Financial security can refer to your peace of mind when you aren’t worried about your income being enough, or, in the more literal sense, keeping your financial information secure. Here are some ways to accomplish both:
Save for an Emergency Cash Fund
Life happens. Having funds to protect yourself in those moments is essential. It is typically advised that you have 6 months of living expenses in a savings account for a single person or a family’s primary income earner. If both partners work, 3 months of living expenses is a good goal. Try your best not to touch these funds unless it is used for those unplanned emergencies like unexpected job loss, having to go to the hospital, or appliances breaking down. It’s better to have the funds to deal with these situations versus putting it on a high interest credit card or payday loan.
View Savings Deposits as a Bill
Saving can be a hard thing to do when you consider all the day to day expenses we face and the temptation of buying products we don’t need. The best way to avoid this is by viewing your savings as a recurring monthly bill. You can even set up a deposit from your checking to your savings the day you receive your salary so it will give you less of a temptation to spend the money.
Maximize Retirement Plan Contributions
If you have a 401k, you need to contribute as much as you can, especially if you are young or have fewer financial responsibilities. Some companies match 100% of your contribution up to a certain amount. Every dollar you contribute also lowers your taxable income which lowers your tax bill. This money is also hard to withdraw without major penalties and tax consequences which will help ensure you save it.
Reassess Your Financial Profile Periodically
Financial responsibilities change all the time. It is good to take a look at your finances periodically to see where adjustments need to be made. For example, you may have just finished paying off the loan on your car, your mortgage, or the number of people you’re financially responsible for has changed. Make sure you look at all your obligations and reassess to see if you need to increase or decrease the amount you save regularly.
Track the Goals You Have Set
You can’t just create a budget and forget about it. Your budget will require fine tuning over time to make sure you are meeting your goals. For example, you set a budget of $100 for eating out each month, but if you’re not tracking it, you could be spending over the $100 limit. If you need help staying on track of your budget, there are multiple reputable apps that can help you centralize all of your accounts and track your spending for you.
Check Your Credit Report Regularly
Federal law entitles you to a free credit report each year from the three major credit bureaus, Equifax, Experian, and TransUnion. Due to COVID-19 and an increase in identity theft, you can now check your credit report on a weekly basis through April 2021. The website for the official government-approved FREE credit report can be accessed by clicking HERE. When you get your free report, make sure you check thoroughly for any suspicious activity. If you see anything out of the norm, consider placing a fraud alert on your credit reports.
Be Careful on Social Media
Limit the amount of personal information you share on social media. Don’t post your full name, address, or phone number on social media channels. When you lose your password for an online account, it usually asks you a series of verification questions like what is your birthday, mother’s maiden name, phone number or address. If you have all of this information made public on Facebook or other social sites, someone can easily hack into your accounts. Make sure it is all private!
Install Anti-Virus and Anti-Spyware Software
Protecting your finances takes more than just putting your money at a financial institution. While banks and credit unions are secure, you don’t want to let harmless internet browsing cause a virus or malware to be loaded on your device. Once this happens, hackers can easily monitor all of your passwords and other personal information. Make sure you have protective software on your computer and phone and keep them updated regularly.
Conclusion: Be Proactive
When it comes to protecting your finances, it’s always good to start early. Plan ahead for hackers by keeping your devices safe and create an adequate savings to protect from future financial stress.