Here are our top tips to start moving in the right direction:

1. Live on Less Than You Earn

One of the key steps on the path to financial stability and financial security is living below your means. This simply means you must always spend less than you earn.

The best way to live below your means is to stick within your budget. Get into the habit of planning for expenses and sticking to your plan. Begin by listing your everyday expenses, such as rent, utilities, school fees, transportation, and food. Next, consider your variable expenses, like medical bills, vacations, and car maintenance costs.

Depending on your circumstances, you may need to accept that making a meaningful dent in your debt every month requires making some sacrifices. Seek out low-cost or free ways to have fun, like taking a walk, reading, painting, baking, or spending time with loved ones.

The good news is that there are tools out there that can help. Free budgeting tools such as that offered by Payactiv can help put you on the path to financial freedom.

2. Avoid Taking out Loans

Payday loans and short-term installment loans prey on the desperation of people who need immediate access to cash. They’re not conducive to becoming financially secure. Lenders of small-dollar amounts typically charge close to 400% APR to borrowers.

These loans have the potential to harm your credit score and lead to bad debt problems.

One way to avoid these high-interest loans is to access your earned wages on-demand through Earned Wage Access (EWA) providers like Payactiv. Instead of borrowing money from payday lenders, you could access the money you already earned for a nominal fee between paychecks and avoid borrowing, no questions asked.

3. Use Credit Cards Wisely

Most people incur debt at some point. For instance, buying a car, a home, or paying for college tuition are expenses few people can fund upfront. Too many of us end up getting into a cycle of debt because we rely on credit to fund day-to-day expenses rather than long-term expenses.

This is no way to move forward on the quest for financial stability or security.

Credit card companies demand high-interest monthly payments – some even have interest rates close to 36% APR.

Racking up excessive credit card debt is a surefire way to begin spiraling into a debt trap.

Ideally, you should aim to reduce the number of credit cards you have. Pay each one off systematically until you have just one.

Some argue that keeping one open credit card is a good idea as it will hold you over in the event of an emergency. That’s a fair point; however, too many people use credit cards to pay for holidays, gadgets, clothes, and even food.

An even better option is to say goodbye to credit card debt altogether and instead rely on a “rainy day” fund.

4. Go After Your Debt

Debt is a trap. Period. It can be enticing, but it can also be deadly. Every time you borrow money, you’re effectively opening yourself up to the risk of being sued, losing your home or car, or having to file for bankruptcy.

Here are a few practical steps to rid yourself of the burden of debt and become financially secure:

• Make a list of every debt you currently have, starting with the smallest through to the largest, according to the outstanding balance, not the interest rate. (If you own a home, exclude your property from this exercise.)
• Start paying off your smallest debt first. Meanwhile, keep paying the minimum payments on all your other debts.
• Once the first debt is paid off, cancel the credit line. Then tackle the next-smallest debt on your list in the same way.
• Repeat this process until you’re debt-free.

5. Put Money Aside for a Rainy Day in an Emergency Fund

As the saying goes, “life happens.” When it does, nothing makes a stressful situation worse than not having the money to deal with it.

A rainy-day fund can be helpful in the case of a job loss, unexpected medical bill, or even a broken appliance.

An emergency fund will help you avoid taking on costly credit card debt or high-interest loans.

Building up this “buffer” isn’t easy, and it takes discipline, but the rewards are well worth the effort. Start with small goals – like $100. Then increase it to $500, and then $1,000.

Experts suggest building an emergency fund that will cover a full three to six months of regular expenses.

Many mobile apps, like the one from Payactiv, have free smart saving and budgeting tools that help you set aside a safe amount to save each paycheck. They provide a great way to automatically save toward short or long-term goals.

6. Save 15% of Your Income for Retirement

Young people seldom have the time or inclination to think about becoming old and frail. But time waits for no man or woman. An essential part of achieving financial security is knowing you’ll be taken care of in retirement.

Once you’ve eliminated debt (credit card, loans, and any other) and started putting away income for a rainy day, the next step is to put all that extra money you’re saving on interest fees into your retirement nest egg.

As a rule of thumb, you should invest about 15% of your income in retirement savings. The earlier you start, the better, as this means you’ll gain the maximum benefit from the compound interest you earn from these savings.

Many people are unsure of precisely where to invest retirement-related funds. Here are a few recommended areas:

• 401(k) and 403(b) plans
• IRAs
• Roth IRAs

Many people find the mechanics of investing confusing and even intimidating, which is why it makes sense to enlist the help of a qualified financial advisor for help and advice.

7. Save on Your Utility Bills

During the cold winter months, stay warm with a few extra blankets and drink hot cups of tea instead of jacking up the heat. Plug any drafty doors with towels and winterize your windows with plastic or caulking.

Make a habit of turning off lights in the home when rooms aren’t in use, and teach your children to do the same. When you’re not using your appliances and electronics, unplug them. Many people don’t know that even when they’re turned off, they still draw a small current, costing you what’s known as “phantom power.”

Also, invest in LED bulbs—they require less energy to run. While they can be more expensive than their traditional counterparts, they’ll pay off in the long term.

8. Hang Out with Friends Without Running Out of Cash

Rather than meeting friends for meals in restaurants, why not suggest a picnic in a park, at the beach, or even in your backyard? When it comes to movies, attend a matinee show rather than an evening one and save a few dollars per person. Also, skip the overpriced candy and popcorn.

For birthdays and special events, consider making your holiday or birthday gifts. Resources like Pinterest and YouTube can help you out, even if you’re a complete beginner. Alternatively, shop for gifts after the holidays when stores put their seasonal items on clearance. You can save a lot by purchasing all the gifts you need early.

9. Consider Your Banking Options

Look for a bank that offers perks like no ATM fees, low overdraft fees, and high interest on savings accounts. Smaller banks and online financial institutions often offer more favorable conditions and rates than their larger counterparts.

Compare what different banks have to offer and ask yours if they can match the best plan. If they refuse, switch to the better option.

10. Look After Your Health

You can avoid expensive medical bills down the road by looking after yourself today. So, get plenty of sleep, eat healthily, don’t neglect regular medical check-ups, and exercise regularly.

Be sure to reach out for support when you need it as well, and make time for self-care among the busyness of everyday life.

How On-Demand Pay Can Help

Financial insecurity is a widespread and multi-faceted challenge, and becoming financially stable and secure isn’t easy for anyone.

In the current economic climate and given the prevailing labor shortage, many socially conscious employers are thinking hard about ways they can help employees (both current and prospective) get on the front foot financially.

There’s no one-size-fits-all solution, as every person will have their own set of circumstances and challenges.

Some organizations are starting to build out a balanced approach that includes a suite of complementary wellness tools that are easy for people to access, understand, and use.

One of the most in-demand benefit programs employers have been offering lately is payment flexibility. Specifically, Earned Wage Access (EWA) services are an increasingly common element of benefits packages. Essentially, EWA allows employees to access pay they’ve accrued but not yet received.

EWA services can help alleviate unexpected demands for cash. Employees value the financial well-being that these flexible pay models provide, as they offer a means to avoid unnecessary debt.

Payactiv—Your Partner in Building Financial Security

As a leading EWA provider, Payactiv knows that saving and spending can be a nerve-racking experience.

That’s why we took the mystery out of budgeting by providing smart saving and budgeting tools that give you a complete picture of your total income, expenses, and savings. With these tools, we do all the number crunching so you always know how much is safe to spend or set aside each month.

Sometimes paying for necessities can cut into savings, so that’s why Payactiv users also have access to an exclusive discount marketplace that makes life a little easier. Users can save up to 85% on prescription medicine with Rx discounts, get discounts on AMC movie tickets in all 50 states, and more.

Payactiv app users also get access to free 1-on-1 counseling services from our partner, KOFE®, to get helpful budgeting skills and saving strategies, learn about options to reduce and pay off debt, and understand or improve credit scores. The KOFE® coaches are certified counselors, and KOFE® is a product of Consolidated Credit Solutions, a 26-year-old national non-profit credit counseling agency.

• With the cost of living higher than ever, many Americans are reviewing their relationship with money and considering how they can ensure their long-term financial well-being.
• In this article, we’ll explore the differences between financial security and financial freedom.
• We’ll also share our top 10 tips for putting yourself on the path to financial security in 2023.

In recent years, we’ve seen the lingering economic fallout of the pandemic, critical labor shortages, and rising inflation forcing people to reassess their relationship with financial planning and security.

Let’s take some time to explore the concept of financial security, why it matters now more than ever, and the steps you can take to make a meaningful difference in this area.

Watch: This short film from Payactiv shows the impact of timely access to earned wages on American workers.

What Is Financial Security?

If you ask people what they understand about the term “financial security,” you’ll likely get a range of different responses. For some, it means being able to support their lifestyles and put their children through good colleges while putting aside enough to fund a comfortable retirement.

Others will tell you it’s about getting through the month with enough to cover their rent and utility bills and not worry about their car or refrigerator breaking down without being able to fix them.

There’s no right or wrong answer. Financial security will always mean different things to different people. If we have to sum it up succinctly, we’d best define it as:

“Not always having to worry about money.”

Many people from working and middle-class backgrounds may feel that financial security is something well beyond their reach.

Financial security doesn’t have to be an unattainable dream for anyone. With the right mindset, planning, and tools, financial security is possible for anyone.

Why Do You Need to Build Financial Security?

Money worries place a huge burden on a person’s mental and physical health. Finance-related stress can lead to unwelcome side effects, including:

• Feelings of irritability and frequent arguments with family and friends about money.
• Preoccupation and anxiety leading to withdrawal from others.
• Sleep disturbances: sleeping too much or too little.
• Indulgence in unhealthy habits such as overeating, alcohol, drugs, or abuse of prescription medications.
• Fatigue, low energy levels, headaches, stomach disorders, chest pains, and high blood pressure.
• A sense of guilt about spending money on non-essential items.

People who are financially secure are happier in the long term. Dan Buettner, author of The Blue Zones of Happiness: Lessons from the World’s Happiest People, said it best in this quote:

“Financial security is … obviously, huge. It really does deliver more happiness over time than most anything that money can be spent on.”

Financial Security vs. Financial Stability

Although interrelated, there are significant differences between the terms financial security and financial stability.

Financial stability is defined as being debt-free and in a position to comfortably meet monthly or recurring expenses while also having remaining funds to put into savings.

While being financially stable is a state to strive for, financial security is even better. If you’re financially secure, you have sufficient money to cover your regular expenses and any sudden expenses and still save for retirement with no fear of running out.

Financial Security vs. Financial Freedom

As we explained in our previous point, financial security means being able to meet all your basic needs like food, housing, and other regular living expenses. It also means being financially equipped to cope with important life events such as sending your children to college, dealing with unwelcome health issues, and entering retirement.

Achieving financial security takes time and effort. It can be achieved by holding down a steady job while at the same time putting money aside regularly for retirement. You can add an extra layer to your financial security by investing in life and disability insurance.

Financial freedom involves more than just being able to meet your basic needs. When you achieve financial freedom, you’re in a position to make life decisions without compromising your financial security.

Here are a few examples: Someone who is financially free might decide to cut down the number of hours they work for a few months to care for an ill parent or spend more time helping a child that’s struggling with their schoolwork. If they’re unhappy or bored in their job, they might decide to switch careers or go back to college to earn additional qualifications.

Essentially, people who are financially free can pursue their dreams without neglecting their financial commitments. It doesn’t necessarily mean that they’re rich or they can spend money on anything they want, but they’re in control of their money—not the other way around.

10 Tips to Build Financial Security

If the prospect of achieving financial security seems overwhelming, don’t worry; you’re not alone. Taking small, incremental steps and congratulating yourself for every quick win will give you a sense of empowerment and control. More importantly, it will put you on track to gaining financial stability and, ultimately, security.

Here are our top tips to start moving in the right direction:

1. Live on Less Than You Earn

One of the key steps on the path to financial stability and financial security is living below your means. This simply means you must always spend less than you earn.

The best way to live below your means is to stick within your budget. Get into the habit of planning for expenses and sticking to your plan. Begin by listing your everyday expenses, such as rent, utilities, school fees, transportation, and food. Next, consider your variable expenses, like medical bills, vacations, and car maintenance costs.

Depending on your circumstances, you may need to accept that making a meaningful dent in your debt every month requires making some sacrifices. Seek out low-cost or free ways to have fun, like taking a walk, reading, painting, baking, or spending time with loved ones.

The good news is that there are tools out there that can help. Free budgeting tools such as that offered by Payactiv can help put you on the path to financial freedom.

2. Avoid Taking out Loans

Payday loans and short-term installment loans prey on the desperation of people who need immediate access to cash. They’re not conducive to becoming financially secure. Lenders of small-dollar amounts typically charge close to 400% APR to borrowers.

These loans have the potential to harm your credit score and lead to bad debt problems.

One way to avoid these high-interest loans is to access your earned wages on-demand through Earned Wage Access (EWA) providers like Payactiv. Instead of borrowing money from payday lenders, you could access the money you already earned for a nominal fee between paychecks and avoid borrowing, no questions asked.

3. Use Credit Cards Wisely

Most people incur debt at some point. For instance, buying a car, a home, or paying for college tuition are expenses few people can fund upfront. Too many of us end up getting into a cycle of debt because we rely on credit to fund day-to-day expenses rather than long-term expenses.

This is no way to move forward on the quest for financial stability or security.

Credit card companies demand high-interest monthly payments – some even have interest rates close to 36% APR.

Racking up excessive credit card debt is a surefire way to begin spiraling into a debt trap.

Ideally, you should aim to reduce the number of credit cards you have. Pay each one off systematically until you have just one.

Some argue that keeping one open credit card is a good idea as it will hold you over in the event of an emergency. That’s a fair point; however, too many people use credit cards to pay for holidays, gadgets, clothes, and even food.

An even better option is to say goodbye to credit card debt altogether and instead rely on a “rainy day” fund.

4. Go After Your Debt

Debt is a trap. Period. It can be enticing, but it can also be deadly. Every time you borrow money, you’re effectively opening yourself up to the risk of being sued, losing your home or car, or having to file for bankruptcy.

Here are a few practical steps to rid yourself of the burden of debt and become financially secure:

• Make a list of every debt you currently have, starting with the smallest through to the largest, according to the outstanding balance, not the interest rate. (If you own a  home, exclude your property from this exercise.)
• Start paying off your smallest debt first. Meanwhile, keep paying the minimum payments on all your other debts.
• Once the first debt is paid off, cancel the credit line. Then tackle the next-smallest debt on your list in the same way.
• Repeat this process until you’re debt-free.

5. Put Money Aside for a Rainy Day in an Emergency Fund

As the saying goes, “life happens.” When it does, nothing makes a stressful situation worse than not having the money to deal with it.

A rainy-day fund can be helpful in the case of a job loss, unexpected medical bill, or even a broken appliance.

An emergency fund will help you avoid taking on costly credit card debt or high-interest loans.

Building up this “buffer” isn’t easy, and it takes discipline, but the rewards are well worth the effort. Start with small goals – like $100. Then increase it to $500, and then $1,000.

Experts suggest building an emergency fund that will cover a full three to six months of regular expenses.

Many mobile apps, like the one from Payactiv, have free smart saving and budgeting tools that help you set aside a safe amount to save each paycheck. They provide a great way to automatically save toward short or long-term goals.

6. Save 15% of Your Income for Retirement

Young people seldom have the time or inclination to think about becoming old and frail. But time waits for no man or woman. An essential part of achieving financial security is knowing you’ll be taken care of in retirement.

Once you’ve eliminated debt (credit card, loans, and any other) and started putting away income for a rainy day, the next step is to put all that extra money you’re saving on interest fees into your retirement nest egg.

As a rule of thumb, you should invest about 15% of your income in retirement savings. The earlier you start, the better, as this means you’ll gain the maximum benefit from the compound interest you earn from these savings.

Many people are unsure of precisely where to invest retirement-related funds. Here are a few recommended areas:

• 401(k) and 403(b) plans
• IRAs
• Roth IRAs

Many people find the mechanics of investing confusing and even intimidating, which is why it makes sense to enlist the help of a qualified financial advisor for help and advice.

7. Save on Your Utility Bills

During the cold winter months, stay warm with a few extra blankets and drink hot cups of tea instead of jacking up the heat. Plug any drafty doors with towels and winterize your windows with plastic or caulking.

Make a habit of turning off lights in the home when rooms aren’t in use, and teach your children to do the same. When you’re not using your appliances and electronics, unplug them. Many people don’t know that even when they’re turned off, they still draw a small current, costing you what’s known as “phantom power.”

Also, invest in LED bulbs—they require less energy to run. While they can be more expensive than their traditional counterparts, they’ll pay off in the long term.

8. Hang Out with Friends Without Running Out of Cash

Rather than meeting friends for meals in restaurants, why not suggest a picnic in a park, at the beach, or even in your backyard? When it comes to movies, attend a matinee show rather than an evening one and save a few dollars per person. Also, skip the overpriced candy and popcorn.

For birthdays and special events, consider making your holiday or birthday gifts. Resources like Pinterest and YouTube can help you out, even if you’re a complete beginner. Alternatively, shop for gifts after the holidays when stores put their seasonal items on clearance. You can save a lot by purchasing all the gifts you need early.

9. Consider Your Banking Options

Look for a bank that offers perks like no ATM fees, low overdraft fees, and high interest on savings accounts. Smaller banks and online financial institutions often offer more favorable conditions and rates than their larger counterparts.

Compare what different banks have to offer and ask yours if they can match the best plan. If they refuse, switch to the better option.

10. Look After Your Health

You can avoid expensive medical bills down the road by looking after yourself today. So, get plenty of sleep, eat healthily, don’t neglect regular medical check-ups, and exercise regularly.

Be sure to reach out for support when you need it as well, and make time for self-care among the busyness of everyday life.

How On-Demand Pay Can Help

Financial insecurity is a widespread and multi-faceted challenge, and becoming financially stable and secure isn’t easy for anyone.

In the current economic climate and given the prevailing labor shortage, many socially conscious employers are thinking hard about ways they can help employees (both current and prospective) get on the front foot financially.

There’s no one-size-fits-all solution, as every person will have their own set of circumstances and challenges.

Some organizations are starting to build out a balanced approach that includes a suite of complementary wellness tools that are easy for people to access, understand, and use.

One of the most in-demand benefit programs employers have been offering lately is payment flexibility. Specifically, Earned Wage Access (EWA) services are an increasingly common element of benefits packages. Essentially, EWA allows employees to access pay they’ve accrued but not yet received.

EWA services can help alleviate unexpected demands for cash. Employees value the financial well-being that these flexible pay models provide, as they offer a means to avoid unnecessary debt.

Payactiv—Your Partner in Building Financial Security

As a leading EWA provider, Payactiv knows that saving and spending can be a nerve-racking experience.

That’s why we took the mystery out of budgeting by providing smart saving and budgeting tools that give you a complete picture of your total income, expenses, and savings. With these tools, we do all the number crunching so you always know how much is safe to spend or set aside each month.

Sometimes paying for necessities can cut into savings, so that’s why Payactiv users also have access to an exclusive discount marketplace that makes life a little easier. Users can save up to 85% on prescription medicine with Rx discounts, get discounts on AMC movie tickets in all 50 states, and more.

Payactiv app users also get access to free 1-on-1 counseling services from our partner, KOFE®, to get helpful budgeting skills and saving strategies, learn about options to reduce and pay off debt, and understand or improve credit scores. The KOFE® coaches are certified counselors, and KOFE® is a product of Consolidated Credit Solutions, a 26-year-old national non-profit credit counseling agency.

With our budgeting and savings tools, financial counseling, and discount marketplace – all in the Payactiv app – you can be more empowered than ever to take control of your financial future. Whether you’re defining financial security for the first time or well on your way toward building it, we’re here to help you along your journey.