What is Financial Security?
The term financial security is generally defined as managing financial expenses, resilience to financial problems, and building wealth. To achieve these standards, financial security often requires a steady income or sufficient financial assets. These financial assets or income must be enough to cover monthly expenses and unexpected financial emergencies.
What holds people back from financial security is a lack of consistent income, little to no savings, and debt. Some people can survive and build financial security despite not having a consistent income. This is sometimes possible when money is saved up and financial assets are high.
Debt prevents people from financial security because interest rates drain finances over time. This makes building wealth or surviving financial emergencies harder. The next biggest factor that keeps people from financial security is making less money than they owe in bills each month.
The benefits of financial security are numerous. With greater preparation for financial emergencies, many people feel less financial stress. This leads to making better financial decisions and opens opportunities for accomplishing financial goals.
How to Build Financial Security
You can build financial security by identifying what is holding you back and taking steps to solve these obstacles. This might look like building an emergency fund, paying off debt, or budgeting. Building an emergency fund serves the purpose of being able to survive financial emergencies.
Anticipate what financial emergencies you could be most likely to encounter in the future. Write down an amount of money that would need to be saved to survive the financial emergency. Start saving now and in amounts you can afford. Decide how much money you can put away each month and consider setting up an automatic deposit.
Pay off any debts you owe as soon as possible. Try the snowball method of paying off smaller debts with the highest interest rates first. This will quickly build momentum and motivation. When debt is minimal or gone, your wealth will build significantly faster.
Budgeting can help with paying off debt or building an emergency fund. Estimate your usual monthly expenses and subtract these from your average monthly income. Separate bills by life necessities and non-necessities. Start taking away non-necessities and see how much money this will save you each month.
Update your budget plan as needed and use this as a guide for financial decisions. An effective budget can be done on paper or through computer programs.
Tom Bible Law Can Help
You may not have to face bankruptcy alone. Do not hesitate to call us at Tom Bible Law today at (423) 424-3116 for a consultation about your financial options related to bankruptcy. Our dedicated team of Tennessee bankruptcy attorneys is ready to help you find the best bankruptcy options for your unique situation. We can be found throughout the Tennessee cities of Chattanooga, Kingsport, and Tullahoma.