It is a fact that stress, especially stress related to money and finances, can cause major health issues. And while some anxiety can keep people motivated to improve their money management skills, too much insecurity about losing income or investment can be devastating. That is why it is important to take actual steps toward financial security, and also believe that you always can cut back and still be fine while you’re leaning on your savings for a period of time.

These two steps require planning and changing your mindset. But they are doable if you pay attention early on in life to their importance and practice good financial discipline. For people who have been and survived minor financial setbacks, the path may be less intimidating because they know that they can be resourceful in cutting back and reconsidering their priorities.

If financial security is a concern for you, think of these two broad areas.

Your long-term plans

Achieving financial security doesn’t come from making a lot of money now. Many people who have significant incomes still struggle with savings, investment and long-term planning. What you will need to make sure that you have solid retirement plans, you have an emergency fund and you have taken step to secure your children’s tuition.

These steps will require you to look at your current income, and decide to live at what probably appears to be below your means to set aside savings and investments that secure your future. These long-term plans won’t pay off only when you need them, but they will also provide you with the peace of mind that you’re looking for now.

It is important, however, to review these plans occasionally. For example, if you are a 20-something year old in your first job, you probably setting aside much less than you will be able to in a decade or two. To ensure that your savings will be sufficient when you need them, review these savings to correspond to your growing income, lifestyle upgrades and your ability to contribute more toward a secure future.

In this process, you also may begin to realise that your priorities are changing or your understanding of investments or needs is evolving. So, make your planning a process rather than a one-time decision, and ensure that whatever schemes you’re using through your bank, financial adviser or employer are transferable and changeable.

Your adaptability

A friend once told me that she remembers several years ago when she walked into a hair salon that listed a haircut and colour service for $90. At the time, she thought that was outrageous. Now, with a high-paying job, she doesn’t feel bad at all getting the service at $200. The moral of the story: Our perception of our spending and affordability can be adjusted higher or lower based on our circumstances and income.

And many people who come from modest backgrounds can tell you that cutting back isn’t as bad as it sounds. In case of losing a job or a spouse’s income because of divorce or death, it is easy — although unwelcome, unpopular and inconvenient, to scale back many of the luxury-spending items, and find cheaper services and alternatives for what’s absolutely needed.

It is an adjustment, but it isn’t impossible. In fact, it is empowering to know that you and your family can do that while leaning back — without draining — your savings during an emergency. This change in mindset can help you stay positive and motivated to crawl your way out of whatever emergency. It also may point you to some of the extra expenses that have been taken for granted over the years.

The writer, a former Gulf News Business Features Editor, is a Seattle-based editor.

 

Box

Planning for financial security

— Set savings and investment aside

— Adjust your long-term plans to match your lifestyle

— Review your priorities and spending

— Know where and how to scale back when needed