Think back to when you were a child. Who was the first person you’d run to when you skinned your knee, fell off the monkey bars or got bullied by a classmate? Chances are, it was your Mom, Dad or some other adult who provided safe haven from your current crisis.
As we grow older, we no longer need safe harbor multiple times a day. That’s (hopefully) part of the growing up process. Safety is now provided by a spouse, partner and/or friends we can rely on to give us advice and guidance as we navigate our way through life.
Although this is true, the notion of safety and security never really goes away. Aside from a chosen few daredevils and thrill seekers, feeling tethered to something is comforting. You may have ditched your security blanket years ago, thinking you’ve lost the feeling that only it was able to provide.
Well, I have good news. If managed properly, money can provide the same level of security and comfort. Here are 3 ways you can use money to secure a bright financial future for you and your family.
Start Viewing Yourself as an Owner
It’s a reality that most of us will never own an NBA franchise, private jet or Rolls Royce. Owning any of these is reserved for the uber wealthy of society. The sooner you can dispel any notions of this happening, the better. Instead, focus on the things you can afford and eventually own. A car, a house, the furniture in your house. Owning all of these is attainable and will provide you with a level of security you never thought possible.
Imagine sitting in a paid off car, walking into a home with no mortgage and sitting on a couch that you own. The weight of payments has been lifted. You’re free to buy (or save) for whatever else you want or need. You’re an owner and you’re in charge.
Become Your Own Bank
It’s very easy to request a loan to pay for something. This “kicks the can” down the road and provides an ability to spread out payments over time. If it’s done correctly, this can be smart. Unfortunately, it’s not often done correctly. Tethered to multiple loans with massive payments, Americans are struggling under the weight of our own devices.
Rather than taking out a loan from the bank, become your own bank instead. This is especially useful for “want” items like a new patio set or big screen TV. Let’s say you want to buy new chairs for your back deck and they cost $1000. Buying them used would be the smart choice. If that’s not an option, saving for them also makes sense. Planning for your purchase ahead of time, you can save $200 over 5 months and buy the chairs rather than financing and paying more.
Save, then Save Some More
You’ve probably heard the expression, “saving for a rainy day.” The expression has been around for hundreds of years and simply means saving money during good times or “sunny days” for when times are bad or “rainy days.” This isn’t limited to saving for one thing in particular. Having enough in the bank to cover unexpected expenses as well as those we know are needed is vital to having financial success.
A simple 70/30 rule is a good place to start saving. If you have $100, placing $30 immediately into savings acts as a sort of personal tax for any future expenses. More is better of course, but this is a good place to start if you’re not ready or able to set aside more. This simple savings method will allow you to set aside $360 by the end of the year. You may even surprise yourself and set a stretch goal to save $500.
The reality is this. Money can be an anchor or a soft blanket around your neck.
The choice seems pretty obvious. After all, it’s called a security blanket, not a security anchor.
