Whether you are just starting out your career or have been working for the last 20 years there are always things that you can be doing to achieve more financial security. Having a job is essential to maintaining financial security. While having a job is the first step to achieving financial security you should also think about your long term goals. Many people have short term goals for paying all their bills on time each month and earning enough money to go on a vacation. It is crucial that you start taking the necessary steps to achieve financial security for both the present and the future. These steps can help you achieve your short and long term goals no matter how old or young you are.
#1) Secure A Job With A Salary
Working day to day and hour to hour can be a challenging thing. No matter where you start out you can work your way up in a company or even switch career paths altogether. To ensure that you have a steady stream of money coming in it is crucial that you find a job that offers its employees a salary. Finding a job with a salary can provide you and your family with immediate financial security. A salary helps ensure that if you work more hours one week and fewer hours another week your paycheck will be the same. Once you have a job with a salary you can focus on saving up your money and investing it the right way to have long term financial security.
#2) Saving Money Each Month
No matter how young you are it is never too early to start saving for your retirement. Saving for retirement is something that people may not start thinking about until they are in their 30’s or even 40’s, but the earlier you start the better. Some companies offer their employees a 401k program where they can set aside money each month. If you are lucky your company may also match what you put in up to a certain percentage. If your company does match your input you should try to max out to help you save as much money as you can.
If your company does not match your input, that is okay too because most companies will not. Depending on your age and the amount of money you make you should start saving about 5% of your income each year and putting that into your 401k or other IRA savings account. If you are already in your 40s you should consider starting at 10% since you inevitably have less time to save your money. As your salary starts to increase you should start saving more money each year. You should plan to save nearly 15% of your income as you get closer and closer to retirement. This can help you have financial security later in life and give you the freedom to enjoy your retirement like you want.
#3) Live Below Your Means
While it is always appealing to move into a larger home, drive a new car, and eat expensive meals each week, this is not recommended. If possible you should try to live below your means. Just because you may be pre-approved to live in a home that costs 250,000 dollars, it is likely that you can find a very nice home for only 200,000. Living a little below your means allows you to save more money each month and achieve greater financial security.
If you are living at your means you will be in trouble if you ever had an emergency or lost your job. Living below your means allows greater financial security because not only are you able to save for retirement, but you are also able to save enough money to have a comfortable emergency fund. You may see friends and family driving a new car each month and buying a brand new house that is much larger than they will ever need. While many of us may envy these things, they only last short term. Having greater financial security in the future allows you to have more freedom and to do what you want. Saving now and living below your means will pay off in the future and you will be happy you were able to do so.
#4) Diversify Your Portfolio
If you create a 401k savings plan through your job or you start your own IRA you will have the option as to how you want to diversify your investments. You can allow a professional to help you create your portfolio for a small fee or you can do it yourself. A professional may be able to make you more money on your investment, but you need to remember that there is no sure thing when it comes to investing.
This is why you must always diversify your portfolio. Putting all your eggs in one basket is very unwise because if that company goes bankrupt you are left losing all of your money. If you put in a little bit of money in a diverse group of companies you can lower your risk and ultimately make a larger profit. If you choose to manage your own investments be sure to diversify your portfolio and check it annually.
#5) Set Goals and Stick To Them
No matter your age, current salary, or career projection it is never too early or too late to start saving. The earlier you start the more financially secure you can be when inevitable events happen in your life. Setting goals is important to help you figure out where you want to be when you retire, but you should always be prepared for the unimaginable events that can happen. Losing your job, a market crash, a disability accident, or other events could leave you and your family in a difficult position, but the more financially secure you are now the less of an impact these events could have on your life.
Before trying to decide how much you should save each paycheck or each month you should sit down with your spouse and determine how you want to live your golden years. You should determine how much you need to save for monthly expenses, how much you plan to travel, and how much extra you would like to have. Once you figure this out you can determine how much you want to have saved by the time you retire. You should consider having a number close to one million dollars if not more to ensure that you can live comfortably and not be dependent on your family.
Taking the necessary steps to be financially secure can be a stressful thing to start, but once you take the first step the rest should fall into place with a little effort. It is critical that you start saving a little piece of your salary each month so that you can have financial security in both the short term and the long term. Finding the right job with a decent salary, creating a 401k savings plan, setting goals, diversifying your portfolio, and living below your means in the present can help ensure that you are set in the future. If you are starting to save at a young age you will be able to save a little bit now and incrementally increase how much you save over time. If you are starting to save in your 40s you should consider saving more money each month so that you can reach your goal savings by the time you wish to retire.