When you say that you have a secure financial standing, it simply means you have the economic means to support the type of lifestyle that you want to live. It is a state wherein you have the confidence to spend your money without worrying that it will run out. Most of the time, being financially secure means you know how to manage your finances well. Nobody who is reckless with their money can ever be secure with finances. It does not matter how much you earn. If you have poor money management skills, it is more likely that you will spend beyond your means and land in debt.
8 financial products that can make your finances secure
If you really want to find financial security, you have to make sure that you have the right habits when managing it. There are signs that will indicate if you are well on your way to achieving this security in your life. One of them is having the right financial products.
Here are the 8 financial products that will prove that you have a secure financial standing.
There is nothing like saving for the future that will prove your financial security. One of the best ways to save for your future self is through your retirement fund. When you can comfortably contribute to your retirement plan, that means you have enough extra money to spend after your basic necessities are met.
Another indication that you are financially secure is a checking account. Believe it or not, there are Americans who do not have this account. This is the place where you can manage your money. It is how you can monitor how it is being spent. When you start monitoring where your money is going, that is a good indication of your maturity when it comes to managing your finances. A checking account is something that you can avail for free. It teaches you how to use your money properly by avoiding overdraft charges. It is one of the products that will help you practice proper spending behavior.
If you have a debit card, this can also be a sign that you have financial security. This will help protect your cash from theft and is also useful when buying things. There are transactions that do not accept cash or check. A debit card can help you push through with that transaction without resorting to debt.
High-yield savings account
According to TheSimpleDollar.com, this is just as important as a checking account because it is a liquid asset. You can withdraw it easily when you need it but it earns you more profit – at least bigger than a traditional savings account. This is a great account to store your emergency fund. This is the fund that you will not use all the time anyway – only for emergencies. While there is no emergency, this money can earn you a higher interest.
Accidents happen and a home insurance is one of the ways that you can save yourself from financial ruin. When something happens to your house, this type of insurance is a great way for you to recover any losses and repair the damage. In case a fire or even vandalism destroys your home, you can use this insurance to rebuild your life without putting yourself in debt. This is one investment that you will surely be thankful that you have when an unexpected event wreaks havoc in your home.
A lot of car accidents happen in the country. The thing about accidents is that even the most careful people get into it. One reckless driver can cause a major accident that can involve two or more cars. An auto insurance will prove to be useful when you happen to be a victim of an accident. It does not only cover the repairs that your car will need – it can also cover any medical expenses that you will require after an accident. According to the article published on ValuePenguin.com, the annual cost of a car insurance in 2014 is $907.38. For that amount, you can already feel financial security – at least for your vehicle.
A life insurance will not really benefit you – but the people that you will leave behind in the event of your sudden passing. This is a great way to secure the finances of your loved ones – especially if you are a sole breadwinner in the family. At the very least, they can use the money from your life insurance to find something that will earn them a steady source of income.
The final financial product that will help solidify your financial security is a health insurance. According to a study done by PWC.com, the health economy experienced another growth in spending in 2015. Although it is expected to slow down in 2016, it continues to outpace the inflation rate. If the inflation rate rises faster than the wages of the average consumer, how can the ill spend for their medical treatments if it is very expensive? A health insurance is one way to keep yourself from thinking twice about getting the treatment that you need – or that of your loved ones.
There are so many products from the financial industry that will indicate that you are a good manager of your money. Some of them are a result of a good financial decision on your part. The more of these that you have, the more likely that you are secure with your finances.
Part of being secure financially is knowing the right products that you will use to improve your financial position. Here is a video from the Bank of America that discusses when you should use your credit card and when you should use debit cards.
Can a credit card secure your finances?
Some of you may think that a credit card has no room in your financial security. That is not entirely correct. Believe it or not, debt can be a sign of secure finances. When you reach a point in your life when you can borrow money and set it up so it pays for itself, you can say that you have reached a mature state in your finances.
There are three ways that a credit card can secure your finances.
- Helps you maintain a good credit score. To have a good credit score, you naturally have to keep on using credit. It is important to maintain a good credit history because you want to be able to get a low-interest loan when you need it. This can be useful when you want to buy a house or invest in a property.
- Teaches you how to control the use of credit. To be a good manager of credit, you have to be able to practice how to use credit wisely. A credit card is that best way to do that without having to apply for a new loan every time. As long as you have not reached your credit limit, you can continue to use credit and practice the right credit behavior (e.g. paying your dues on time, etc).
- Allows you to enjoy rewards and freebies. Finally, a credit card can help you achieve financial security through rewards and freebies. The savings that you will get from these rewards can be used to invest or grow your saving goals.