Self-Wealth means having a purpose, financial security, and hope for the future. In my last blog post, I discussed purpose and how it fits into your personal Self-Wealth. Purpose is enormously important, but it can’t stand alone. It needs the company of hope and financial security to give an individual true happiness and Self-Wealth. This week’s focus: security.
While financial security seems like a more concrete concept than purpose, that isn’t necessarily the case. Security means something different to everyone and we all have different measuring sticks for judging how “secure” we feel. For some people, that means having their basic needs (food, shelter, clothing) met, while for others, that means continuing their membership at the golf club or being able to travel. There is no right or wrong way to look at financial needs, but there are guidelines that will help most people feel secure in their finances.
One of my basic recommendations is that a person should strive to have the resources to rebound, pivot, or regroup at any stage in their life. You never know when a major life change might crop up, and it’s best to be prepared.
Many people think about planning for a catastrophe—unemployment, a wrecked car, a large hospital bill—but that’s only one side of the coin. You should also plan for positive life changes such as purchasing a new home, transitioning into a new career, or starting a family. Typically, that means having access to liquid funds, such as the money you might tuck away into a savings account.
A stable savings account is a hugely important step on the road to financial freedom. Of course it’s important to have long-term investments, but you don’t want to have to tap into your investments if you find yourself temporarily unemployed or if a tree falls on your roof. I have found that my clients who consciously and fastidiously save their money are less likely to feel stressed by the curve balls life tends to throw us.
Another aspect of financial security is planning for retirement. Many people do not realistically consider how much money they’ll need in order to retire. Take food, for example. If a couple decides to retire at age 65 and they both live until they are 85, that couple will need 20 years worth of meals. If they spend $10 per meal and eat three meals per day, that’s a whopping $438,000 for meals alone! The couple will also need housing, clothes, healthcare and a whole host of other basic necessities in addition to any luxuries they might want to purchase. Not to mention, an emergency (or several!) might crop up during this time and they should be financially prepared.
If this discussion of financial security is a little frightening, don’t despair! The fact that you’re reading this blog post means that you care enough about your financial security to take action. Just because you haven’t achieved this aspect of your personal Self-Wealth, doesn’t mean that you can’t. Get in touch and we can start plotting out your path to a comfortable financial future.