![]() ![]() On the other hand, being debt-free can help provide a deep sense of financial security. The threat of these scenarios isn’t likely to make you feel financially secure. ![]() For example, very few people have the capital to pay for a house or a higher education in cash.īut spending on credit for everyday items, clothes, tech gadgets, or vacations isn’t likely to help you achieve financial security – especially if this debt is on credit cards.Ĭredit cards demand monthly payments and are known to have very high-interest rates – some even have interest rates up to 29.99% APR, making it very easy to spiral further into debt.īottom line, if you don’t pay back the money you’ve borrowed on time, you can be sued, your house can go into foreclosure, and your car could be repossessed. It’s hard to feel financially secure when carrying significant debt. So, here are four types of financial security to help you define what this term means for you. Still, financial security means different things for different people. Ultimately, financial security just means that you’re in control of your money, and you’re not worried about paying the bills or covering an emergency. The truth is, you don’t need a mansion, sports car, or private jet to be financially secure – you don’t even need to have paid off your mortgage. However, there have been countless entrepreneurs, athletes, and film stars who’ve made a fortune and then lost it all. Some people believe you need to be a millionaire or even multi-millionaire to be financially secure. Often, this means having enough income to comfortably cover expenses, being debt-free, and having savings to cover emergencies. Once you know what it means to you, it’s time to calculate how to accomplish it.Financial security refers to the peace of mind felt when we aren’t worried about money. Think about what it means to you to be financially free. There are no wrong answers, but we do need a destination. Still others might want to fund charities, do mission work, or give money to help others. Others might say they need to know that they have a certain amount of income coming in and are not reliant on others so that they can travel the world without worrying about paying bills. It might mean knowing that you always have a roof over your head.įor some it means that you own your house and your cars outright. So how do you define financial freedom? For you it might mean that you don’t have to go to work anymore, or you can take a lower-paying or non-paying job to do something you love. Achieving financial freedom is just as much about generating wealth, as it is figuring out what is most important to you.ĭefining financial freedom is different for everyone. Without this clarity, we are at the mercy of our whims. When you make the effort to not only think through this exercise, but write it down, you are halfway to identifying the reason and motivation for seeking financial freedom. Continue to drill down and truly come to an understanding of what is important to you and why. You would continue repeating that same step until you arrived at the core of what it is that is motivating you-what it is that financial freedom really means to you, individually. The next step is to answer the following question: “Why is this important to me?”įor me, I might write down that I want to experience the culture of my ancestors. For me, one thing financial freedom means is that I get to travel. Let me offer my own reaction to that question as an example. To illustrate this point, consider what comes to mind when I say, “What does financial freedom mean to you?” The common denominator is the control and freedom to choose to do what you wish. Ultimately, financial freedom is going to look a bit different from one individual to the next. Create financial freedom for years to come.Īnyone can build perpetual wealth-and create true financial freedom for themselves.
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