A financially secured future depends on several factors such as defining long-term goals, having enough savings for both near and long-term, budgeting, managing debt, having an investment strategy, and most importantly staying on track.
Financial security requires an understanding of assets and liabilities as well as the comparison between the income and expenses of an individual. If he fails to track these, he might suffer later on. For true financial security, people need to create a budget that addresses both their current needs as well as long-term goals. They should also include insurance to cover the ‘what-ifs’ in their life.
Individuals should ensure that they set aside an amount for their long-term goals such as education fund for their kids, down payment for a future home or a retirement account. When people struggle to find enough money to pay down debt, they should look for discretionary expenses that they can rely on.
Whether it is an emergency account, a rainyday fund or safe money, keeping aside some amount is critical for maintaining financial security. Doing so, a person will have the funds to deal with unexpected situations rather than being in debt, especially high-interest debt such as a payday loan or a balance on their credit card.
A budget requires maintenance and fine-tuning over time to make sure an individual adheres to his goals. For instance, if a person has not been tracking his spending in the past, he might think his expense is about $100 a month, but he could be spending twice thrice that amount if he is not tracking it.
For being financially stable, people need to stay on top of their money, and today there are several software in the market that can put all the accounts of an individual in one place so that they can manage their money efficiently. It takes patience and discipline to follow a financial plan over years. But with focus on the end goal, it is possible to build long-term security. The key is to maintain a balance where a person is not completely depriving himself of a secure future.