What are 9 signs that show that I am financially secure?

Ralph
00:00:00

Do you ever lie awake at night, wondering if you're truly financially secure? Maybe you've got some money in the bank, but deep down, you're just not sure if it's enough. What if an unexpected expense comes up? What if you lose your job? These worries can eat away at your peace of mind, leaving you feeling anxious and truly uncertain about your future. Today, we're going to tackle this head on.

I'm going to explore 9 signs that show you're financially secure, and trust me, it's about much more than just numbers in your bank account. And here's my promise to you. By the end of the episode, you'll have a clear roadmap to assess your own financial security and find true contentment. So stick around as we answer the question: What are 9 signs that show that I am financially secure?

Narrator
00:00:45

Welcome to the Ask Ralph podcast, where listening to an experienced financial professional with over 30 years of experience can help you make sense of confusing questions, current headlines and industry trends about taxes, small business, financial decision making, investment strategies, and even the art of proper budgeting. Ask Ralph makes the complex simple by sharing his real world knowledge from a Christian perspective with all things financial.

Now here's your host, Ralph Estep Jr.

Ralph
00:01:14

I want to welcome you to the show today. I've got a great one for you. Now yesterday, we discussed why states with no income tax aren't as affordable as they may seem. We talked about how one of my clients moved to another state and found that what he thought was going to be the case in this huge tax savings really didn't work out. So I'm going to recommend you go back and give it a listen, because it might just save you a costly move based on some incomplete information. Let's get to our question of the day.

Here's a heartfelt message from one of our listeners. His name is Carlos and Carlos wrote this. He said, "Dear Ralph, I've been following your show for months now, and it's been a blessing. But I'm still struggling with something. On paper, my finances look okay. I have a steady job. I've got some savings. I'm not drowning in debt. But I can't shake this feeling of financial insecurity. Every time an unexpected bill comes up, I panic. I keep wondering if I'm doing enough, saving enough, planning enough. How can I know if I'm truly financially secure? And even if I am, why do I still feel so anxious about money? Please help me find some peace in this area of my life."

Well Carlos, let me start by thanking you for that question. Boy, that shows some vulnerability on your part. And let me just tell you, this is a common struggle. I struggle with this. A lot of people struggle with this. It is truly difficult to shake this insecurity. Before we jump into my answer to Carlos, let me tell you this.

The whole point of the Ask Ralph show is to answer your questions. So if you've got a question for this show, go to justaskralph.com and submit your question. Who knows? Your question might be featured in our next episode. Before we dive into today's episode, I'd like to take a moment to share something personal with you.

My mother-in-law, Dianne Bethard, is currently battling the late stages of Alzheimer's disease. In light of this, I have assembled a team representing the Ask Ralph show to participate in the upcoming Alzheimer's walk here, not too far from us in Wilmington, Delaware. Now we're walking tomorrow, but if you still wish to support the cause, we've set up a donation page.

You'll find a link in the show notes and listen, every contribution, no matter the size brings us one step closer to defeating this devastating illness. If you've got family members going through this, you understand. Your support means the world to us and to the millions affected by Alzheimer's. Because the truth is, together, we can make a difference.

Let's get back to Carlos's question. Carlos, your question makes me think about Paul from the Bible. In the book of Philippians 4:11-13, the Apostle Paul wrote this. "I am not saying this because I am in need, for I have learned to be content whatever the circumstances. I know what it is to be in need, and I know what it is to have plenty. I've learned the secret of being content in any and every situation, whether well fed or hungry, whether living in plenty or in want. I can do all things through him who gives me strength."

Let me just tell you, that verse is awesome. I actually have the last part of that right here on my bookshelf to the side of me. I can do all things through Him who gives me strength. And that's the thing. When you're starting to feel that financial insecurity, this is what I go to. Paul tells us that true contentment isn't about our circumstances. But it's about our perspective and our faith. And that's what I'm going to unravel today.

Now I use the word Tom a lot. Just to be clear. I never want to use a client's real name. So if you hear me using Tom or Don or somebody to Sally or Sarah, it's just because I don't want to use clients' real names, but that doesn't take away from the story. So let's get back to it. I have this client named Tom, and from all outward appearances, listen, Tom was the epitome of financial success.

He had a thriving business. He had a huge, diverse investment portfolio. He was well-diversified. Tom actually owned many multiple rental properties, and he had more money in his bank account than most people see in a lifetime. Tom had no debt; all of his bills were paid. He had no mortgages. He didn't have any mortgages on his rental properties. His net worth, and I'll talk about that later what that means would make most financial advisors green with envy. But here's the kicker and this is the sad part. Tom was miserable. He came to me, Ralph, I'm coming to you not because I need financial advice, but because despite all I have, I feel empty. I feel unfulfilled. He was the living embodiment of the phrase, "Money can't buy happiness." It's just true.

He was the living embodiment of that phrase. Money can't buy happiness. Now, before we get into Tom's transition, let me break down 9 signs that show you're financially secure, because I want to talk about Tom, but I also want to go through these because I want you to remember that financial security is more than just numbers, but we got to start somewhere. So true financial security, it's about peace of mind and freedom to live the life you want. But here are some things I say those 9 things that definitely point the financial security and the first one is this. You have a robust emergency fund. That means that you've got three to six months of living expenses saved in an easily accessible account.

You're prepared for that rainy day. If the hot water heater dies, or if you have an unexpected car repair. You're ready there because you've got that emergency fund. You don't have to go tap into a loan or put it on a credit card. So that's number one. Let's move on to number 2. You're consistently saving for retirement.

Now that might be through a 401(k), an IRA or whatever other retirement account you have. But one of the ways to measure financial security is that you're regularly putting money aside for your future. You're planning for that retirement. I read a statistic the other day which was truly sobering. And it don't hold me to the exact numbers, but it said 49% of those ages 55 to 65, and I think that was the numbers, 55 to 65 have zero in retirement savings. That is scary. That is terrible. Let's move on to number 3. Your debt is under control. Now this doesn't mean you don't have any debt. But any debt that you have is manageable and you have a clear plan to pay it off.

Listen, I'm not saying you can't have a mortgage. I'm not saying you can't have a car loan. I'm not saying you can't have other types of things, but the issue is, is your debt under control, and do you have a manageable, clear plan to pay it off? That's one of the signs of financial security. Let's look at number 4 and this is what a lot of people won't think about. You have adequate insurance coverage.

This includes things like health insurance, life insurance, disability insurance. And if you own properties, property insurance. It amazes me how many people don't have these basic, and I call these things basic things, health insurance, like I've done many shows on these. If you didn't check them out, go check them out because there are real concrete reasons to have life insurance.

There's reasons to have disability insurance and listen, if you own property and you have a mortgage on it, I can guarantee the bank is going to want you to have property insurance. Let's look at number 5 and this is kind of a dull Ralph moment. One of the signs of financial success, you live below your means. Your lifestyle doesn't eat up all of your income.

You've left room for savings and giving. You're building that emergency fund. You're putting money away for retirement. You're doing all those types of things. You're living below your means. It doesn't mean you have to scrimp and save every day of your life, but you have this mentality that what's coming in is going to be able to cover all the things that are going out and I'm going to build in a little cushion to that. Let's look at number 6. And this is another one a lot of people don't think about. And this I think is vital, especially as you get closer to retirement, and that is you have multiple income streams.

Now, this could be something through investments like I talked about with Tom. He's got investments, he's got rental property, he's got a small business. So like I said, it could be through investments, side businesses or any kind of passive income sources. It's that old adage. You don't want to put all your eggs in one basket. So if you've got these multiple income streams and something happens in one of them, let's say you're running a side business, and all of a sudden, your side business fails, or you just don't have time to do it.

You can fall back on those investments or maybe those rental properties or whatever that looks like for you. Let's look at number 7. And that is you have a positive net worth and you might be asking Ralph, what in the world does that mean? It's really quite simple. This means that your assets, that's the things you own, the things you have value are worth more than your liabilities, where your liabilities are simply what you owe.

So think about it like this. Let's say you had a house and the house is worth 200 grand and you've got a car that's worth 30 grand. This is going to be a real simple example. So your assets are 200,000 plus 30,000. So your assets are 230,000. And then you look at your liabilities and let's say, you've got a mortgage on your property.

And that mortgage value is 130,000. So then if you think about it, you got $230,000 worth of assets, you've got $130,000 worth of liabilities. We're assuming you don't have any loan on the car. So your net worth is a real simple calculation, 230,000 minus 130,000 means that your net worth is $100,000. What I'm saying to you here is that one of the signs of financial success is it you've got a positive net worth.

Let's look at number 8. This one is all part of that financial security, that emotional feeling. And that is you can handle a financial setback without panic. Listen, all of us get into those situations. This happened just this week. We have one of those instant hot water heaters. And for the last couple of weeks, I've been getting in the shower, I turn the shower on, and this thing is oscillating between hot and cold, hot and cold. I was constantly moving the dial while I called one of my clients is a plumber. His name is John. And that's his real name. I don't mind saying that. John's a great guy. And John came out. He took a look. He says, Ralph, unfortunately I got to tell you, your instant hot water heater is, it's gone. It needs to be replaced. Well, $4,000 later, I've got a new instant hot water heater that I got in the shower this morning and it's not going back and forth. But that's the whole point of what I'm talking about.

You can handle a financial setback without panic. I have set myself and I don't say this to be arrogant or boast, but I've got that emergency fund. When John said, “Hey, this is going to cost you about four grand.” Did I want to spend the money? Absolutely not. I'd much rather not spend it. But I have the ability to deal with it out, without derailing my entire financial plan.

I didn't have to go rob Peter to pay Paul. I didn't go take out a loan. I didn't have to go put it on a credit card. Now, in my case, I actually did put it on a credit card because I'm going to get benefits from that and I'm going to pay it off at the end of the month. Let's look at number 9.

And again, this one is not intuitive to people. One of the things that I say you can measure your financial success for is if you're able to give generously. See, here's the truth. Financial security allows you to be generous with your resources. Whether that's through charitable giving or helping family members or friends in need.

That to me is one of the biggest things that measures true financial security, because that's what we're all called to do. We're all called to be generous. Now you might be thinking, Ralph, that's great, but I don't check all these boxes. Does that mean I'm not financially secure? And here's where we need to dig a little deeper. Because the truth is this. Financial security isn't just about ticking off a list of achievements. I don't care if you can check off all 9 things. Really doesn't matter to me. Those are just pieces of the puzzle. But true financial security is about having a holistic understanding of your financial situation and here's the most important part. And it's feeling confident in your ability to meet your needs and goals.

If you don't feel confident, then guess what? You don't have financial security. Look at Tom. He's got all of those things. So let me jump into a concept that I want to talk about now. And it's called a personal financial statement. Now, if you're not a business person, you may not have ever heard about this, but I want to talk about this because I think this is something all of us should have, and we should take some time to build.

So a personal financial statement, think of it like a selfie, if you will. It's a snapshot of your financial health. It's what we talked about a few minutes ago. On that financial, a personal financial statement, that snapshot, you're going to list all your assets. What do you have in your bank account? What do you have in your savings account?

What do you have in investment accounts? What properties do you own? All those types of things. And then on the other side of that, you're going to list your liability. What is your mortgage balance? What is your credit card balance? What are your car loan balances? Whatever those things are, and the difference between those things is your net worth. But here, that's a great thing. It's a fantastic thing to have. Like I said, it's that selfie if you will, of your financial health, and I think everybody should look at that because here's the thing. It's just real numbers. There's no emotion in it.

It is factual. But here's the important part I want you to remember. Your net worth is just a number. And it could be a, it could be a number that shocks you and that's okay because what matters is the trend over time and how it aligns with your personal goals. You can say right now, my net worth is negative. Look at, my assets aren't worth what I owe. Okay, that's fine.

That's a snapshot. Like I said, that's that selfie. The goal is to improve on that. The goal is to change that, the goal is to see that trend upward over time. And listen, that brings right back to Tom's story. Like we talked about on paper, Tom was more than financially secure. Any of us would be looking at that from the outside go on, Tom, what are you worried about, dude? You have rental property, you don't have any mortgages. You've got no credit card debt. You got money in the bank. You've got retirement savings. You're your own boss. We could tick off all 9 of those signs and list them and say he really had it. But I think you understand where I'm going with this. Tom was missing a critical component.

I call it a crucial component. And that was contentment. You see, Tom had spent his entire life chasing wealth. He sacrificed relationships. He sacrificed his health, and he sacrificed personal fulfillment in pursuit of financial success. He wanted that personal financial statement. He wanted that net worth number to continue to soar. And when he finally arrived at what he thought was financial security, he found it hollow. He found it unsatisfying. And let me tell you, that's when Tom had an epiphany. And Tom realized that true financial security wasn't about hoarding wealth.

It wasn't about those 9 things we checked off. Maybe one or two of them because I'm going to get to that in a second. But true financial security was about using his resources to create meaning and impact. So when Tom came to me, I said to him, I said, “Tom, you know dude, financially, you're in good shape, but you feel empty. You feel like you're not secure.” So what did I do? I work together to help develop a plan that aligned his finances with his values. And that's why I do this show. It's all about doing that. So what did I do for Tom? We sat down, we brainstormed, and we did this. We said, let's increase your charitable giving.

We found causes that Tom was passionate about, and he started moving money towards them. He began donating and here's the beautiful part. What Tom said to me is Ralph, it's not even about money. I can give them money, but I want to be involved. I want to devote my time and my expertise, and he did that.

And one of the coolest things that Tom did was set up a scholarship fund for underprivileged students in his community. He had gone from a place where he didn't have a whole lot when he was growing up. His parents struggled, but Tom worked hard, he put in the hours. And so the next thing he did was he started mentoring young entrepreneurs.

He wanted to share his wisdom that he had gained over the years in his business success. And let me just tell you, looking at this from the outside, Tom's transformation was remarkable. He went from feeling empty and unfulfilled to a sense of purpose and excitement. That was the coolest part. Now Tom was still financially secure by all standard measures.

He could check off all 9 things but now he had something even more valuable. And I talked about this a moment ago. Tom found contentment. And listen, Carlos, that's the key to true financial security. It's not just having enough money. Now you're listening, Ralph is an accountant. This is what Ralph does.

He talks about money. You're thinking, Ralph has lost his mind. But it's true. It's not just about having enough money. It's about using your resources in a way that aligns with your values and brings you joy. Here's a simple truth. Some of the wealthiest people I know, and some of the wealthiest people I've worked with are the most miserable people you'll ever meet. They've got that financial security.

They can go to the grocery store in times of inflation, and they don't even look at the prices. It doesn't matter to them. They go to the gas pump. It doesn't matter to them. They don't even worry about what's in their bank account. But they are empty. They are insecure. They have no contentment. So you might be asking, Ralph, what can I do to move towards this kind of holistic financial security? Well, good old Ralph's going to give you some actionable steps because as I always say, if you have great ideas, they're useless unless you put them into action. So let's talk about how to put them into action. First thing I'm going to want you to do, and you can do this right now. As soon as you get done listening or watching this show, create your own personal financial statement. List out your assets and liabilities and get a clear picture of your net worth.

It's a starting point. Again, I'm not saying that you need to measure yourself by what is in your bank accounts and your net worth, but it's a starting point. It's that selfie. It's that snapshot. The second thing I'm going to encourage you to do is review your spending habits. Ask yourself a very simple question. Are my spending habits align with my values?

Are there areas where I can cut back to increase my savings or giving? The next thing I'm going to tell you to do is set specific, measurable financial goals. I did a show about smart goals. I'm going to encourage you to go check it out. And this could be things like building up your emergency fund. Maybe part of your measurable financial goal is paying off debt or increasing your retirement contribution. Set some goals and then measure if you're getting to those goals. Again, you can set the best goals, it's sort of things about the new year's resolutions, right? I think it's the funniest thing ever. People set these new year's resolutions; I'm going to lose weight. I'm going to exercise. I'm going to do this. I'm going to do that.
And that's fantastic. But without putting those into action, without measuring those and seeing if you are meeting those goals, they are absolutely useless.

Number 4. Look for ways to increase your income or create multiple income streams. We talked about this. Maybe you look at setting up a side hustle, maybe you look at doing some different kinds of investments and listen, I just did a show a week ago on investments of people who are frugal, like maybe you're one of these people that doesn't like to risk. But you can go and find ways to increase your income and create multiple streams.

Maybe it's as simple as asking for a raise at work. Maybe you need to go to your boss and say, listen, here's what I'm bringing to the table. No one else is going to do that for you. You got to do it yourself. Let's look at number 5. And that's make a plan for generous giving. Again, this is counterintuitive in our culture. But even if you have to start small but make it a regular part of your financial plan.

God loves a cheerful giver, and I will tell you this from my own personal experience. The more you give, the more you get. I know that's a cliche thing to say. But if you're able to get to the point of being a generous giver, I can assure you, you will find financial security in this. Number 6. Educate yourself about personal finance. The truth is the more you understand, the more confident and secure you'll feel.

If you don't know the terms we talked about today, get an education. Tune into my show. Watch other shows. There are a lot of resources out there that you can tap into to grow your knowledge. And number 7. And I don't want to go without saying this one. Consider working with a financial advisor who can help you create a personalized plan for achieving your goals.

And I can do that for you, and I'll talk about that in just a moment. But again, above all things, remember this. Financial security is a journey. It's a journey. It's not a destination. It's about progress. It's not about perfection. And most importantly, it's about finding contentment and peace in your financial situation whatever that may be.

And it's different for everybody. And I know I've covered a lot of ground today and you might be feeling a bit overwhelmed. Maybe you're realizing that you're not as financially secure as you'd like to be, or maybe you are financially secure on paper, but you're still struggling to find that sense of contentment. If that's you, I want to help you.

I want you to know that you don't have to navigate this journey alone. If you'd like to schedule a one-on-one consultation with me, we can do this. I want to invite you to schedule a one-on-one consultation with me. And during that call, we're going to dive deep into your unique financial situation. We'll look at your personal financial statement. We'll discuss your goals and values, and here's the best part. We'll create a personalized plan to help you achieve true financial security. And like I said, that contentment. Because that's the key to it. You can have financial security and still feel unsecure cause you don't have that contentment. And it's sure pretty easy.

To book your call, just head over to askralph.com. Click on that banner that says, "Book a call with Ralph". Now I do charge a $150 consultation fee, but here's my promise to you. If we're not able to develop a personalized plan for you to move forward, I'll refund your consultation fee in full. That's how confident I am that I can help you improve your personal finance. Maybe you need help growing your business. I can help you with that too. My overall goal is to help you achieve all those financial goals. I want to help you get on the right track. I want to help you. I work with people every day.

I'll help you move beyond living paycheck to paycheck. Maybe you're saying Ralph, I feel like I'm taking three steps forward and then I'm getting shoved four steps back. It's always a new hot water heater. It's always the repair to the car. It's always the kids who need braces. The kids need this. It's hard.

It's and I want to help you break that financial bondage. I want to show you how you can truly achieve financial freedom. I want to help you improve your personal finances. Maybe you need help with your business. Maybe you need to find ways to grow your business. This is what I do every day. This is my mission field.

My overall goal is to help you achieve your financial goals. So let's create a personalized plan just for you. Not some cookie cutter approach of do this and do this and you see it on TikTok or one of these online sites. I want to create a personalized plan for you, and I want to exceed your expectations.

So don't wait. Schedule your call today and let's create a plan that will not only secure your financial future, and here's the best part of what I do. I want to help you align your finances with your faith and values. And I want to leave you with this thought as we leave. True financial security isn't just about having enough money. It's about having enough faith. Faith in God's provision, faith in your ability to steward your resources wisely and faith in the path He's set before you. Remember this. My passion is to help you achieve financial success.

I want you to live out your dreams, not my dreams, not their dreams, not your neighbor's dreams. I want you to live out your dreams and I want you to grow your faith. And I know working together, we can master your finances from a Christian perspective. And don't forget to tune in tomorrow's show when we'll be discussing the differences between revocable and irrevocable trust.

Now I'm not an attorney. I don't pretend like I'm one on TV, but I'm going to break down some truths about that. I want to talk about why you might want to use those to protect your assets. So as I always say, stay financially savvy and God bless you.

Narrator
00:25:22

Thank you for joining us on the Ask Ralph podcast. And with a simple click to subscribe, we'll invite you back to our next episode.

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