Everyone wants to achieve financial security. However, a study conducted by Personal Capital found that less than half of Americans have the funds they need to feel secure.
The same study also reported that the average American won’t feel financially secure until they have at least $500,000 in the bank. Many hope to reach this goal before turning 50.
While $500,000 is a lot of money to have in savings, for those nearing their retirement years, that amount is unlikely to be enough.
The Real Cost of Financial Security
People tend to confuse financial stability with financial security. For many people, financial security is all about having enough money for retirement. However, $500,000 is hardly enough.
Half a million dollars is likely to last, at most, a decade. And thanks to inflation, having a full $1 million in retirement savings may not be enough, either.
The rising cost of financial security and retirement planning is only bound to get worse. For those who are still decades away from retiring, having $1 million in the bank is likely to put them right above the poverty line.
Ways to Achieve Financial Security
It’s important to remember that planning for retirement is a journey and won’t happen overnight. It takes decades of contributions and investments to grow your retirement funds to achieve financial security.
But this doesn’t mean that people can’t achieve financial freedom and independence now.
Pay off credit card debt
Credit card debt is one of the heaviest things to burden. It’s extremely hard to get ahead financially under the weight of high interest credit cards.
According to recent data from the Federal Reserve’s Survey of Consumer Finances, the average U.S. family has $6,270 of credit card debt.
If you’re struggling with debt, consider a consolidation loan. Focus on paying off the highest interest credit card first and then tackle other debt.
Make sure you can afford your bills
Everyone has monthly expenses, from housing to car insurance to the cost of utilities. Financial security is being able to pay monthly expenses without worrying if you have enough funds.
For those struggling to make ends meet, there are two options. Make more money or lower monthly costs.
Recreational spending is important as well
Keeping a roof over your head and the lights on is important. But being financially stable also means having the funds needed to spend it on needs as well as wants. Being able to treat yourself is an important part of being happy and managing your money wisely.
When buying things you want, always shop around for the best price.
The cost of financial security continues to increase. This makes it even more important for people to save for retirement as soon as possible. Making other smart money management decisions also plays a huge role in reaching financial security, independence, and stability.