Financial Independence? Build Financial Security First!

Financial independence comes from first building basic financial security. Only then you will have the peace of mind and freedom to really do the things you want.

A sure way of creating peace of mind is to know you have provided for those who depend upon you to provide for their daily livelihood. This may be your immediate family members. This is extremely important and there is no justification for taking risks which jeopardize the future of those who depend on us.

Having proper financial planning will avoid the pitfalls that we further on.

Financial independence cannot be had by ignoring family responsibilities. There is simply no peace for those who want more without first taking care of the basic financial security. So what are the elements of risk that the average family face?

It's been mentioned that there are two main sources of income - either from man at work or money at work. It's quite obvious if money is invested wisely, it will never stop working for you.

Income (and certainly financial security) from "money at work" at work never stops working. This is certainly an enviable situation for ordinary folks like us. It is however, also a wise situation to be in.

Why is that so? Simply because it helps us achieve financial independence and financial security. Certainly, I will feel a healthy level of peace of mind knowing that should I stop working, I will still have income from other sources. Financial independence and financial security certainly seem much more possible with "money at work" for us.

Which is why one should always look to having multiple sources of income to achieve financial independence .

But income from "man at work" is another matter. Man lives on a biological clock whose alarm is set to go off at a certain age, in the future. Obviously, the ability to work and earn a living is not a inherent right guaranteed by life. But age is not the only risk. You could lose your job, become permanently disabled and unable to work. The only protection for your loved ones is to recognise these possibilities and protect them against these risks as much as possible.

Life insurance can certainly cushion the blow. Think about it. Without proper personal financial planning, there cannot be peace of mind. Having this peace of mind allows you to focus your energies to build a better future for you and your family. Don't you agree?

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Let's talk about some of these risks in more details.

Losing your job - In uncertain times like the one we live in, economic depression, technological breakthrough or an industry slump can put us out of work. Many people do not assess the real degree of financial security (or INSECURITY) in their job. Cutbacks, economic cycles and poor management are all real risks to job security and the financial security that comes with it. Without financial security, there is really no sense or need to to even think of financial independence.

The solution to this is to have a contingency fund held solely for this purpose. As a general guide, a person should have about six months in cash reserve in the bank or in near-liquid instruments. You never know when one will need it. Make this the topmost priority before investing in any other long-term or short-term investment. Nothing else should come before this.

Retirement - Believe it or not, retirement is a "risk" you have to contend with. Start worrying about retirement now. It's never to early to plan for retirement. Remember, let the power of compound interest work for you. If you employ the simple principles outlined here, you will automatically fulfill the dreams of those retirement years.

Disability - It's been said, "nowadays, it may be better to die than to be disabled". It's true, not being able to continue to work and earn an income due to disability can, and will, throw your finances into disarray.

There's nothing worse than being disabled, and at the same time having to worry about medical bills and everyday expenses. Having adequate insurance - either disability insurance, personal accident, critical illness insurance - is imperative.

It is important to have an "income replacement" mechanism for both disability and death of oneself. We need the appropriate life insurance and disability insurance for this purpose. If you're still lacking in this aspect, I suggest you speak to your life insurance agent to immediately. Have it done as part of your personal financial planning

It may sound morbid to have to "plan" for one's death. But someone said it aptly of life insurance which is intended for this purpose - "Life insurance is bought not because someone has to die, but because their family has to live". Yes, the family of the deceased needs to live on.

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On a personal basis, I find that planning for such contingencies gives me a peace of mind of having completed my responsibilities.It give me the energy to focus on making money, to provide for my family. Here's another resource I recommend on achieving financial independence. Click here to achieve breathtaking wealth and abundance .

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Life insurance will not bring someone back to life, but it will certainly help cushion the financial impact of the loss of a bread-winner. It is not the purpose here to go into the specifics of this subject, for example how much life insurance and what type. Do approach an insurance professional for advice.

A word here. Many people have asked me. Is insurance useful or even needed? Does it work really work? My answer to this is YES!

I'll use a simple analogy here. Do you drive? If you do, you will know that every vehicle carries at least a spare tire and the necessary tools in case of an emergency. This is so that you carry on the journey in the event of a puncture. Now do you expect a puncture to happen every time you drive. Of course not! But you still carry the spare tire, don't you?

Well, that's insurance for you. It's arranged when you don't need it, so that it's there when you need it. You don't try to arrange for it only when it's really needed. Get the idea?

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