Most of the time I write about personal safety. Precautions you can take to prevent accidental injury you yourself, your family, or co-workers.
Safety is also a word often used to imply security. And many times we feel secure because there is no information to tell us otherwise. That doesn’t mean that we can’t be more secure. Lately, I’ve been thinking about steps and actions that might improve my security, or my safety when it comes to finances. Some are the ones I have been using myself, and others are only more recently coming to mind.
- Account security. Online banking is great. But how secure is your account? Do you change passwords regularly? Do you use easy to determine passwords? Do you use a common password for most of your accounts or logins? I have had some sort of palm or smartphone device for years, and when I lost one in an airport, I had to set about changing all my passwords, because there was an outside chance someone could crack my password file, and thus get all my passwords. I realized then how weak my plan was. Now I still keep a file on my phone, but it has a password that you couldn’t guess before the file auto-destructs. And all my financial accounts not only have tough passwords, but they have different user names. Overall, I feel pretty secure.
- Auto financing. Most people understand that they typical new car loses value when you drive it off the lot. Depending on how much you put down on a car, you may owe more on the car than its re-sale value for the first two to three years of ownership. I have a Ford Focus philosophy about cars. What is the least I can spend on a car that is sufficient for my commuting and traveling needs? Keep it maintained, and plan to drive it for 10 years (or longer), and you end of with a pretty good value. I can afford a much nicer car, at least in terms of current cash flow, but every extra dollar I spend now is one I am not saving for retirement.
- Every extra dollar I spend now is one I am not saving for retirement. Yeah, I know I just said that, but when I consider the implications on my various monthly services – internet, cable, phone, wireless, lawn care, heat, electricity, water, trash removal – I am sure that I could pare those down a bit, and maybe work one or two months less than if I spend at the level I do today. Spending less now equals more financial security – if I do the right thing with my saved money.
- Consider the size of your house and mortgage. For me, these two have been increasing through 6 moves over many years. Thirty years of home ownership, and I currently have 24 years left on my mortgage. It doesn’t have to be that way. Its an old paradigm. My wife hit me with this one last week with one question: Why did we buy the house we live in today? I knew the answers, and every one of those answers no longer matter. We have fewer people in the house, we have no interest in the schools, and we have more rooms than we need. Yes, I can continue to live here and pay the mortgage and build equity, or we can find a smaller house that fits our current need, go to a mortgage that is half the size of the current one, and be paid off in 7 years. Not as much equity, but now I can save the money I was paying each month, and not one dollar of that goes to someone’s interest earnings on the money they loaned me.
- Diversify. We all hear this, and it makes sense, but you need to pay attention to it carefully. Not all savings in one bank, not all investments in one stock. Life expectancy is increasing, spending power of dollars weakens over time, and social security just might not be accurately named – at least the “security” part.
- Prepare for college, or raise your children to know exactly how they can get college paid for. Here in Georgia, my youngest is benefiting from the lottery in the form of a college scholarship. That means he can use what he and we saved for graduate school, which he will likely consider. There are all kinds of approaches today from 529 plans to pre-paid tuition. Understand the options, and don’t wait too long to decide what your approach as a parent will be.
- Kick the gadget habit. “I don’t need an iPad, I don’t need an iPad…..”
There are many other important purchases and income opportunities that help define our financial safety. You are in control, every day. Do you have a particularly smart strategy for improving your financial security and safety?
Thanks, and let’s be careful out there.
Anna at abdpbt is responsible for the effort to Fight Listless Mondays. Find other list links on her blog. Her lists and the others linked there always give you something to think about, and may even make you smile!