We hear people talk about financial health and having financial security, but rarely do we get a definition of what it means to have good financial health. Many times we get lazy and short-sighted with controlling our money because we forget just how important and how beneficial it is to have good solid finances. What use is it to work towards a goal without knowing what the end result looks like? It is important to have an idea of what financial security is, so that you have a goal that you can actually work towards and feel good about as you make progress. Remember, if this doesn’t describe you, the good news is that it can be you with dedication and work. (Sorry, it does take effort to have financial security.
Imagine not worrying about money. I don’t mean you can spend to your heart’s content, buying anything you want, as much as you want. I mean that you don’t lie awake at night worried about your finances. You aren’t worried about what bills may come in the mail, or that the ringing phone is a creditor demanding money. You have systems in place so that you can manage your money effectively, and you don’t have to check your bank balance every time you make a purchase. Here are a few more examples of what you have to look forward to when you are in control of your money.
All bills paid on time and in full – Imagine paying your bills based on when they are due, not on when you have the money. Collectors are not calling you looking for past due payments. You are saving hundreds if not thousands of dollars by avoiding late fees and interest on overdue bills. Your credit score naturally increases as you have a history of timely payments and no overdue bills.
No debt except for home mortgage – You have no car payments, you pay your credit card statements in full every month so you never carry a balance over into the next statement, and you have a plan to pay off your home mortgage ASAP so you maximize the savings on interest. (More on getting out of debt and credit cards in other articles)
Setting money aside for emergencies, savings, retirement, college, etc – You have money set aside for emergencies, you have a savings account you are steadily putting into, you have a plan for retirement and you have a college account going so that your kids don’t have to borrow so much for college. You have a cushion in your bank account so that when the car breaks down, a pipe leaks, or something else unexpected happens you can just deal with it and continue with your life. (More about setting money aside later)
Not living paycheck to paycheck – Imagine that your boss just told you that he can’t make payroll this week and it might be another week until the funds come in. You have enough of a cushion in your finances so that the late paycheck won’t push you over a financial cliff. Your life continues without a hitch and your family life is unaffected.
You can help others – You are in a financial position where you can provide help to others, whether it be through a church, food bank, shelter, etc. There is a joy that comes from making a positive difference in the lives of others and it is hard to help others if you aren’t in a strong position yourself.
The point here is to show what you are working towards, the goal and rewards. The great news is that no matter your situation, no matter your job, no matter your debt, you can reach financial security! All you have to do is get serious about making a difference in your life and focus on achieving your goal of having financial security in a crazy world!