I recently came across a post on a LinkedIn group, asking the question "What would make you feel financially secure?" The first thoughts that came to mind were the lessons learned in Risk Management, from over ten years of advising families on how to mitigate risk and manage their resources, subject to their specific circumstances and goals.But then my personal experiences and reality cut through the noise.
Knowledge and access to information is our first defense in becoming financially secure. Being a lifelong learner, willing to adapt and adjust to your environment, is critical. One of the speeches I share with anyone who listens is, "Do whatever you can to put yourself in an ownership position, avoid becoming a borrower." What I mean by this, is to put sweat equity into your life. Learn how to repair the broken washer, a leaky faucet, grow a garden, bake your own bread. Take time to learn important matters, such as tax codes, insurance contracts and legal contracts. Have you read your insurance policy? Have you read your Checking Account Agreement? What exclusions are in your health insurance plan? Don't take someone else's word as the holy grail - read up on the topic. Do some research before you copy & paste another person's nonsense.
How does that lead to financial security? Instead of running to the store every time something isn't working, you may discover that a $50 part and a little elbow grease could save you from buying a brand new $700 washer and then you'll need the $500 new dryer to go with it. And most likely you aren't buying the appliances with cash, but using credit that will cost you more in the long run.
See, the secret to compound interest is having it work for you, not against you. When you buy things on credit, the amount increases over time as interest accrues. Your are in a borrowing position. Other people have control over what you do with your money every payday. On the other hand, money that is earning interest, works for you, as it earns interest and then interest on interest, the longer you leave it alone. Your money is available for you to decide how to make it work harder, on your own terms. So, the next time you are tempted to run to the store, stop and consider if this may be an opportunity to learn.
The second part of this journey to financial security is Networks. Building a network of people that you trust is vital. A healthy community will share their knowledge and work together to help each other live healthier lives. It doesn't mean you agree with everything they believe or do. It means you respect each other's value and strengths. Networks can help share tools, instead of running out and buying a new thing you may need once. Networks can barter, take turns babysitting, put a roof on or build a shed. Each person contributes their own knowledge and interests to the greater good of the whole. As you continue to learn new skills, you become an important part of you Network.
As another year comes to a close, take time to consider what you've learned and what you would like to explore in the new year. Every day presents us with opportunities to meet new people, expand our networks and share our resources with others.