How to Reach the Life Goal of Financial Security?
Financial security means having enough resources to take care of yourself and your loved ones on a regular, sustainable basis and have enough reserves to cover any emergencies that might come up.
There are two ways to reach financial security. One is to make enough money to cover all of these things. The other is to create a less demanding lifestyle, which makes it easier to live within your means. These two strategies are not mutually exclusive. A superb financial plan with realistic financial goals uses both methods to meet somewhere in the middle, and that is your point of financial security.
How Can I Achieve Financial Security?
These tried and true methods used to set the financial goals for a business apply equally to running your personal finances. Your goal is to create a lifestyle free from financial stress and worry so that you can enjoy life to the fullest.
The Tools You Need For Financial Security
To manage your finances and achieve your goal of financial security, you need a comprehensive financial tool kit to take care of very specific things which include bill paying, budgeting, cash management, credit history, debt management, applying for loans, insurance, real estate, taxes and wealth building.
Here are the tools you need to create financial security:
Bill Paying: Control your spending by tracking bills, paying them on time when due, and learn how to save money by shopping smarter.
Budgeting: A budgeting tool is needed to make budgets and help you stay on track.
Cash: This is a tool to manage cash and what you can do if you need some fast.
Credit: Manage your credit history and improve your credit score.
Debts: Take charge of your debts and make a plan to pay them off.
Loans: Learn how to shop for loans. Be in control of your loans by repaying them conveniently to enjoy peace of mind.
Insurance: Make sure your risks are covered with coverage from a high-quality insurance underwriter.
Real Estate: Buy and sell real estate, get market valuations, and search for investment opportunities.
Taxes: Manage your taxes and file your tax returns conveniently and easily.
Wealth: Learn how to build wealth.
The Two Roads That Lead To Financial Security
As I said, there are two methods you can use to reach financial security. The first one is to make enough money. The second one is to live within your means. Let’s explore both approaches to see how the strategies interrelate and support each other.
Method 1 - The Path to the Money
Look in your pocket. Do you have any money? Check your bank balance. Do you have any money? Look under your mattress, in the kitchen cupboards, in your piggy bank, in your shoes, and everywhere else you might hide money. Do you have any money?
If the answer is NO then you are doing something wrong. There are a few options you can do:
saving
If you do not have a savings account yet - what are you waiting for? It’s one of the easiest ways to start saving money, and there are various options on the market that you can choose from.
SIDE GIG
If you feel like you are not earning much, or you are spending too much money, a good option is to find a second job. Every since the pandemic it has become increasingly popular, especially the jobs that you can do remotely, from the comfort of your own home.
INVESTING
When you finally save up some money it is time to start investing it. Remember to do a good research before you decide where you will invest your money and keep it growing.
Method 2 - Living Within Your Means
Living within your means is a strategy not to spend more than you have coming in, use credit wisely, and put away some resources for emergencies as well as save for retirement. It makes no difference if you are a millionaire or an average worker. If you live beyond your means, you will crash and burn, financially speaking, and end up in some kind of financial meltdown. This will be a disaster of your own making.
Living within your means is something you can do without the help or aide of another person. This strategy comes from the personal decisions that you make to set up your lifestyle to ether be balanced with your income or spending out-of-control. If your goal is to live fast and die young, this method of living within your means will not be of interest to you. If your goal is to live with less stress, be content, and have a satisfying experience, this is the method you must embrace fully.
A Man with Everything, Who Owns Nothing
One man, who I know, has the most financial security of anyone I met in this life. His story will surprise you. He is a descendant of an Emperor, but he is not royalty. He made millions in real estate but now owns none of it. He travels the world constantly. He is welcome nearly everywhere he goes. He lacks nothing and yet he never touches money.
Is this man a billionaire, a celebrity, a world leader? No. He is Bhikkhu Buddha Dhatu, a humble Buddhist monk who was born in Vietnam. He is related to the last emperor of Vietnam Bảo Đại, so you could call him the great grandson of a king.
I met Bhikkhu (that name means monk in English) when he walked barefoot on his World Peace Walk from San Francisco to Los Angeles in December 1999. During about two years, he walked barefoot through 34 countries for more than 5,000 miles (8,000 kilometers), spreading his message of world peace.
He grew up in Vietnam. During the Vietnam War, when he was a nine-year-old child, his village was attacked. He was almost burnt to death by napalm, which is a chemical that is lit on fire and cannot be rubbed off. He had to have six major surgeries to repair his body and barely survived.
The only place on his body not burned was his face because he was running away from the flames. He left Vietnam as a “boat person” and made it to Australia where he was accepted as a war refugee. From this humble start, he became a multi-millionaire through real estate. He helped other immigrants to buy houses in Australia after they arrived.
At the height of what most consider to be a wealthy life with financial security, he was inspired by the Buddha's story (who was also the son of a king). He gave up all of his possessions to become a monk.
Today, he owns nothing. He eats one vegetarian meal each day before noon. It is made of food given to him by the people that he helps. He walks around barefoot. He never touches money. He is the most financially secure person that I ever met. This is not because he is so wealthy in material things but because he is not attached to any material things and has no need for them. His financial security comes from inner strength, and there is no need for him to touch the money at all. His students take care of those things.
In 2017, Bhikkhu Buddha Dhatu made the news again with a declaration of world peace. The amount of money wasted in fighting and on armaments is more than enough for everybody in the world to have financial security, especially if all we need is to eat one vegetarian meal per day! Think about that for moment.
I don’t expect many to be able to follow the example shown by Bhikkhu’s path. As I stated, at the beginning of this article, the best choice for most is to take both paths, the path to find money and the path to live within your means and see where those two pathways meet.
Now, that you understand the two paths, which I will call path A and path B, let’s consider the action steps you can take to find your financial security.
The Five Step Plan To Financial Security
Here are the five steps and examples of the applications of the dual paths.
Step 1: start now
Start from exactly where you are right now. Start at this moment without delay. Are you breathing? Would you want to wait until tomorrow to be able to take another breath? Of course not.
So, breathe some life into your plan for financial security right now.
Path A – Make a Plan: Make a list of the information you need to collect to understand your financial condition and prepare a budget. This is just a simple list of items that takes only a few minutes to create. This list includes your income, your expenses, and your saving or other assets if you have any.
Path B – Lighten the Load: Make a list of the things you do not use anymore, which you can sell.
Let's Start Working Towards Your Goals Together
Step 2: Collect the Information
Path A – Get Your Financial Records: Collect the information about all the things on your list from step 1. Get all your bills and pay stubs, and account balances from any assets you own (savings, stock portfolio, etc.).
Path B – Create an Inventory: Take photos of things you want to sell. Search for prices on eBay and Craigslist for similar things to decide on the price you will use to sell your things.
Step 3: Use the Information for Financial Planning
Path A – Make a Monthly Budget. Make sure your budget totals to only a maximum of 80% of your take home pay and/or the earnings that you make. If you are already over this limit, decide what things you can eliminate or how you can change things in your life to lower your monthly expenses.
It may be possible to adjust expenses by consolidating high-interest rate credit card debt with a personal loan at a lower rate and lower monthly payment. Consider if you can refinance your home. You may have to move to a cheaper place. Many have to find extra work to increase their income.
Do everything necessary to only spend 80% per month of what you have coming in and not more than that amount. Except in emergencies, this is to become a permanent rule in your life from now on. You must be able to get this done to take the next steps.
Path B – Sell Unneeded Things: List the items you have for sale on eBay and Craigslist. If they do not sell within a week, lower the price until they sell. If they will not sell at all, give them away by trying to barter with them, such as giving an old working computer to a neighbor’s kid who will clean your yard in exchange. Do not spend the money that you collect. You will use it in Step 4.
Step 4: Put your financial plan into action
Path A – Follow Your Budget: Making a budget is easier than following one. Use a budgeting app to make a budget and then check your budget before you make any expense. Only buy what you absolutely need and only go to the store with a specific list of items you want to buy. Do not buy other things. The only exception is if something you use regularly is on sale, then stock up on it at the cheaper price.
Path B – Give Money Away: Take 10% of the money you earned from selling your things in step 3 and give it to a charity that you really appreciate. It is better if this charity is local and one you can see in action. From now on, you will give away 10% of everything you earn for the rest of your life. Choose a charity that is trustworthy and run efficiently, which you can see grow. How does this help your financial security? This is proof of your financial security because you always have some money to give to others who need help. It is good karma to do this. If you ever get in a jam without enough resources you will be pleasantly surprised when someone who you do not expect suddenly helps you.
Step 5: Invest
Path A – Regularly Invest to Build Wealth: Take the other 10% of your income and invest it each month. You can start simply with a free brokerage account and add small money to buy stock every month like clockwork.
Path B – Invest in Yourself: For the rest of your life, you will invest in becoming a better person. Embrace endless curiosity to learn new things, gain new skills, and you will be more prepared to meet any challenges that you may face.
Conclusion
Which sounds easier to you? Spending only 80%, saving 10%, and giving 10% away or becoming a monk and walking around the world barefoot? Both lead to a sense of personal security. If you are rich or totally broke, you can always become a monk; however, your path to financial security is probably somewhere in-between.