7 Tips for Achieving Financial Security
Everyone would love to feel financially secure and never to worry about money. The term 'financial security' is variously understood for one may take it to mean attaining a certain amount of money in the bank, or earning a certain amount of income monthly or annually. This varied understanding of financial security makes it difficult to define the term itself. Therefore the best way to understand this concept is to highlight what financial security is not.
Financial security is not making or having a certain amount of money for there are some who have millions of pounds or dollars and yet they are financially insecure. There are many who have made billions of money and yet they are declared bankrupt. In a nutshell financial security could include: being debt-free, increase of savings, control of expenses, and any other practices that demonstrates financial discipline.
7 Tips on Financial security:
The following general tips would be helpful in attaining financial security:
-Starting to save at an early age is ideal, though it is never too late to start any time one realizes the importance
-Saving even a little amount over a long period of time will be helpful after retirement. For instance, a monthly savings of £100 for 30 years at a 5% interest rate would have made over £50,000 by the end of 40 years.
Save Small but Consistently.
-Regular assessment of the saving plan to determine whether one is on track or adjustments are necessary.
-Treatment of savings as an expenses by resisting temptations to spend the money. -Planning to have amount for savings directly deposited in the account without having to come into the account.
-Retirement savings should be treated as a recurring expense.
-Financial education is important because it helps one to understand simple methods of financial planning
-Many people make plunders because they don't have simple financial literacy.
-Using financial advisors to get education on financial management and savings.
-Reading literature on financial management and investments.
-Acquiring skills on personal financial planning and savings. For Assessment of Expenses and Readjusting Accordingly
-It is advisable to adjust everything including change in income, lifestyle, and financial responsibilities.
-Making necessary changes to one's savings by either increasing or decreasing where necessary is important.
-Regular monitoring of the savings and investment plan to ensure everything is right on track.
-Budgeting helps in setting realistic financial goals.
-Budget planning would help in working within budgeted amount.
-Impulsive spending that 'eats' into other finances is avoided through budget planning.
Income and Investment Diversification
-It is more risky to put all investments in one account for one may lose of it.
-It is advisable to have more than one stream or source of income due to economic uncertainties.
Consideration of All Expenses in Financial Planning
-All expenses including medical, long-term care and income taxes during retirement should be considered
-Making a list of all possible incurrences during retirement years and not forgetting to take the government's medical insurance cover by obtaining the National Insurance or ni card to assist with medical services and saving the expense on health services.
-Planning of all possible expenses helps to make realistic projections accordingly.