15 Tips to Ensure You're Financially Secure

Worrying about money is a fact of life for far too many people. You don't want to be one of them.

Financial security can provide peace of mind and ensure you're able to do the things you've always dreamed of. But how do you become financially secure?

Following these 15 steps can set you on the road to the secure life you deserve.

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No matter how much money you earn, you aren't going to be financially secure if you're spending every dollar of it.

Instead, try to keep your fixed and discretionary spending well below the amount of income you bring in.

It's especially important to avoid overcommitting to obligations you'll have to meet on an ongoing basis, such as taking on a mortgage payment that's too large.

It can be confusing to figure out how much of your money you should be saving. Ideally, you'll develop a personalized plan for that depending on your financial goals.

But if you aren't sure where to start, it's a good idea to plan to save at least 20% of what you make.

This will help you build the type of nest egg you need for financial security -- especially if you start saving when you're young and you let your money work for you.

ALSO READ: Saving 10% of Your Income Really Isn't Enough for Retirement

Living on a budget is one of the single most important steps toward financial security.

Not only does budgeting help ensure you're living below your means and enable you to prioritize saving, but it also gives you a clear picture of where your money should go to align with your values.

Financial security will come when you're confident you can afford all of the things that matter in your budget.

If you want to become financially secure, you can't put yourself last after covering all of your other needs and wants. You need to make saving one of your top financial priorities, and just as important as paying any other essential bill.

That means when you make your budget, a payment to yourself should go at the top of the list.

For many people, money worries center around being unable to afford unexpected expenses.

Feeling unprepared for a rainy day can be a huge source of stress. And when the storm arrives, if you don't have the funds you need, you could end up in a much worse financial situation.

To avoid that and take a huge step toward financial security, make sure you have an emergency fund with at least three to six months of living expenses in it.

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Taking on a lot of debt is the surest way to become financially insecure.

After all, if you owe a lot of money to creditors, your financial obligations are much greater. You'll have ongoing payments to make and will be wasting part of your hard-earned cash on interest charges.

If you want to feel confident in your financial life, just say no to payday loans, credit cards, and any nonessential borrowing. Good debt, such as mortgage debt, is OK, though, because it helps you build wealth by buying an asset that should go up in value.

ALSO READ: Best Debt Payoff Apps for 2021

It's not just your own debt you need to worry about. If someone asks you to cosign for a loan, you'll be taking legal responsibility for their debt as well.

This creates a huge risk of financial disaster because you become liable to the creditors if the primary borrower doesn't pay. Your credit score could also be damaged due to late or missed payments.

In almost all situations, it's best to just say no if someone asks you to cosign so you don't put your own financial security in jeopardy.

Major disasters can happen to anyone. You could get sick and need expensive medical care; you could become involved in a car crash; or your home could be robbed.

Paying for large-scale disasters out of pocket is rarely possible. As a result, financial security involves buying the insurance coverage you need to protect your assets.

Financial security comes from making a series of choices over the course of your lifetime to do the responsible thing with your money.

Sometimes it's not easy to make those choices month after month.

Avoid that difficult decision by automating your savings. If your money disappears into your investment accounts on payday before you get a chance to spend it, you don't have to do the right thing every month to become financially secure.

ALSO READ: 3 Ways to Become a Millionaire Making Money in Your Sleep

There are many different types of tax-advantaged accounts that are designed to help you meet financial goals.

For example, you could invest in a 401(k) or an IRA for retirement, and a health savings account to prepare for medical expenses (provided you meet qualifying requirements).

If you take advantage of tax breaks that help you save, the government will essentially subsidize your quest for financial security.

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You probably have a clear idea of what financial security means to you. So set goals for how to achieve it.

This could involve deciding how much you want in a retirement account, as well as how much you want invested for emergencies or to purchase a home of your own. Whatever your objectives, make sure your goals are clearly defined and you have a timeline for achieving them.

You should also break big goals down into small ones. And always track your progress to see if your efforts are paying off or you need to do more.

ALSO READ: 4 Ways You Could Sabotage Your Retirement Savings

If you want to become financially secure, it's not enough to save money. You need to invest some of it. That will allow you to make your money work to build wealth.

The stock market has historically been the best option for investing and earning a reasonable rate of return while taking on reasonable risk. At least some of your money should be invested in it, either via exchange-traded funds, mutual funds, or shares of individual stocks.

Investing successfully requires know-how.

You don't want to buy assets you don't understand and take a risk of losing money because you miss major red flags.

Make sure you carefully research investment options, decide on a thesis, and invest in things that make sense given your base of knowledge.

Although you should be invested, you don't want to take on an outsize risk. That means you don't want to put money into the stock market that you'll need within the next two to five years and that you can't afford to lose.

Your risk tolerance also changes as you get older and have less time to wait for things to turn around if some of your investments perform poorly.

Make sure you identify an appropriate mix of investments given your age and timeline so you don't undermine your efforts to build financial security.

ALSO READ: Here's How to Diversify Your Portfolio With a Single Investment

Your net worth is a measure of all that you own minus all that you owe. The higher your net worth, the more financially secure you become.

You should be tracking yours so you can see if you're on course to achieve the security that you deserve.

You can also course correct and make changes to your habits if your net worth begins to decline instead of rising.

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If you practice good money habits, set goals, and make sure to save and invest wisely, financial security is something you can achieve.

Get started on following these 15 tips today so you'll get closer to having the peace of mind of knowing your financial life is in order both now and in the future.

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