Financial security is not a function of the size of your bank account or your investment balance. It cannot be obtained from a financial plan or the assurances of your financial advisor. Why? Because for most of us, no amount of planning can protect us from disaster. The very nature of the word, disaster, tells us that. War, climate change or inept and uncaring politicians - any number of disasters can strike and destroy the security of a carefully constructed financial plan.
Ironically, financial security does not lie outside of you. It lies within. It is a knowing that you will be ok regardless of what happens to you.
But knowing your numbers does help. Knowing what your survival budget is, what the minimum you need to spend is and how much you have available to last on that minimum, helps you practically plan for the unknown. It is a fire drill or evacuation plan. This exercise - the understanding of your minimum financial needs - helps to form the foundation of your planning. Even for the wealthiest, I have seen how knowing this number can make them feel more secure.
The fear surrounding the loss of financial means is very real – I have seen it in people who are going through it. Hard numbers aside, their biggest fear is not knowing whether they will cope. Not knowing whether they are capable of turning off the taps and living that way, indefinitely or temporarily. However, I have never met a person who made that change – to survive on less – who did not testify that, in the end, adjusting their lifestyle to suit their means didn’t matter.
Because what matters more, is the knowing that you can live within your means and have control over your (meagre) budget. The knowing, that stripped from your luxuries and comforts, you are still worthy of love and respect. You are still worthy of affection from your friends and family. That you are still the same person, albeit with less money. This kind of knowing is the real foundation of your security.
In these uncertain times, knowing our numbers may help us feel more secure. But in truth, the knowing that we will be ok regardless of our numbers – that is our real financial security.
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