Scotia Investments

Financial Learning Centre

Scotia Investments Financial Learning Centre

Money Management Guide - Are You Financially Secure?

Do you feel comfortable in knowing that you are somewhat financially prepared for unexpected disasters? Are you confident in knowing that you can facilitate your needs/lifestyle without digging yourself deep in debt? If you are, then you've achieved financial independence and security, or you are at least headed in the right direction!

Now, for those who could only say "no" to those questions, you then have a serious issue you need to address. Firstly, living pay-cheque to pay-cheque just doesn't cut it. It's as if you're walking blindly, not knowing if you'd be able to face whatever awaits you around the corner. Certainly, this doesn't make you feel comfortable, and it's always a great feeling to know you can depend on yourself when it counts.

Have your plan of action… then execute

You need to know where you want to go and what steps you can take to get there. After you've decided this, carefully assess your monthly expenses, and whatever you can afford to shed from your budget, drop it! (at least for now). Proper allocation of your funds is the key. In essence, your focus right now should be finding ways to ensure that at the end of the month, you've managed to save some extra cash no matter how little it is.

After a few months of doing so, you'll notice a steady growth in your savings, and you'll now have access to an emergency fund (should it be required)…which is something you didn't have living pay-cheque to pay-cheque. At this point not only should you feel some sense of financial security, but you'll now have the extra cash to purchase your 'desire-ables.

Bear in mind however, that if you have certain debts to clear, for instance a credit card debt, you'll need to take care of them before you can say you've become financially independent.

Now what?

Now you have to look at the bigger picture. You should not only feel financially secure and independent at this moment, having a steady income stream, but you should also be able to maintain financial independence, if for instance, you loose your job, or when you decide to retire.

After saving on a monthly basis becomes a common practice, how about enhancing your financial security, by finding ways to make your savings grow? Find a reputable financial institution in which to invest some of your savings, where you'll be able to gain higher returns than what you'd receive from a traditional bank account.

It would be good to know that in the case where you've lost your job, you don't have to jump at the first offer because you're desperately in need of the money. Financial independence will give you the option of waiting until a good offer is made.

Feeling financially secure and being financially independent, truly is a beautiful thing!