4 ways to build your financial security
With so much uncertainty in the world at the moment, you can take steps to increase your sense of financial security.
With so much uncertainty in the world at the moment, you can take steps to increase your sense of financial security.
Building financial security is about taking actions that will give you more peace of mind. The more prepared you are for risks and unexpected events, the more peace of mind you'll have.
Here are 4 things you can do today to kick-start your journey to financial security.
Emergency savings are savings you set aside for unexpected events or expenses, such as a big repair, a medical emergency or a loss of income. These savings create a buffer that can help you to avoid using debt or dipping into long-term savings if something unexpected happens.
So, how big should your emergency savings be? Everyone’s financial circumstances are different; however, a good rule of thumb is to save enough to cover 3 – 6 months of expenses. This may sound like a lot of money to set aside, but it is achievable! Start by putting away a small amount each month – as your savings grow, you’ll feel more prepared.
You can’t anticipate and save enough to cover every possible risk, but having the right insurance in place could help you cover the bigger risks and can immediately increase your security.
Take time to review any policies you already have and consider whether these meet your current needs. Prioritise what is essential to protect your family and your income. If you need help deciding what insurance is right for you, you may wish to speak to an FSCA-registered financial adviser.
If you contribute to a retirement savings product or a unit trust investment, times like these can feel very scary. Investment values have been very unstable as a result of the extensive and unpredictable effects of the pandemic, and may continue for some time to come. However, if you are investing for a long-term goal, try not to let these changes affect you. If you can, stay invested and keep investing a little every month.
Before you decide what is right for you, you may wish to speak to an FSCA-registered financial adviser about your decision.
Investing in your financial knowledge will help improve your financial security for the rest of your life. The more you understand about managing your money and making the most of the options available to you, the more in control you will feel. It will also become easier to make decisions that build your financial health and help you avoid easy mistakes, giving you greater peace of mind not just over the short term but well into retirement too.
It’s not possible to learn everything all at once, but if you add to your financial knowledge regularly, you'll reap the rewards for years to come.
One way to boost your financial know-how is to register for Capitec’s Live Better Academy. The platform offers 4 courses: becoming money smart, saving, budgeting and managing debt. The courses are designed to help you take control of your financial future, reach your goals, and create financial security. Register now, it's free!
