Financial security is one of the most vital aspects of leading a safe and secure life. Financial security doesn’t always mean having millions of dollars, but, rather it means meeting your day to day expenses and having substantial money to tackle any unpleasant economic crisis.
In order to achieve financial security in your life, we have compiled for you the next 10 valuable steps.
Step 1 – Start by Having a Plan
Initiate a plan as early as possible. There is no exact age to start planning for your future. But it is strongly advised to start your financial planning before you reach the age of 30.
Draw up a budget that satisfies your present financial demand and can meet the requirements of your future, without any harsh compromises to the necessities of life. Finalize the targeted amount including daily requirements and future financial emergencies.
[ Read More: About Writing A Plan ]
Step 2 – Set a Budget
By setting a budget, it gives you the ability to Control Your Expenses and your Surplus. Your monthly income is not what matters. But it’s the way you are spending your money that matters the most.
You absolutely need to set a budget if you want to secure your financial future. If you find that your budget is hampering your present expenses, never give up. Look for ways to increase your income. If you abandon your budget, it will severely hamper your goals. Reduce your personal expenses and do away with any unnecessary expenses.
[ Read More: About To Set Up A Budget ]
Step 3 – Remove Bad Debt
If possible you need to get rid of your Bad Debts, in particular your most expensive bad debts first. This is debt that has the highest interest rate and fees, like a Credit Card. Bad debt includes purchasing things with Credit, that don’t increase in value over time, or which do not give you any profit in the future.
This list includes spending on cars, hotels, holidays, entertainment, and other luxury items, that are paid for with credit cards and other personal debt. I know it sound boring, but such costs are huge and beside the immediate gratification, they don’t give any valuable financial asset in return. This may also be a sign that your spending more that your income will allow.
[ Read More: How To Remove Bad And Harmful Debt ]
Step 4 – Manage Your Surplus Income
Surplus income in the portion of your income that is left over after your living expenses are take out. You calculate this by using your budget. This surplus, if not managed carefully, will simply slip away if not taken from your budget at the right time.
If you calculate your entire year’s surplus income, it could turn out to be a very good amount. Have a goal to Invest this money sensibly. Maintain a separate account, and use it save the surplus income.
[Read More: How To Manage Your Surplus Income]
Step 5 – Automate Forced Saving
Set up and Automated Forced Saving of a % of Your Income Directly to a Place that is Hard to Spend. Get a savings account which demands monthly fixed deposits and charges high penalty for missing even a single months deposits.
These automated actions will force you to save the required amount irrespective of any difficult situation. Moreover, you can’t just take out and spend the deposited money with these types of accounts before a specific maturity date.
[Read More: How To Automate Your Forced Savings Plan]
Step 6 – Avoid Speculation and Taking Risks
Avoid Punting or Speculation and Taking Silly Risks with the Surplus income that has been saved. This Surplus money can be a great help for your future. So don’t speculate and take risk with this cash and make hasty decisions based on bad financial advice. Taking risks with your surplus is foolishness as it may lead you to disasters. If you do want to take some risk do it with a small portion, never the entire amount.
Step 7 – Retirement Management
The best and most ideal time for investing in any suitable retirement plan is as early as possible. But you should have something started by the age of 30. In this case you will have enough time to build up a substantial amount at the time of your retirement. So, start as early as you can to get the maximum benefit.
Step 8 – Maximize Your Tax
Paying more taxes than a person is entitled to is simply throwing money away. Paying more tax doesn’t mean you need to avoid paying taxes, as that is illegal. But it means you should claim every amount possible and reap the financial rewards for your future.
Step 9 – Protect Your Assets
Protect Your Assets with Insurance and Other Techniques Like Trusts etc. This means you need to safeguard your assets with insurance cover. Natural calamities or disasters could inflict major damage to your valuable assets. But if they are protected with insurance you can claim the money and rebuild your lost assets again.
Step 10 – Take Advice When Required
Never hesitate to get expert opinion from experienced professionals. Their valuable advice will guide you to manage your budget and help you to get a secured financial life. However never blindly take advice either. Be sure you understand what you’re investing in.