There is no doubt that we all want to be financially secure, but what does it mean? I believe this lack of understanding is the key reason why so many in our country never become financially secure.
What Financial Security Isn’t
Over my long career of assisting people with their financial needs, I can’t tell you how many defined financial security as having enough of cash reserves in the bank to live for however many months before going broke.
In other words, if their bills were $5,000 per month and they had three or four months of reserves meaning $15,000-20,000 in the bank then they considered themselves moderately secure. If they had six months they were supremely secure and if they had one year in reserves they were rich!
Because of this belief, they saved very little money and instead spent their money freely. As a result over the years their retirement became a fantasy. This lack of understanding of what financial security is and how to become financially secure has lead to an America where 66% of the people will never be able to retire. And guess what? That percentage is growing fast.
So what is financial security?
Financial security means having a plan that encompasses short and long term financial needs and goals. These needs include having a home and the necessities of every day life. A savings plan to cover short term financial needs, for example you may have a car that will need to be repaired or experience an unexpected job loss. Six months in cash reserves is a good policy.
Lastly, the most important component to financial security is passive income. Everyone pays great attention to what they are getting paid on their job, but few pay as close attention to their passive or retirement income until it is too late. Most people rely on what I call the save and hope strategy. They save what they can and hope it works out later. This is a huge mistake and will almost certainly lead to financial struggle and despair.
The path to financial security and beyond begins with a Financial Freedom Analysis.
This analysis will tell you based on your current spending and savings habits if you are on track to reach financial security and retirement or financial hardship. The next step is to have a financial plan focused on generating the passive/ investment income that you need for retirement that will never run out! The good news is that most people CAN accomplish this! But it requires focusing on building passive income as intently as your job income.
Mark 1 Mortgage & Wealth Academy have a mapped out plan called The Straight Line to Rich.
We guide you every step of the plan and help people find financial security.