10 Signs You’re Financially Secure

10 Signs You’re Financially Secure

Nicole Spector nFri, June 21, 2024

Financial security: What exactly is it? Essentially, it means you’re not only getting by, but getting by comfortably. Surveys have shown that most Americans do not feel financially secure, and it’s understandable why that’s the case. Wages aren’t keeping up with rising costs of living, inflation is still bullying our bank accounts and companies across sectors are carrying out mass layoffs.

Though it makes sense why you may be feeling financially insecure, it’s important to truly understand what financial security entails so that you can determine if your feeling is aligned with your reality.

Stephen Kates, CFP, principal financial analyst at RetireGuide.com and Annuity.org, walked us through the 10 key signs that indicate you’re financially secure.

You Have a Robust Emergency Fund

Expert recommendations for how much you have in your emergency fund vary. The most common suggestion is to have three to six months of living expenses at the ready, but you may want to listen to financial guru Suze Orman, who recommends keeping eight to 12 months’ worth of essential expenses in an emergency fund.

You may also want to factor in how many streams of income your household has.

“The more sources of income your household has, the less you may need to keep in an emergency fund,” Kates said. “If there are two or more income sources, either two jobs or a dual-income household, you can begin to reduce your emergency savings.”

Again, though, the more prepared you are, the better!

You Spend Less Than You Earn

Even millionaires know the importance of spending less than they earn. It’s a key trait of financial security and, in fact, ensures future financial security.

“If you spend every penny, you live on the precipice of financial troubles,” Kates said. “As the saying goes, ‘It’s not what you make; it’s what you keep.'”

You Contribute to a Retirement Account

Kates pointed out that retirement accounts — 401(k)s, 403(b)s and IRAs — are essential to setting yourself up for financial security in your golden years. If you are contributing the necessary amount to these funds, you have one of the telltale signs of financial security.

You Invest and Diversify

If your retirement funds and excess savings are invested into a diversified strategy, you’re also exhibiting a sign of financial security.

“Contributing money toward an account isn’t enough to beat inflation long-term,” Kates said. “Putting your money to work by investing in the market is essential for long-term growth.”

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https://www.yahoo.com/finance/news/10-signs-financially-secure-170028446.html