EVERYONE DESERVES PEACE OF MIND WHEN IT COMES TO THEIR FINANCIAL SECURITY
When you are financially stable you have all your ducks lined up in a row however financial security offers you a grip on your ducks.
Life is not as simple as it is made out to be unless of course money doesn’t matter where you can just ease into daily living.
Unfortunately, that’s not the case for 99% of Canadians which means earning a living whether it’s by going to work or receiving government benefits is part of life.
I find the more I’m exposed to certain situations the deeper my desire to leave no stone unturned for my family increases.
Last month I blogged about improving financial stability where you have a plan and goals set up for your money.
This also means you’re using a budget, eliminating unnecessary expenses and following a pattern where you are not involving consumer debt.
You want to build your net worth and the goals you set forth and strive towards helps to increase your overall stability.
You’re not necessarily living paycheque to paycheque but you are comfortable about money to live for today while planning for tomorrow.
Financial Security In A Nutshell
What does financial security mean?
Financial security, on the other hand, means that you have enough money saved to take care of emergencies, future retirement, and daily living.
You’ve now come to a point where you are debt-free, net worth is increasing and retirement savings are plentiful.
A dream come true for many Canadians but not often a get rich quick reality especially with the cost of living being so high.
Just yesterday I read that a 1 bedroom apartment in Toronto on average will cost $2300 a month.
See more info from PadMapper.com
That alone is twice the cost of what was our mortgage payment and property taxes when we bought our house in 2009.
Granted, we did have a downpayment but still, that’s a massive amount of income to be dishing out for rent.
However, if you want to live in Toronto you have to be making big bucks to afford these types of housing expenses.
If you can’t, the only option is to leave and find somewhere to live that’s more affordable or face living on the streets.
It may not be the optimal way but if you want to increase your chances of financial stability and optimize financial security you need to be proactive.
Financial Stability vs. Financial Security
In order to achieve the financial security, you have to first take control of financial stability.
By doing so you;
This part of finance is the ‘doing’ part where you working on achieving financial security.
- Budget Your Money
- Own Your Debt
- Build An Emergency Savings Fund
- Save For Your Future
- Invest in Retirement
There will come a time when the above 5 long-term and short-term goals are complete and you can breathe.
This is when you know you are at a point where financial security is locked in and you’re going to make it until the end.
Gosh, that really does sound like lots of work and it is and most people won’t achieve it only because it’s not as simple as it seems.
Unfortunately, life is costly and financial mistakes set people back whether it be in their 20’s, 30’s 40’s or 80’s.
The critical part of achieving financial stability and financial security is to never stop trying.
Being stable means you have a plan and you’re putting it into action and being secure means your plan worked.
Financial security on the other hand to me means;
This part of Financial Security is the ‘done‘ part similar to a financial security system looking after you.
- Debt Free
- Mortgage Free
- Emergency Savings
- Long-Term Plans that include beneficiaries
- Creating A Will and Updating It as Needed
These last few years as you know we’ve been through lots of turmoil and grief with my inlaws with death and mental health.
Both Mrs. CBB and I have learned SO MUCH about the Canadian healthcare system, retirement, pensions, savings, banking and the importance of having a WILL, little to no debt and to be mortgage-free.
In fact, we feel as if we’ve been on a crash course about life and what happens when you don’t have financial security by the time you retire.
We also learned that you don’t need to be earning big money to be financially stable.
Creating debt that you can do without means that you put your future financial security at risk if you can’t pay it back fast.
When someone tells you that having your mortgage paid by the time you retire is smart, they are not kidding.
It’s a big deal especially if you become unable to care for yourself or your finances.
Senior financial security is the difference between getting what you need or getting it in part or not at all..
Not being in a state of financial security when you grow old or if your health fails puts a big strain on family members who are looking after you.
Here’s the thing, not everyone has a family to look after them which means financial security becomes far more important.
I don’t really know where the path leads from here for my mother-in-law but we know it won’t end well.
What we can safely say is that they went from being broke, to being debt and mortgage-free in the nick of time.
Too close for comfort to be honest and it scares me.
I guess our awareness is heightened when it comes to all things about life when we are put into a situation that otherwise would be considered out of the ordinary of daily living.
It certainly puts things into perspective especially when you imagine swapping your life for theirs and wonder how you’d want it all to go down.
Discussion: Does financial security factor into your future plans? What worries you the most today that motivates you to build stability for future security?
Leave me a comment below as I love to read your feedback.
Net Worth Losses and Gains
What happened to our money in July?
One word for this month, renovation. To be precise the renovation is one room in the house but due to the fact that it needs more than just a new floor and walls it’s easy to see where the cash has gone.
I’ll do a more in-depth post about the costs of renovating our bathroom right from the studs when it’s complete.
We did however, use credit card points to buy parts cheaper, watch for deals on no tax days, shop around for the same product through different suppliers etc all to make the renovation a little cheaper.
Other than that, the investments did okay. I’m sure that this coming month they won’t fair so well.
The market does not look good for the short term.
Understanding Net Worth
What Does Individual Net Worth Mean?
Net Worth is a snapshot of your financial health sort of like a picture or debt to net assets.
In simple terms, it’s a total of the value of your assets minus your liabilities.
We credit the growth of our net worth due to patience, perseverance, using a monthly budget and not giving up.
Your numbers may go up and down but don’t let the numbers scare you rather understand why and move on.
If you would like to use our budget I offer a FREE downloadable budget which I created and that you can use at home just like we do.
I don’t charge for it because I want you to save money not spend more!
There are tonnes of other free resources at Canadian Budget Binder to help you build your net worth.
Calculate Your net worth
Do you know how to calculate your own Net Worth?
We like to calculate our net worth every month so we know if we are still on track.
Some people calculate it yearly or quarterly but it’s up to you and how informed you want to stay.
Net Worth is only an estimate and not everyone uses the same type of figures to tally it up.
Some of you may not include vehicles like we do or leave out assets inside the home as we have.
You might be that person that believes that your house should be excluded.
It depends on what you want to calculate or what you can sell today and make money on for tomorrow.
Figuring out net worth is fairly easy as long as you know your personal numbers or monthly finances which means you need to do your homework.
Net Worth is simply adding up all your assets (what you own) then taking away your liabilities (what you owe) which will give you a net worth number.
Understanding your net worth will help you determine if you are on track meeting or beating your personal financial goals.
It doesn’t get any easier than that.
Net Worth = Assets – Liabilities
Why not go ahead and calculate your own using our Free Money saving Tool Net worth Calculator (Canadian Budget Binder 2012)
When budgeting anything is possible, we are proof of that although we still have a long way to go in our journey.
These are our numbers and our goals, not a means of comparison towards your own goals to others’ target goals.
We don’t care how much money others make or if they have a high net worth or if it is lower than ours as it’s not a competition.
I hope our experiences will help guide you along your financial path working towards debt freedom.
Not everyone has the same path in life.
Some of you may have had to start over like I did or go to school a second time and now have OSAP loans to pay back.
Others may have divorced, lost money in the stock market or other investments, suffered job loss, fell ill or injured on the job and so on but you can’t let that stop you from achieving your financial goals.
Some of you may have been given trust funds, paid-for homes, paid educations or perks in life that give you a financial kick-start and that’s OK too.
Remember what I said, “It’s not about how much money you make, it’s how you save it”.
The only reason people accumulate wealth is that they know how to save or invest it wisely even if they did inherit money or win the lottery.
The smallest improvements should mean big strides in working towards reaching your goals.
Sometimes we have to fail in order to learn and we’ve all been there.
Money can be an evil force for some people especially those who have a negative attitude towards their own financial situation.
I urge you to be optimistic and little by little with determination you too should see improvements if you want that to happen.
Canadian Budget Binder Net Worth Updates 2019
Click the links below to read our net worth updates for the year.
- December 2018 -(1.66%)
- January 2019 (+2.37)
- February and March 2019 (+2.15%)
- April 2019 (+2.63%)
- May 2019 (-0.79%)
- June 2019 (+0.87%)
That’s all for this month’s net worth update but please check-in at the beginning of September 2019 to see how we made out in August 2019 with our financial portfolio.