• Sunday, December 03, 2023
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BusinessDay

Ascertaining the strength of your financial security

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The issue of financial security is often raised during discussions because of its importance to the financial well being of individuals or households. To ascertain the strength of one’s financial security, it’s important that you consider certain thing and provide answers to these questions.

• Do you have an emergency account? Creating and maintaining an emergency account will do you a world of good as setting aside funds for unforeseen circumstances will save you the stress and burden of financial constraints. It is quite disturbing that many people do not have the slightest idea about an emergency account and have to undergo financial stress in case of eventuality.

• Do you have a Retirement Savings Account? Apart from the mandatory Retirement Savings plan your organization has put in place, it is also wise for you to have your own plans, setting aside some amount for your retirement.

•How long do I intend working to earn a pay check? Do you intend working to earn pay check at sixty? Can your strength allow you work at an advanced age? Your financial plans for your old age will determine the strength of your financial security.

• Are you debt free? If fifty percent of your earnings go to debt settling, then know that you are heading for a financial crisis. It is therefore wise that you map out strategies to write off your debts and ensure that you don’t incur more debt.

•How do you handle excess fund? Do you always try to upgrade your lifestyle each time you get a raise or excess money? What happens to this excess fund? Do you keep it aside for the rainy day, invest it or just blow up everything? Your answer determines the outcome of your financial security.

• What is the worth of your insurance policy? Most often, clients tend to go for the insurance policy with the lowest premium not considering the benefit of such premium in the long run. Certain factors should influence your choice of insurance policy, you should consider what you intend to achieve in the long run instead of just picking any insurance policy because of the low premium involved. For instance, it is advisable to go for a comprehensive insurance policy instead of picking a third party insurance policy for your car as this will leave the burden of fixing your car on your shoulders in event of an accident.

• What is the spending habit of your spouse? The spending habit of your spouse determines the strength of your financial security. Is your spouse a spend thrift or a wise spender? If you operate a joint account then it is advisable that you spell out the rules like how often money will be withdrawn from the account and how much should be withdrawn after due consultation and planning with your spouse to secure your financial future.

•Do you have a will yet? Do you have a written will yet? Or are you too scare to put down your will on paper because you don’t want to think about death? You may feel that you don’t need to worry about financial security after your death but you have to be concerned about the financial security of your children, your bequest to your children and how your resources are managed long after you are gone as it is the popular saying that “a good man leaves inheritance to his children”. Failure to do this will leave you children and hard earned resources at the mercies of relatives. 

HOPE IKWE