1070: What is Financial Security? by Michael Mihalik with Get Rich Slowly on How to Become Financially Independent
This is optimal finance daily episode. Ten seventy what is financial security by Michael Maalik with rich slowly dot org. And I'm Dan I'm your host post here on the show and this is where I read to you from some of the very best personal finance blogs on the planet and if you have any topic requests for us topic you'd like to hear me cover on a future your show. Please share those at old podcast dot com that's L. D. podcast dot com and before we continue. I want to tell you about fundraise. The first investment platform to offer low cost and simple way for anyone to access. The historically consistent returns real estate fundraise has earned a place on Forbes herbs list of most innovative companies year after year and it also received the title Best Real Estate Investment Platform Twenty nineteen during the fintech breakthrough awards. I'll all share more about how fundraisers revolutionizing the investment world at the end of the episode. But you can visit fundraise dot com slash O.. F. D. that's F. U. N. D. R. or I S E dot Com slash. FD To have your first three months of fees waived for now. Let's get right to the post. Start optimizing your life Sir Sir. What is financial security by Michael maleek with get rich slowly dot org? Wouldn't it be great eight to be financially secure to never have to worry about money. What would it take to get there? In fact what exactly is financial security. Ask Ten people to define how much money money it takes to attain financial security. And you'll probably get ten different answers for some people. Financial Security is having ten million dollars in the bank for others. It's fifty million and I doubt anyone would say one million being a union millionaire isn't what it used to be with the median home price in the United States around two hundred twenty thousand dollars. The median in price in my hometown. Seattle is pushing four hundred. Twenty five thousand. There may not be much left after paying off the mortgage even having the full million in the bank. Earning five percent cent per year will only produce an income of fifty thousand dollars per year. That's not bad but not enough to get around the world and party. With Paris Hilton Mick Jagger and diddy what about ten million at five percent that will generate an annual income of five hundred thousand dollars without working. Now we're talking some real money. The problem with defining finding financial security in these terms is that having ten million fifty million or even one million. He's a pie in the sky. Dream for most Americans. We don't like to have millions ends of dollars and it's not bad to aspire to that goal the problem is if we define financial security by such large amounts of money. Most of us will believe that it's out of our grasp instead. We should use a realistic definition of financial security. That can be achieved whether somebody makes ten thousand dollars a year or a million first. Let's look at what financial security pretty is not financial. Security isn't making or having a certain amount of money. There are many people who have made millions of dollars are not financially secure stories about musicians winds superstar athletes and multimillion dollar lottery winners who end up in bankruptcy. Court are so common that they become a cliche if someone makes five hundred thousand dollars a year but spends six hundred thousand are they essentially secure of course not financial security also isn't limited to being independently wealthy having servants bring you Martinis by the pool and flying your private jet to Monaco to party with heiresses supermodels and rockstars. If that's what you want then go for it. But this is a very narrow definition of financial security eighty I prefer a broader definition one that puts financial security within the reach of anybody with a desire to improve their financial situation and a little bit of discipline to me. Financial security consists of four things. One being debt free considered to women. Jill makes thirty five thousand dollars a year. She has two hundred hundred fifty dollars in her savings. Account and Os ten thousand dollars on our credit cards. Joan makes thirty five thousand dollars a year to. She has ten thousand in her savings account and os two hundred fifty on her credit cards. Which woman do you think feels financially secure which sleep better at night? Certain debt is understandable. Few people have the money to write a check check for a car or a house borrowing money for an education or to start a business may also be acceptable but borrowing money for other reasons is probably a mistake. How many have you are still paying off the credit card debt for the vacation you took last summer? The elegant Romantic Valentine's Day dinner last February the pair of expensive Italian shoes you just gave goodwill Christmas presents. Your kids no longer play with or electronic equipment that has since become obsolete. When you owe somebody money they have power over you? You go to work work even if you don't want to because you have to pay back your debt. If you don't pay you can be sued. Your car can be repossessed or your house can go into foreclosure. That doesn't sound like security me too me to being in control of your expenses as I mentioned earlier if you earn five hundred thousand dollars a year but you're spending six hundred thousand you're on your way to the poor house if you control your expenses so that they are less than your income you can save and invest the extra money and you're on your way to becoming financially secure three consistently increasing your savings assets or net worth on a monthly basis. Most people have little to show for years or even decades of hard work for whatever reason they can't or won't save money and they're one paycheck away from being destitute. We should focus on saving money every month. It's a great feeling to watch your savings grow real especially because the interest compounds without any extra effort from you instead of you working for money your money can work for you for not being forced to work at a job job. You dislike just to pay the bills. Many people live paycheck to paycheck and are stuck at jobs. They don't enjoy because they have to pay their bills if they quit their jobs or were laid off. It wouldn't take long before they were in dire financial trouble. If you're debt free if you control your expenses and focus on increasing your savings on a monthly basis you can survive tough times such as a layoff for months or even years without a change in your lifestyle you will also have the freedom to quit a job. You don't like and take your time finding a new job preferably one that you will enjoy. Financial security is an admirable goal for which we should all strive. However it's important to define financial security so that it's achievable for the average American being debt free controlling our expenses increasing our savings every month and doing what we love can lead to happy fulfilling and prosperous lives for us all? You just listened to the post titled What Is Financial Security It by Michael Maalik with get rich slowly dot org and thanks once again to fund rise which makes real estate investing and accessible opportunity to anyone due to its investor fester. I and low cost model. Investing in real estate has been a historically exciting and satisfying investment strategy. Instead of trying to navigate the complicated world of investing on your own fund. Rise gives you instant access to high quality private market real estate projects and each project is carefully vetted and managed by fundraisers own. I'm team of real estate. Professionals many successful investors understand the importance of a diverse portfolio to improve it strengthened potential for results. The future of real estate investing is here visit fundraise dot com slash Oh. FDU That's F. U. N. D. R. I S. E. DOT COM slash O. F. D. to have your the first three months of fees waived and that's it for today. I thank you so much for listening and for subscribing. Hope you have a great rest of your day and I'll see you back here tomorrow. Where your optimal life awaits?