Financial Security Journey

Is financial security a dollar amount or a mindset? In our modern society, money provides daily food, shelter, and clothing. But beyond these basic needs for life, financial security is a mindset.

If it is a mindset, then why do we strive for specific dollar amounts? Always striving for the next, greater dollar amount?

On my honeymoon, 10 years ago, we met an older group staying at the same resort as us. It was a friendly group that sent over drinks to us to congratulate us on our marriage. One man took interest in our young careers and boasted about his own level of success. He asked me pointedly what dollar amount I was striving for in life, “what number do you want”? “What is your financial number?”

I remember giving him a variety of responses, but I wouldn’t give him a specific number. He didn’t like this. He told me I needed to know my number. I remember feeling imposter-syndrome. Thinking, maybe I can’t be successful or reach my goal of financial security if I don’t have “a number”.

Fast forward to today. After seeing the lives of hundreds of successful people. Multi-millionaires. Working with them through my accounting business. Seeing the behind-the-scenes day-to-day reality of their business, seeing their personal financial house, and seeing their portrayal of life to the world. I can say with certainty that financial security is not a number; it is a habit and a mindset.

If financial security is sought by chasing a number, you will always seek another number each time your goal is met. And then financial security becomes a moving target. And if you are waiting to reach financial security to feel peace or to give yourself a break from work to be with your family on vacation. There will always be another mountain to climb. And another. And another.

And are you chasing financial security for happiness? When you reach the desired number, does that mean you stop working? Or stop being an active member of society? Does that desired number mean you’ve now achieved financial security?

Going back to our honeymoon, this monetarily successful man shared with us he’d lost a couple hundred thousand dollars the night before at the resort casino. I remember, my husband and I jokingly saying to each other we’d be happy for him to send that to our student loans.

I don’t remember the man’s name, but I remember I felt like he was wrong. And I wasn’t ready to take advice from him even though he was seemingly “successful”. But at my young age, I could not pinpoint exactly why I thought he was wrong. It was a feeling I had rather than proven through fact.

Always the Numbers

• 1 out of every 3 Americans do not feel financially secure. This increased from 27% to 33% within a 12-month period. (Northwestern Mutual, 2024)
• 58% of Americans have no emergency fund. (LendingTree, 2023)

Regardless of the economy, there is a lot that is in our control to protect our financial security which ultimately reduces stress and protects our physical health.

The Next Step

FIRST, Know your choices.

It is an individual and household choice where to each dollar earned. Is your dollar allocation for saving, spending, donating, investing, or creating? I break this down in an imaginative form for children ages 4-7 in the children’s book I wrote, A Dollar Is Magic. You can preorder here for delivery in September 2024: ADollarIsMagic.com.

For an adult example of financial choice, assume you refinanced your student loan (or home mortgage) at 3.25% a few years ago. And your current online savings account or CD is currently yielding 5% return. You have a choice with extra dollars: you can paydown your loans and accelerate debt payoff or you can put money into savings and profit on the difference between the savings rate and the debt rate.

Personally, I would pay only the minimum payments toward the debt (with the low interest rates of the past) and put extra dollars into the high yield savings or CDs. However, I know individuals who have internal stress if their household lives with debt. For those individuals, the numbers and calculations can be shown to them. But if they have other personal and emotional factors or circumstances that influence their need to paydown the debt rather than put extra dollars into savings – that is their choice.

This is their definition of financial security within their own household. Even if the mathematical calculation shows it is not economically wise to pay down the debt. This may be the best choice for them on an individual level. This is not the textbook answer. It is not the “right” answer. But it is the answer that achieves financial security for that individual.

Money is a personal choice.

SECOND, Influence what is within your direct control.

It is easy and momentarily relieving to blame the economy. Blame the boss. Blame the company. Blame the parents. Through blaming we convince ourselves we are powerless and mentally shift the responsibility. Which is easier to internalize. While all these external factors do contribute to our financial position (for a moment) it doesn't have to dictate our long-term security.

Let go of factors outside your immediate control. Focus on your direct circle of influence. This is not to say to ignore external factors. Educate yourself. Be aware of external factors that have an impact on your financial wellbeing. But if you cannot change external factors, then there is a lot to be said for letting go of perceived control. It is liberating when your energy is turned inward to influence items within your direct reach. Stress levels are almost instantly reduced. Instead focus on what you can personally influence.

Let’s use the same example of debt paydown: 3.25% interest rate versus the high yield savings interest rate of 5%. Rising interest rates are outside our control. I’m not in those Fed Meetings (although I would happily join their meeting in Jackson Hole). But choosing where to put our own cash dollars is within our control. And exercising our right to say “yes” and “no” to decisions influences our immediate circle of influence.

THIRD, Determine what provides personal peace and household happiness.

Let’s go to some basics. What makes you happy? What moments provide you an internal calm? There is a new show on Netflix called “Rich Life” by Ramit Sethi. What is so interesting about Ramit is his background is not in finance. His degree is in psychology. With no knowledge of him until recently, I have found myself taking the “rich life” approach for years. Where I choose to spend my money is different than yours. What brings me happiness is different than yours. One size does not fit all (but truly even in clothing I always roll my eyes at those tags).

An adult example: Purchasing a house does not equal success or financial security. Our society has ingrained this into our belief process for decades. Owning a home is not synonymous with financial security. In some instances, it can be the opposite of financial security.

Your life. Your choice. Your mission of household happiness and personal peace. Money may not equal happiness. But you do have the power to choose with your dollar.

It is comforting to embrace financial security through mindset rather than dollars.

Financial security has been (and still is) a journey for me.

Truly,

Helen

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