and designate it as off-limits. Keep building your emergency fund until you can cover six months of expenses. 

Establishing this savings safety net guarantees that you have the funds to sustain yourself if the unexpected happens, setting you up for financial stability even in the face of a crisis.

Four: Eliminate and Manage Your “Bad” Debt

We know what you’re thinking: “There’s such a thing as GOOD debt?” The short answer is no. The long answer is that, while debt isn’t desirable, some debts are worse than others—namely payday loans, credit card debt, and auto loans with high interest rates.

You have a few different options when it comes to tackling “bad” debt. First, take some time to list out all of your debts: what you owe, what you’ve already paid, the interest rate, etc. Then, turn your attention to payment. If you’re looking to save the most money in the long run, focus your attention on paying down the debts with the highest interest rate (APR) first. If you need to see results faster to stay motivated, you’ll want to start with the debt that has the smallest balance instead.

Five: Invest in Your Professional Self

YOU are your biggest financial asset. It’s wise to invest the time, energy, and money, into increasing your value in your career. And this doesn’t just mean obtaining a formal degree. It means seeking certifications, classes, books, and online resources that expand your professional opportunities and increase your value to an employer. Most workplaces are looking to hire and promote eager, well-rounded employees who contribute to the company in several ways. Putting in the effort to increase your job security can have a far bigger impact on your financial security than cutting costs.

Stick with It!

Adopting and sticking to healthy financial habits can be challenging at first. You may fall off the wagon, or life may have other plans. But even if things aren’t going your way, make sure you follow through. Instead of focusing on doing things perfectly, focus on making a bit more progress every day. While financial security may seem like a far-off dream, sticking to these five habits can make that dream a reality.

Are you struggling to increase your financial security and need help getting your debt under control? Request a Custom Debt Relief Plan with one of our debt specialists today! Together, we can find the right path to debt relief for you—and the financial security you deserve.

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