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Feeling that both I and my close relatives are in a good position to be self-supporting and to help each other out in dire emergencies is what I need to feel financially secure. Health, education, employment, and savings all play a role in that feeling.
In my twenties, I obtained a decent job with a stable employer. I made a deal with my parents to pay them rent for a year, so I could start paying down student loans and save for furniture and deposits on apartment and utilities. My father became seriously ill. My mother couldn’t work because my father needed care. My brother was struggling to establish a legal practice. My parents had a mortgage; my parents and my brother had car payments; my brother and I had student loans. Our combined savings was less than $5,000. I went from feeling somewhat financially secure with my new job to constantly worried about money during the year it took to get my father’s health stabilized and get him approved for disability.
Twenty years later, when my mother needed to move to assisted living, I was only slightly concerned about money. She had no debt, social security, and a tiny pension. My brother and I discussed our family budgets, figured out where we could cut back, and were able to pay for assisted living without being in a hurry to sell our mother’s house.
That’s financial security, when I can support myself, prepare for retirement and emergencies, be able to help out family in a dire emergency without much stress, and know that my nearest family are also self-supporting and preparing for retirement and emergencies.
I wouldn’t mind a couple of million dollars, but I don’t need it to feel financially secure.
A steady, low-risk full time job with benefits is probably the biggest thing. Since leaving my 9-5 six months ago, my net worth has grown nicely and I have a good self-employment income, but I feel less secure now than at any time in the last several years.
Also, since I’m 33yo, there is just so much time left in life and a wide range of possible outcomes. If I were generally healthy, married, owning a house at age 70 with Social Security on the doorstep, I’d probably feel more secure since I’m closer to the end and know that SS will provide a nice annuity. Kind of morbid, but that’s how I see risk right now.
And I like Rick’s response below!
I wish I knew. If most people looked at my income, my assets and my lack of debt I suspect they would say you are totally secure. But I don’t feel that way and probably never will. I’m always looking for what if’s that could derail the status quo. Have I accounted for every possible contingency? I try.
I think this changes as you grow older.