"Financial Security" - What will provide it?

Wouldn’t it be great to be financially secure — to never have to worry about money?


What would it take to get there? In fact, what exactly is financial security?


First let’s look at what Financial Security is NOT!


Financial Survival - Having an adequate financial plan and enough financial resources to fulfill basic daily needs. A very large part of our society lives life at or below this level from birth to death. In this land of opportunity, where paupers can and do become wealthy, many people never rise to a level above survival.


Financial Security - Having an appropriate financial plan and enough financial resources to adequately fulfill all daily necessities and provide most/or all reasonable desires (no private jets or yachts) of an individual.


Ask ten people to define how much money it takes to attain financial security, and you will probably get ten different answers. For some people, financial security is having $10 million in the bank. For others, it’s $50 million.


One thing is for sure - $1 million isn’t what it used to be!!! Having a full $1 million dollars in the bank, earning the highest long-term interest rate of 2.55% for 5 years (the best I could find recently), will yield a whopping $1,135,979.74. That averages out to $2,266.33 a month - not enough to pay the bills for most of us. With the median home price in the United States around $220,000, there may not be much left after paying the monthly mortgage. That’s not bad, if you want to keep working for the rest of your life at the same old job you’re working at now. Less than $2500 a month is not going to provide a lifetime of financial security on its own.


What about $10 million? At 2.55% (compounded daily), that will generate an annual income of approximately $272,000, without working. Now we’re talking some real money and enough to provide real financial security for most people! I suspect if you had $10 million to invest, you probably would have other things to do besides read this blog.


The problem with defining financial security in these terms is that having $10 million, $50 million or even $1 million is a pie-in-the-sky dream for most Americans. We’d all like to have millions of dollars, and it’s not bad to aspire to that goal. The problem is, if we define financial security by such large amounts of money, most of us believe that it’s out of our grasp. Clearly a certain level of wealth is necessary to provide true financial security. The question is: “If you don’t have millions of dollars to invest, how will you generate the necessary wealth to feel financially secure?”


A broader definition of financial security, that is achievable by any reasonably industrious person, begins with having a better source of income than what is provided by an hourly wage job. Earning your income in an hourly wage job limits the amount of income available due to the limited number of hours available to work. Your body simply will not function at an acceptable level without nourishment, rest and companionship.


Think about the wealthiest people in the world. Did they find financial security by earning a higher annual salary or by seeking a raise in the hourly rate that they were being paid? Of course not! More money per hour and higher salaries will never provide true financial security, only an incrementally higher standard of living. Working really hard won’t earn enough to become truly financially secure. There is a better way - earning what’s called “residual or passive income” - and it’s easier than you might think. Residual income is earned when you stop trading time for money, and start thinking like an entrepreneur. The people who have discovered how to have true financial security get paid MORE THAN ONE TIME for the work they do. (For more information on residual income see the May 3 blog titled “Residual Income – Can the average person take advantage of it?”)


Having a residual source of income that exceeds your level of financial survival allows you to continuously reinvest the earnings back into your residual income generator, steadily increasing the amount of residual income available. Developing a dependable residual income generator results in a legacy that provides generations of your family with true financial security!


I can hear you asking “If this type of opportunity is available, why aren’t more of my friends or family taking advantage of it?” The only possible answer is that they have been trained for generations to think that the only way to earn a living is to go to work. And, if they aren’t earning enough to provide the income level that they desire, they need to work harder, work longer or find a better job. The most difficult thing for people to do is change the way they view the world. If they were raised in an entrepreneurial environment, the thought of residual income is very natural. If they were raised to think in terms of an hourly wage job, residual income is simply not something they have even considered. The only way to get something that you’ve never had is to do something you’ve never done.


Most people have little to show for years or even decades of hard work. Many live from paycheck-to-paycheck and are stuck at jobs they don’t enjoy because they have to pay their bills. If they quit their jobs or were laid off, it wouldn’t take long before they were in dire financial trouble. Most people reading this blog will continue doing the same thing tomorrow that they did today expecting different results. Do you want more out of life than going to work at a job that you don’t really enjoy? Isn’t it time to start looking outside the box that you’ve been looking in? Large numbers of people are generating substantial incomes without working at the jobs that they hated to go to every day. YOU CAN TOO!!!