Four Tips to Move from Financial Insecurity to Security

Lots of folks complain that they simply cannot save money or that they are trapped in the paycheck-to-paycheck crisis of having nothing at the end of the month. This financial insecurity is very real and it can be an extremely difficult cycle to break. Here are four tips to help those of you experiencing financial insecurity remove barriers and start moving into a more financially stable position and become your own money hero!

The first barrier is deciding to save money. This is a real challenge and a big deal. Take to heart that changing your financial situation and moving from scarcity to having some cash in reserve is truly a big deal. It’s your money, and the challenge of saving some of it is very real. Accept that fact. It may take you a few weeks or months to truly grasp that making the change is a real challenge and a big deal, so acknowledge that fact. It's worth deciding to save and will help to lessen the feeling of financial insecurity.

 No better feeling than cash in hand at the end of the month.

No better feeling than cash in hand at the end of the month.

Next, you are going to need some tools. Identify what works for you whether it is an app for your Smartphone to track spending, a spreadsheet, or old-fashioned envelopes that you put money in and lock in a cabinet. You should also consider other tools such as employer provided savings vehicles, like a 401(k), or even a separate savings account not tied to your checking into which your payroll department can deposit a set sum of money for you each pay period.

Third, find your motivation. Pick something that excites you to get started on your path to savings. It doesn’t have to be a large expense, but something you would otherwise not be able to pay for with cash during a normal pay cycle. Target this item as your first goal; make sure it is real, and obtainable. Once you achieve this goal, reflect on your success and celebrate! Then set a new goal to achieve and keep going!

Fourth, it’s time to talk turkey. You need to have a heart-to-heart with yourself and start evaluating your spending choices. Where are you throwing away money each month? That’s where the tools come in from step two above. Use a spending app to track your purchases for three months and analyze the data.  Review all of your monthly spending and determine what is discretionary (you can really live without) and what is non-discretionary (such as rent, insurance, utilities, food, etc.) and start trimming some fat. If you don’t need a full gym membership consider buying a package with a set number of visits or joining a group that exercises together in your local park. Look at your dining out and bar tab; if you are going out four nights a week, cut back to three at first and then two. Entertainment is another big area. Review your cable, movie, periodicals, and Internet subscriptions and see if you have any services that duplicate or can be cut to basic. Stop retail therapy! It’s only adding to your financial insecurity and most items bought are unnecessary or have a very short useful life. In fact, clean your house and consider having a garage sale to jumpstart your savings.

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Make the mindshift to be a saver and not a spender. It is difficult to do, but it can be done. If you need to, find a friend and make a pact and turn saving into a fun competition. You can do this if you’re single or even as a couple. The support can be invaluable.

Consider hiring a pro! If you need guidance, hire a CFP® professional like me to guide you. We get professional help in most areas of our life so why not hire a professional to help with your finances! Just as we hire doctors, dentists, auto mechanics, and real estate agents, we should seek out professional help for our financial lives. Finally, don’t forget to celebrate your victories along the way. As an independent CERTIFIED FINANCIAL PLANNER™, I can help you. Contact me and let’s get started. #talktometuesday #getstarted #goals #newyou #future #CFPPro #financialinsecurity #financialsecurity #savings #mindshift #401k #cash