Saving Advice - A recent survey revealed that the majority of Americans (about 70%) don’t feel financially secure. Respondents said they’d need to earn a whopping $233,000 per year just to feel comfortable and $483,000 annually to achieve financial freedom. Even some millionaires say they don’t feel rich.
These findings just go to show that financial security isn’t solely about how much money you have in your bank account. To feel comfortable, you need to maintain the right money mindset and build good financial habits.
No matter how much you earn, you can still feel broke if you’re living above your means. And even if you have plenty of money in the bank, you can still be plagued with financial anxiety if you have a scarcity mindset around money. Since I’ve struggled with this issue myself, I thought I’d share 4 things I do to feel secure and maintain a positive financial outlook.
Build a Solid Emergency Fund
Building an emergency fund is one of the best ways to improve your financial security. Experts recommend that you stash between three and six months of expenses in a savings account to cover unexpected expenses. That way you won’t go into debt when your car dies or your heater goes out.
However, some people need more financial liquidity to feel secure. You might decide that you need to save one year of expenses for your own peace of mind, and there’s nothing wrong with that. Personally, I need two separate emergency funds to feel financially prepared.
My bigger emergency fund has about eight months of living expenses and is only meant to cover job or income loss. I try not to dip into this emergency fund at all.
My second emergency fund is more like a sinking fund designed for smaller emergencies. When an unexpected medical expense or home repair comes up, I can pull from this savings account to pay for it.
I try to deposit about $400 per month into this account so it’s always funded with a couple thousand dollars. Over time, I hope to grow this emergency fund so that it can cover bigger emergencies like roof replacement and major medical emergencies.
Although it may seem like overkill to have two emergency funds, doing things this way gives me a greater sense of financial control and security. If a series of emergencies hits me all at once, my extra emergency fund will give me an additional buffer so I hopefully don’t go into debt.
Keep a Well-Stocked Pantry
Since I have an emergency fund, I’d be able to buy food and other essentials if my spouse and I lost our jobs. However, there’s something about keeping a well-stocked pantry that gives me an extra feeling of security.
Knowing that I have extras of everything I need on hand, from toilet paper to canned beans, helps me sleep better at night. I know that my spouse, dog, and I will be well-nourished no matter what happens, which gives me a sense of peace. Even if another worldwide event caused food shortages, I could still feed my family and share supplies with friends and neighbors.
Having a deep pantry also means that I can wait until things go on sale to stock up. Shopping this way helps me reduce my food costs and save money.
Don’t Consume Too Much Bad Financial News
I’m a personal finance writer, so it can be difficult to avoid bad financial news entirely. However, I don’t allow myself to doom scroll when the stock market is down or check my investment accounts to see how much I’ve lost.
I’m a long-term investor, so I don’t need to know about all the stock market’s dips and rebounds. Even if the market is doing poorly, it doesn’t affect my financial plans, so hearing about it only causes unnecessary stress.
The same goes for news about the economy overall. When the job market is weak, all I can really do is continue saving for emergencies and work on my professional development. Since I’m already doing those things, I don’t need to read the monthly jobs report religiously.
No matter what’s happening in the world, I stay the course, follow my original financial plans, and try to maintain a positive mindset. Even if things seem bleak, I remind myself that life has a way of working out. Trusting my ability to weather the bad times helps me feel more financially confident and secure, and prevents me from getting shaken up by poor financial news.
Focus On and Celebrate Smaller, More Achievable Wins
Inflation is making many Americans feel like they need to earn multiple six figures to be comfortable. However, I find that setting such a high income goal can be discouraging. If you believe that you need to be in the top 10% of wage earners to be financially secure, you may feel like you’ll never achieve stability, which simply isn’t true.
Believe it or not, teachers are more likely than physicians to become millionaires, proving that it’s possible to attain financial security on an average salary. Increasing your income makes it easier to build wealth, but don’t discount the power of frugality. You can make a lot of financial progress by living below your means while working toward achievable salary growth.
Reducing your bills by $50 or $100 per month or getting a 5% raise doesn’t sound like much. But even small changes can help you build your savings and investments and get closer to financial security. Instead of dreaming of the day I make six figures (which may never come), I chase and celebrate these small wins, knowing that they’ll add up over time. As the saying goes, slow and steady wins the race.
What do you do to feel financially secure and cultivate a positive money mindset? Share your tips in the comments!
This article was originally published on Saving Advice
