FINANCIAL SECURITY: EVERYTHING YOU NEED TO KNOW (AND DO)

Financial security refers to the peace of mind felt when we aren't worried about money. Often, this means having enough income to comfortably cover expenses, being debt-free, and having savings to cover emergencies.

Some people believe you need to be a millionaire or even multi-millionaire to be financially secure. However, there have been countless entrepreneurs, athletes, and film stars who've made a fortune and then lost it all.

The truth is, you don't need a mansion, sports car, or private jet to be financially secure - you don't even need to have paid off your mortgage.

Ultimately, financial security just means that you're in control of your money, and you're not worried about paying the bills or covering an emergency.

Still, financial security means different things for different people. So, here are four types of financial security to help you define what this term means for you.

It's hard to feel financially secure when carrying significant debt.

Now, some types of debt are necessary. For example, very few people have the capital to pay for a house or a higher education in cash.

But spending on credit for everyday items, clothes, tech gadgets, or vacations isn't likely to help you achieve financial security - especially if this debt is on credit cards. 

Credit cards demand monthly payments and are known to have very high-interest rates - some even have interest rates up to 29.99% APR, making it very easy to spiral further into debt.

Bottom line, if you don't pay back the money you've borrowed on time, you can be sued, your house can go into foreclosure, and your car could be repossessed. The threat of these scenarios isn't likely to make you feel financially secure.

On the other hand, being debt-free can help provide a deep sense of financial security.

If someone makes $100,000 per year but spends $110,000, are they financially secure? Nope. This person is digging themselves into debt and will struggle to pay the bills.

So, if we want to learn how to become financially secure, we must first learn to budget.

Budgeting is the process used to control money - to tell it where to go, instead of wondering where it went. When you're in control of your money, you're far more likely to feel financially secure. 

When you consistently have money left over at the end of every month, you're well on your way to achieving financial security.

As the Irish statesman and philosopher Edmund Burke once said, "If we command our wealth, we shall be rich and free. If our wealth commands us, we are poor indeed."

Financial Security Quote: Edmund Burke

There are many people who don't have enough money to pay for health, home, or renters insurance. And according to a Bankrate survey, nearly 4 in 10 Americans (41%) would borrow money to cover a $1,000 emergency.

Living pay-check to pay-check without savings or suitable insurance is guaranteed to affect your sense of financial security and mental health.

To feel financially secure, you need to have suitable insurance and a buffer in the bank for when things go wrong.

If you're not becoming more financially secure, there's a good chance you're becoming less financially secure.

As a result, financial security also means steady, reliable progress. Perhaps this means paying the mortgage down every month, adding to a savings account, or investing for retirement.

Watching your savings and net worth grow is very likely to make you feel more financially secure.