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Smart Way To Create Financial Security in 2023 – Ep. 93
Do you know what comes before financial freedom? Financial security.
In this episode, we’re going to talk about the smart way to actually create financial security in the world that we currently live in. So, here we go!
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Podcast Key Points:
0:00 – Episode Overview
1:05 – Why 6 Months In An Account Doesn’t Work Anymore
2:46 – Level of Financial Security
5:26 – Cash on Hand
8:49 – Leveraging Marketed Assets
10:20 – Financial Security Calculator
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Understanding Financial Security: The Key to Your Financial Freedom
Do you know what comes before financial freedom? Financial security. And this is not just having an emergency fund with six months set aside in it, right? We’re going to talk about the smart way to actually create financial security in the world that we currently live in, right? So here we go!
Welcome to the Your Money Your Life podcast. I’m your host, Aimee Cerka. After over 10 years in the personal finance industry and multiple personal financial and medical crisis, I was fed up with the lies that are being shouted from the rooftops by the Guru’s and the media. If you’re ready to eliminate fear, stress, struggle, frustration and guilt, from your finances, and all the areas they affect. You’re in the right place. Welcome. I’m so glad you’re here.
Financial Security in 2023: A Smart Approach
Welcome back to another episode of the Your Money, Your Life podcast. I’m your host, Aimee Cerka. We are talking today about smart ways to create financial security like now in 2023. Because gone are the days where it makes sense to have 6 to 12 months’ worth of expenses, sitting in a savings account somewhere like, Please stop, okay? Don’t do that anymore.
Like, take a listen to this episode, we’re going to work through it together on what this actually looks like and why that actually doesn’t work any longer.
The Power of Financial Security Before Freedom
So financial security happens before financial freedom. So, we talked a little bit last week about the money machine and how to like actually what financial freedom is and how to create it. And where most people don’t actually have the financial freedom that we think that they do. And it’s kind of become like this industry trending topic.
And that’s just not it’s not cutting it right. Like that’s where we’re lying to ourselves, if we feel like we actually had the financial freedom, but financial security, that’s key. And for most people, and having financial security is rewarding enough. Like that’s really what we’re working towards, we don’t necessarily need the financial freedom, not that there’s anything wrong with it.
Finding Peace in Financial Security
And we should be working towards financial freedom. Like that’s not what I’m saying. But there’s more power in the financial security than we realize. And often like, we talked about how they’re mistaken for the other.
Okay, the ability to be present and showing up with our kids and, like intentional with them and having that time and then being there when your family needs that. That all stems from security.
A Personal Story of Financial Security in Crisis
And honestly, we had achieved a level of financial security. When Wyatt, my second was hospitalized, he had an undiagnosed birth defect. Even though he was a full-term baby, post term baby because he was over 41, I was over 41 weeks when he was born undiagnosed with a birth defect a couple hours old. He turned purple on the table with the pediatrician came in to do their check on him.
And so, he was sent back to the NICU. We discovered he had a Sofitel atresia with the TF fistula, which for those of us who don’t know medical terms, that means is esophagus wasn’t connected to his stomach. He was sent over to a local children’s hospital had his first surgery at less than 48 hours old. It was in the NICU a total of seven and a half weeks. And then after that, we left with what’s called a G button support his stomach where he received all of his nutrition.
We had weekly feeding appointments and so many different therapies and things for years. But during that time in the NICU, we had achieved a level of financial security to the point where I was able to be home, I had left. Let’s see, I would have been about three months pregnant. February, March, April, May, June, July, August, okay, probably about four months pregnant at the time, and I was able to leave my 9-5 and insurance and come home spend time with my oldest before the baby was born.
But when Wyatt was born, I was able to be there. I love to take care of myself and spend time with my oldest but like I was there when it counted. But I hadn’t worked on the mindset portion of it. And there’s a lot of indoctrination again, that personality types etc. Like we don’t always there, it’s never enough like, okay, we’re working towards the next goal. It’s never enough. We have to keep doing this. We have to keep doing this. We have to keep doing this.
So, because I hadn’t achieved that income goal that I was working towards in my business at the time. I felt like I had failed my family. But in reality, I hadn’t because the thing that I had set out to do, to be there with my kid and the everyday moments but it really freaking counted. Like we had done that.
The Importance of Mindset
And I was there and it was, consciously, I was so grateful for that. Subconsciously, I was beating myself up that we had failed our family but or I had failed my family because of the money. But that’s not really what the goal was.
So, we confuse those two. And financial security, we talk about if something were to happen today, if something were to happen tomorrow, all your incomes gone. I don’t care how strong of a personal brand you got; I don’t care how much job security you have. I think a lot of people on this in 2020.
Preparing for the Unexpected
But in general, like if something happened today or tomorrow to your income, and it was completely gone to your spouse’s income to both of your incomes, and it was gone. Like, how long would you be okay? Are we like, a couple days away from like, lights or turn it off? Or like, we don’t know how we would make it? Or do we have a little bit there.
This is where traditionally; people think of like the emergency fund and having six months’ worth of expenses in there. And there are several gurus that still teach that I can tell you like, that’s not what they’re actually doing. But they’re still teaching that because they’re making the money teaching that.
And for me, it’s like, I want you to do this in a way that feels smart. So yes, we do need to have some cash on hand. Because if something happens tomorrow, you need to be able to have assets there, in this case, cash on hand to be able to take care of your responsibilities and what you need to actually do.
Okay, but with the rate that they’re printing money, and this is the battlefield side of the unstoppable finances framework, because if we don’t understand the rules of the game, and what’s actually going on with the economics and the economy, we are losing. Because you’re not set up for success.
So, because of the rate of inflation currently, and because the US dollar is a fiat currency, they’re going to continue to print money as much as they want, which means the money you have is worth less money. It’s not worthless, it’s worth less the money than it was before. So, you’re losing money.
The Three Levels of Financial Security
There is some of it that we just have to have on hand. And there are things that you can do that are marketed assets is what I call it, that you can get to him. So, we set this up within the financial security calculator. So ideally, like 6 to 12 months is great, but in a variety of manner.
Okay, so we have cash on hand. So, this is like money in the savings account. Again, you can get to it tomorrow if you need to. But the money you have set aside for holidays for vacation, some of those things can still count towards that as well. It doesn’t have to just be one designated fund.
Although what’s okay, hold on, we got to preface this. Don’t call it emergency fund. I’m not planning for an emergency. And you shouldn’t either we can plan for our contingency. But don’t plan for an emergency because you don’t want an emergency to happen, right? We plan for the contingency.
So, there is some money sending in a contingency fund. But you can also utilize some of the other things that you have. Maybe its money set aside for travel money; set aside for savings. Money set aside for homeowner repairs. All of those different type things that still cash on hand. And if the stuff hits the fan tomorrow, then you’re going to be able to use that money to take care of your bare necessities because you’re not necessarily going to go update your bathroom.
If you have to prioritize, make sure to put food on the table. Does that make sense? So that’s like the first level, okay. But then we also have marketed assets. This can include your 401k, the stock market, some of those things that you’re also passionate about that we like, these are the things that we have to have, right. This can also be cryptocurrency was hot for a while.
This can also be life insurance, cash value in your life insurance policy, depending on how you have that set up. If you have a universal life, we want to make sure you’re not taking out too much that the policy collapses on itself. You have to make sure you’re funding it enough so it doesn’t collapse on itself.
And that’s why you have to be careful if you’re getting universal life, there’s more American that my insurance background is going to come out right. There could be assets, let’s see you have extra vehicles, not the vehicle that you need like to get to and from places because like you still need that, right? Like if something happened, you’d still need a vehicle. But if you’ve got extra vehicles around the asset there that vehicle if it could be sold for cash, and these are called marketed assets, because you keep the cash on hand.
But then if you haven’t recovered within 30 days, you’ve had time to get some of those marketed assets liquidated so that you have them available to you. Let’s see if we miss anything, maybe jewelry. And then the third one is like long term assets. This could be additional, like real estate portfolios, business investments, things that are going to take longer to liquidate.
But if you needed to, you could liquidate them and take care of the financial security. Now, again, we work on this all inside, there’s a calculator I put together, it’s called the Financial Security Calculator. If you really like to know, you can go to https://aimeecerka.com/calculator. I’ll make sure that link is in the show notes, or just join us inside the Academy in its absolute included for you.
Leveraging Debt and Credit Wisely
But the thing is, we have to do this smartly. So, debt payoff isn’t bad, because like that would put less on your bare minimum expenses that you need. We should still pay off debt and creating that debt free, but you can leverage that in a smart way.
So yes, paying off debt that wasn’t necessarily smart. Maybe we had purchases, impulse purchases, maybe you had obligations, medical debt was one that we had to take care of student loans like those things, yes, we need to work on paying off debt.
It’s not all bad, though. Like you can leverage debt to build your assets. You also could leverage, like additional credit, if you have the credit available and the stuff hits the fan, you have the credit to go buy groceries if needed to.
So, like, we have to stop looking at debt and credit as this evil thing. It is a necessity in this world that we live in now having a good credit score and make being mindful of our credit, you can do so much good when you’ve leveraged that smartly, to grow assets to grow the financial security, you can do all those things. It’s not necessarily all bad.
So, you can leverage your debt. We talked about the marketable assets; we talked about the savings accounts that you can use those.
So, the question is, if all the income shut off tomorrow, it’s gone, how long could you last? Do you know? Because if you’ve achieved that financial freedom that we talked more about last week, that means there’s no difference. Like you have enough cashflow; you have enough reoccurring monthly cash flow, that there’s no difference for you, you’ve got everything covered.
Assessing Your Financial Security
And then financial security means you’re fine for a certain amount of months. And do you know what the certain amount of months are? This is also why we talk about creating food security because the average US person can’t make it more than three days without food or water that go on to the store or any of those things.
But that’s we’ll dive into that again another day. So where are you at? How are you doing? Are you in the place that you want to be or you’ve got a goal now somewhere to work towards? This is not about doom and gloom. This is about setting you up for open your eyes and where things are at and then set yourself up for success. That is the key, right?
Connect with Aimee Cerka
Okay, if you’ve got questions, send me a message @aimeecerka on Instagram, or we’re checking out this thread threads thing as I’m recording this. So, shoot. I’m on there, too, @aimeecerka.
Let’s see. Do you have any questions? Send me a message. That’s what I’ve got for now. Make sure to check out the show notes for additional resources. So, you can take this from Hey, that was a nice episode to actually making this a reality and moving forward towards that abundant life that unstoppable life that you deserve. We’ll see you next time. Bye for now.
Thank you so much for listening to the Your Money, Your Life podcast, I’ve got a special gift for you for sticking around to the end. And if you’re tired of your finances being a mess, this is for you.
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