What would it be like if you didn’t have to worry about money—even in an emergency? For most people, that sounds like a fantasy. But you don’t have to be a millionaire to have financial security (and being a millionaire does not automatically mean you have it).
Financial security means you can be confident that you have enough to live on for the foreseeable future, even through a crisis such as losing your job. It can also include generating enough to live on without a job so you can retire.
Financial security comes from good stewardship of the resources you have. There is no magic number you need in your bank account; financial security looks different for every person.
If you hope to achieve financial security someday, there are a number of things you can start doing right now to get there.
Identify where you are.
You can’t figure out how to get somewhere else if you’re not sure where you are right now, so the first thing to do on your journey toward financial security is find out where you currently are. What is your regular income each month? What debts are you managing? What areas do you feel confident in when it comes to the topic of money? What areas would you like more practice or education in to help you feel confident?
Examine your income.
Identifying your income can be very simple if you are salaried or a bit more variable if you work an hourly job. If you have a regular salary, write down that number. And if you work an hourly job, look back at the last several months and add together the income for each month, then divide that total by the number of months, giving you an average income to write down.
Identify your expenses.
As you list your expenses, include both regular bills and expenses and the items that come up only once every six months or once a year. Monthly bills could include things like water, electricity, rent or mortgage payments, car payments, internet, streaming services, or charitable giving. Food and gasoline obviously are not bills, but they are regular expenses. Expenses you might pay every six months or every year could include car registration, life insurance, car insurance, home security subscriptions, or gym memberships.
The further you can look back, the more helpful this process will be. Make time to look back at your expenses for at least the last several months, and ideally for the last year, to help you remember those expenses that come up infrequently.
As you evaluate your expenses, create categories such as transportation, clothing, entertainment, home furnishings, eating out, or personal care items. Individual categories are more helpful than broad “miscellaneous” categories, because those labels will let you know what you are actually spending your money on.
Compare your expectations versus reality.
Was there anything that surprised you when you organized your expenses? Are there any bills that feel way too high? Are you spending an unexpected amount in any particular category?
Sometimes your spending in a particular category feels too high because you are mentally envisioning your spending from a previous stage of life. For example, if you are married, you spend more on groceries than when you were single, and if you have young children, you spend even more now on food than before they were born. Assessing your spending is extremely helpful to update your mental map.
In other cases, spending feels too high because it’s easy to spend money and not realize how a particular category adds up. You may decide you want to make a lifestyle change. The shift may be temporary until you build up savings or grow some investments, or it may be permanent, because you simply cannot afford to live the way you have grown used to.
Consider your goals.
As you compare your income against your expenses, you’ll be able to quickly identify whether you have enough coming in to cover all the bills going out. But the next question to consider is whether your spending aligns with your goals. What are the things that matter most to you? Is that reflected in your spending?
Ultimately, focusing on becoming financially secure requires a shift from thinking about your finances in the short-term to the long-term—from the immediate to the big picture.
Money is a tool, and it’s a tool we have a responsibility to use wisely. We want to honor the Lord with everything He has entrusted to us. This includes caring for those who depend on us and sharing from our abundance, just as the Lord has been generous to us.
After you have taken the time to understand where you are at financially, identifying your income, categorizing your expenses, and considering your goals, the next step is to create a plan. To learn more, check out the next article in this series: How to Achieve Financial Security: Part Two (coming soon).
