Achieving financial security isn't just about accumulating a lot of money. Financial security is more about being confident about the path to financial goals, even if something doesn't go as planned.
Here are 6 ways to work toward maximum financial security.
Make Financial Education a Priority
The number one way to help ensure maximum financial security is to invest in education. Being more aware of how to effectively manage personal finance means someone can understand which levers to pull to dramatically change financial outcomes.
The best part of today's financial education landscape is that many books, podcasts, and online information is completely free. That means the only investment in furthering education is a bit of time.
Don't Take on Unnecessary Debt
Those who tend to be most secure financially have very few debt obligations to other people and companies. People who strategically use debt to further their own agenda, i.e., financing education or starting a business, are often better off than those who use debt to finance their lifestyle.
Protect the Financial Plan
One of the major aspects of a well-rounded financial plan, is taking out the right life insurance policy. A life insurance policy can provide income replacement for loved ones if the policyholder passes away unexpectedly.
In addition, a whole life insurance policy accumulates cash value over time which then can be tapped to supplement retirement income later in life*.
Set Aside Savings for Emergencies
An emergency fund is designed to act as a buffer against taking on debt to pay for an emergency like a sudden car repair or medical bill. Even setting aside a few hundred dollars in cash can be enough to head off living a paycheck-to-paycheck lifestyle.
Don't Forget Retirement Savings
Planning for financial security means thinking about day-to-day income and spending, but also how finances will support someone down the road in retirement. Starting to save during early working years can afford greater financial security later in life thanks to the power of compound interest.
The Bottom Line
It's important to take a comprehensive approach to money management to reach financial security. That means considering how savings, spending, investing, and protection work together to create the best financial outcomes. Ensuring adequate attention is given to each area puts anyone on their way to building a stronger, more secure financial future.
*The primary purpose of permanent life insurance is to provide a death benefit. Using permanent life insurance accumulated value to supplement retirement income will reduce the death benefit and may affect other aspects of the policy.
Contact: michael.bertini@iquanti.com
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Original Source: Northwestern Mutual: 6 Ways to Maximize Financial Security
