We may be experiencing a roller coaster in economic terms, not to mention the emotions that go along with a turbulent economy, but every generation has its own set of challenges. It’s nothing new. After all, we’re about six years from the 100th anniversary of the Great Depression. Nevertheless, today the world is much more interconnected, including financial markets, making it imperative to have a solid financial foundation.
More than ever, it’s important for individuals, especially those in high-risk careers, to have their finances in order, regardless of what stage of their career they are in. Additionally, jobs that include the added element of physical danger make it much more likely that at some point in your career, you will get injured and may need long-term care (LTC) benefits. This makes it even more important to optimize your financial health.
A rock-solid financial foundation provides at least three essential things:
- Stability: A household budget that can weather the storm of fluctuating costs for goods and services
- Security: Ability to make long-term investments and have a diversified portfolio
- Freedom: Living your life free from worry about what happens to your nest egg if you get hurt tomorrow and need long-term care; knowing that your retirement goals, house and car payments are protected.
The F-Word You Should Say: Finances
Here are four straightforward ways to build an immovable financial foundation needed for today, tomorrow, and the future.
1. Create a proper emergency fund.
I’m not talking about a jar in your closet that you stuff bills into and sneak bills out of when you’re in a pinch. An emergency fund is an account that will help you through a financial storm without (ideally) relying on credit cards or personal loans. Aim for an amount equal to six months of living expenses in an accessible savings account.
2. Lower your personal debt ceiling.
Congress will do as they wish, but for most families, lowering debt is essential to staying financially stable. Credit card debt snowballs quickly, which can be overwhelming. Aim at your high-interest debts first and consider a consolidation loan that brings all or some of your debt into one monthly payment with lower interest than the credit cards.
Ahh, the Good Life (Doesn’t Have To Be Expensive)
3. Don’t overspend.
Looking at a new truck? How about a jetski instead? Just because you can afford a $60,000 pick-up doesn’t mean you should buy one. Living within your means, and even under-spending, is one of the most crucial things a person can do to build a solid financial base. Limit your discretionary spending for six months to watch that emergency fund grow.
4. Pretend retirement is nipping at your heels.
Ask any financial advisor, and they’ll say that waiting too long to save for retirement is a common mistake. The earlier you begin, the more you will have accumulated in an IRA or 401(k) through your employer. Additionally, law enforcement employees often retire much earlier than the general population.
These four methods for creating a robust financial foundation can be utilized in any economy — rollercoaster or not. For high-risk careers, there’s even more reason to pay attention to the stability of your finances, including looking into highly affordable options for long-term care through NPFBA.