Life isn’t always easy. Even when you think you are financially secure, something happens and your savings can hit rock bottom. And if you don’t have any financial security, things can go from bad to worse overnight. If you want to build financial security but aren’t sure how to do it, here’s what you need to do.
Despite being a somewhat complex topic, you can begin building your financial security at any time, even in retirement. While it’s always better to start earlier, it’s never too late to secure your financial future. Take inventory of your entire financial picture. Look for ways to cut costs and then bank the extra.
Keep Track of Your Spending
Even though saving money shouldn’t be hard, it is for a lot of people. Even with the best intentions, it’s not uncommon for people to dip into their savings because they overspent. The best way to avoid this is by keeping track of your spending. Create a budget of your current expenses. This will give you insight into how much you’re spending each month, so you can put the residual into your savings.
If you’re struggling to keep money in the bank, you need to determine why. If you’re paying for unused extras, like gym memberships or streaming apps, you need to cancel them. You also need to look at your other revolving payments, including life insurance payments. Far too often, people pay for life insurance they really don’t need. Or, they don’t know that they can get a life settlement, put that money in savings and buy a cheaper policy.
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With a life settlement, you’re essentially selling your policy to a third-party buyer for a percentage of the total value. You can then use the money to pay off debt or build a nest egg. Since the process can be confusing, you need to understand how it works prior to moving forward. There are plenty of blogs online that break down the process. From there, you can then decide if getting a life settlement is right for you.
Put Everything You Can into a Savings Account
Financial security is only obtained through two things: a stable income stream and a savings account. After all your monthly expenses are paid, you need to put whatever you have left in a savings account. If you’re not sure how much you should be saving, you could try the 50/30/20 method.
How this works is that you put 50 per cent of your income toward necessities, 30 per cent into savings and use the remaining 20 per cent for whatever you want. Rather than spend that 20 per cent, you can combine it with the 30 per cent for savings, so you have an even 50/50. You’ll save more and build up your financial security much faster. Keep in mind that everyone’s financial picture is different, and you might not earn as much as others. If this is the case, you can still try to save as much as possible without sacrificing good quality of life. Start by finding ways to save on travel, dining out, or whatever it is that you do to enjoy yourself, so you can do so while still keeping your savings goals in check.