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How Secure Are Your Finances?

April 11, 2013

Being secure in your financial situation is a goal that almost everyone wants to pursue. How exactly can you assess whether or not you are truly secure in the current situation you’re in, no matter how stable it seems? Read on to find out!

financesBackup Money
One of the best ways to tell if you are secure is by gauging whether or not you have backup money. In the event that you were to be let go from your job, would you still have enough money to pay the rent or mortgage? Some experts suggest that you should have three months of bills saved in an emergency fund at all times. If this isn’t your present one, start working toward saving up that money. Even if you have a month saved up now, you would at least have that time period to start looking for a new position.

Consider Total Income
Now, if you are living with another person, you should consider the total income. For example, when couples are first starting off and say, purchasing their first house, it’s so important to make smart financial decisions. For example, in the event that one of you were to lose your job, it would be very helpful if the other person were able to cover all of the necessary bills by him or herself. While you might not be going out to fancy dinners anymore, you would still have enough cash to cover your basic needs.

Job Security
You also want to ensure that you have a steady income throughout the year, so it’s wise to know where you stand in terms of job security. In an economic climate like the one that exists today, answering these questions can be really tough. However, it is completely necessary to do so. Think about whether you are truly secure in your job and be honest with yourself. Perhaps speak with your supervisor to gauge their approval level and the future of your company – if you level with them, they will return the favor. If you are worried, it’s smart to at least seek out a part-time position to cover you if you were to lose your job.

Debt
Another way to consider your financial security is to examine the amount of total debt you have. It’s difficult to be entirely financially secure when you have large amounts of debt. If you were to stop bringing in income, then you might wind up defaulting on your payments or receiving terrible credit scores, both of which could cause even more financial problems for you in the future. While it might be impossible for you to pay off all of your debt right now, you should at least start working on a plan. Try to pay as much as possible and never make late payments, as this will negatively affect your credit. If you have student loans, look into every option out there to find out the best way to pay them off.

By simply looking at all of these factors, you should be able to determine how secure your finances really are. However, it’s also a smart idea to speak with a certified financial planner or an accountant. These professionals can provide a very helpful outside perspective of your financial situation and work to get you on a stronger path, if necessary.

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Categories: Building Wealth
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