So what is financial security, and how do you get there? For starters, financial security means:
- The ability to afford your current needs as well as enjoying a few luxuries
- Enjoying peace of mind as you handle your daily affairs
- Having confidence that you can afford what you may need in the future
By following the steps listed here, you'll be closer to reaching this stage of your financial life.
1. Make your strategic plan
Identify a few very broad goals. Think about:
- What you want to accomplish in the next 3-5 years
- What you want to accomplish long term
- How to reach your goals given your budget and finances
It's a good idea to put your goals in writing to serve as a constant reminder of what you need to do financially to reach your objectives.
2. Know the best practices for personal finances
The experts agree on a few things that will always help solidify your financial footing:
- Don't spend beyond your means
- Establish a good credit record
- Maintain positive financial habits
- Take steps to begin building your net worth
Practice these positive behaviors as much as possible, and over time you'll become a natural at good financial choices.
3. Control your spending, starting today
To rein in your expenses, first determine how much money you have coming in each month. After taxes, employee benefits, and any other deductions come out of your paycheck, the rest is how much you have to pay your bills or put into savings.
Now make a budget. Break your expenses into those that are fixed and those you can control. Fixed expenses include rent, utilities, food, parking and insurance. Every other expense can potentially be reduced or eliminated.
After you pay for your fixed expenses, try to save as much as possible from what's left over.
4. Establish a good credit history
Building and maintaining a good credit history gives you financial flexibility. The better your credit, the more likely lenders are to approve you for loans and give you favorable interest rates. To build a good credit history, consider these tips:
- Be sure to pay every bill before the due date. Promptness counts, and you want to avoid any late payment fees.
- Pay your credit card balance off in full each month. If that's not realistic, then strive to pay more than the minimum payment due.
- Don't have too many credit cards—even if you don't use them. Every time you apply, it's noted in your credit record. Limit yourself to one or two cards.
At least once a year, obtain your free credit report from one of the three credit agencies. If you notice an error in your report, be sure to contact the credit agency and have it corrected.
The bottom line
As long as you live within your means, you'll be able to control how much you spend and save. Over time, this will help you save money and develop a better credit rating. As you practice good financial habits over the years, they'll gradually help you achieve financial security and peace of mind.
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The information provided is not intended to be legal, tax, or financial advice. BB&T hopes you find this information useful but we cannot guarantee that it is accurate, up to date, or appropriate for your situation. Financial calculators are provided to assist you in estimating the approximate costs associated with any bank activity. Your actual costs may vary. You should consult with a qualified attorney or financial advisor to understand how the law applies to your particular circumstances or for financial information specific to your personal or business situation.
Branch Banking and Trust Company, Member FDIC.