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Financial Security: What It Means and How to Achieve It

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What is Financial Security?

Financial security is often viewed as an elusive long-term goal, but the truth is that anyone can achieve it with the right plan and mindset. Achieving financial security isn’t about hitting a specific number in your bank account; it’s about reaching a place where you no longer need to worry about money, where your financial situation comfortably covers your needs and allows for future planning.

For some, financial security means having enough money saved for emergencies, paying off debts, or having multiple streams of income. For others, it’s about retiring comfortably, providing for loved ones, or investing wisely for the future. While financial security looks different for everyone, certain fundamentals apply to anyone striving for it.

What Does Financial Security Look Like?

Being financially secure means that you’re confident about your finances and have control over your money. It’s about knowing you can cover your expenses today and still be prepared for the future. Here are some common indicators of financial security:

  • Emergency savings: You have a safety net that can cover at least 6 months of essential expenses.
  • Sufficient income: You consistently earn enough to meet your needs without relying on debt or credit.
  • Debt freedom: You have little to no debt, freeing up your income for savings and investments.

These milestones might seem daunting, but the journey toward financial security starts with small, consistent steps. Whether it’s building savings or reducing debt, each move helps strengthen your financial foundation.

“Financial security isn’t about the size of your paycheck, but about how well you manage what you have. Control over your money is the key to lasting stability.”

Financial Security vs. Wealth

Contrary to popular belief, financial security is not synonymous with wealth. You don’t need a mansion or a six-figure salary to feel financially secure. In fact, even those with substantial incomes can struggle with financial insecurity due to mismanaged money or overwhelming debt.

True financial security is less about the amount of money you have and more about how well you manage it. It comes down to control: control over your income, your savings, your investments, and ultimately, your future.

Determining Financial Security

Measuring financial security can be challenging because it often depends on personal goals and circumstances. However, certain financial metrics can provide insight into whether you’re on the right track. By tracking these key areas, you can assess your financial health and take steps to improve it.

1. Net Worth

Your net worth is a reflection of your overall financial health. It’s the difference between what you own (assets) and what you owe (liabilities). In simple terms, net worth is the value of your financial life.

  • Assets: Include your home, car, savings, retirement accounts, and investments.
  • Liabilities: Include mortgages, loans, credit card debt, and other monthly obligations.

Building a positive net worth, where your assets exceed your liabilities, is a clear sign that you’re moving toward financial security. Tracking your net worth regularly helps you understand how well you’re progressing in managing your finances.

2. Debt-to-Income Ratio

Your debt-to-income (DTI) ratio measures how much of your income goes toward paying off debt. A high DTI limits your ability to save or invest, while a lower DTI gives you more financial freedom. This ratio is crucial for determining how well you can manage and pay off existing debts.

A good target for financial security is keeping your DTI ratio below 30%. If you are currently above this level, it’s essential to focus on lowering it by paying off debt or increasing your income.

3. Emergency Fund

An emergency fund acts as your financial safety net, protecting you from unforeseen expenses like medical emergencies, car repairs, or job loss. Financial experts recommend saving enough to cover at least six months of essential living expenses.

Six months of expenses: This is the gold standard, but even starting with three months of expenses saved is a positive step.

Multiple income sources: Diversifying your income streams, such as through a side hustle or investment, can strengthen your financial position and emergency fund.

“Building an emergency fund is one of the most critical steps toward financial security. It ensures you’re prepared for the unexpected and keeps you on track toward your goals.”

4. Financial Stress

While not always measurable, financial stress can indicate whether you’re truly financially secure. If you’re constantly worrying about paying bills or anxious about your financial future, it’s a sign that you may still have work to do to achieve financial stability. Alleviating financial stress is as important as reaching your monetary goals.

5. Future Funds

Future funds refer to long-term savings or investments that will serve you in the future. This can include retirement accounts, real estate investments, or stocks. Financially secure individuals often have diverse portfolios, ensuring they have income sources to rely on later in life.

Planning for the future is a critical part of financial security. By setting aside funds for retirement and other future expenses, you can ensure that your money continues working for you in the long run.

Steps to Achieve Financial Security

Achieving financial security takes time, discipline, and ongoing commitment. Here’s how you can start building your path toward a more secure financial future:

1. Start Building Your Retirement Early

Retirement might seem far off, but starting your retirement savings as soon as possible gives you the advantage of compounding interest. Compounding allows your money to grow exponentially over time. Whether through an employer-sponsored plan like a 401(k) or an IRA, the earlier you start, the more time your money has to work for you.

  • Compounding power: Even small contributions grow significantly over decades.
  • Explore your options: Look into different retirement account options such as IRAs or 401(k)s, and choose one that aligns with your long-term financial goals.

2. Set and Stick to a Budget

Budgeting is the cornerstone of financial security. It helps you track your income, expenses, and savings so that you stay within your means. By setting clear limits on discretionary spending and allocating funds for your savings and investments, you can take control of your finances. A budget also highlights areas where you might be overspending and can help you prioritize essential expenditures.

3. Pay Down Debt Aggressively

Debt is one of the biggest obstacles to financial security. Reducing and eventually eliminating debt frees up your income, reduces stress, and allows you to focus on building wealth. There are two popular strategies for paying down debt:

  • Snowball method: Pay off smaller debts first to build momentum.
  • Avalanche method: Focus on paying down high-interest debt first, saving you money in the long run.

Choose a method that fits your financial situation and stick with it to become debt-free faster.

“Paying down debt aggressively can free up your income and reduce financial stress, allowing you to focus on building wealth for the future.”

4. Build a Solid Emergency Fund

An emergency fund is one of the most crucial pillars of financial security. Aim to save at least six months’ worth of essential living expenses in a separate account reserved only for unexpected events. This fund acts as your financial buffer in case of job loss, medical expenses, or other crises.

By having this safety net in place, you protect yourself from the unexpected and ensure that financial setbacks don’t derail your long-term goals.

5. Diversify Your Income Sources

Relying on a single source of income can be risky. Consider creating multiple income streams, such as side hustles, part-time gigs, or investments that generate passive income. By diversifying your income, you not only increase your earning potential but also build financial resilience in case one income source is disrupted.

Seek Professional Help

If navigating financial decisions feels overwhelming, consider working with a financial advisor. Financial planners can help you create a personalized plan based on your current situation and future goals. Whether it’s debt management, savings strategies, or investment options, a professional can offer guidance to keep you on track.

You Can Achieve Financial Security

Financial security may seem out of reach at times, but with a clear plan, dedication, and the right tools, anyone can achieve it. Start by understanding your current financial situation, setting achievable goals, and steadily working toward them. Whether it’s paying down debt, building an emergency fund, or saving for retirement, every step brings you closer to financial freedom.

Financial security isn’t about wealth—it’s about peace of mind. It’s the ability to face the future knowing that your financial foundation is solid. Whether you’re just starting your journey or looking to improve your current situation, remember that financial security is possible with the right mindset, tools, and persistence.

About the Author

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Rick Munster

Rick Munster is a personal finance expert and author with over 21 years of experience in the credit counseling industry. He currently serves on the board of directors for the Financial Counseling Association of America and has written over 200 articles on personal finance. Rick's expertise has been recognized by several prominent online organizations, which have quoted him on issues related to credit counseling, debt management, and financial education. With more than 20 years of experience at Money Fit, a non-profit credit counseling organization, Rick has established himself as a trusted authority in the field of personal finance.
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6213 N. Cloverdale Rd, Suite 130, Boise, ID 83713
Money Fit is a nationwide nonprofit 501(c)(3) organization. We do not lend money.

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Client Credit Report Authorization

You hereby authorize and instruct Debt Reduction Services, Inc. (DRS, dba Money Fit by DRS) and/or its assigned agents to:
  • Obtain and review your credit report, and
  • Request verifications of your income and rental history, and any other information deemed necessary for improving your housing situation (for example, verifying your annual property tax obligations and homeowner’s insurance fees)
Your credit report will be obtained from a credit reporting agency chosen by DRS. You understand and agree that DRS intends to use the credit report evaluate your financial readiness to purchase or rent a home and/or to engage in post-purchase counseling activities and not to grant credit. You understand you may ask any questions pertaining to your credit report. However, while DRS will review the information with you, the company is not able to furnish you with a copy of your credit profile. You hereby authorize DRS to share your information from your credit report and any information that you provided (including any computations and assessments produced) with the entities listed below to help DRS determine your viable financial options.
  • Banks
  • Counseling Agencies
  • Debt Collectors
  • Landlords
  • Lenders
  • Mortgage Servicers
  • Property Management Companies
  • Public Housing Authorities
  • Social Service Agencies
Entities such as mortgage lenders and/or counseling agencies may contact your DRS counselor to evaluate the options for which you may be eligible. In connection with such evaluation, you authorize the credit reporting and/or financial agencies to release information and cooperate with your DRS counselor. No information will be discussed about you with entities not directly involved in your efforts to improve your housing situation. You hereby authorize the release of your information to program monitoring organizations of DRS, including but not limited to, Federal, State, and nonprofit partners for program review, monitoring, auditing, research, and/or oversight purposes. In addition, you authorize DRS to have your credit report pulled two additional times to conduct program evaluations. You also agree to keep DRS informed of any changes in address, telephone number, job status, marital status, or other conditions which may affect your eligibility for a program you have applied for or a counseling service that you are seeking. Finally, you understand that you may revoke consent to these disclosures by notifying DRS in writing.

Client Privacy, Data Security, and Client Rights Policy

NOTE: This sheet is to inform new or returning clients about our services, records, fees, and limitations that may affect you as a consumer of our services. This form also discloses how we might release your information to other agencies and/or regulators. If you do not understand a statement, please ask a Debt Reduction Services (DRS) counselor for assistance.

Debt Reduction Services, Inc. (DRS) has put into place policies and procedures to protect the security and confidentiality of your nonpublic personal information. This notice explains our online information practices and how we use and maintain your information to conduct our financial education and credit counseling sessions and to fulfill information and question requests. This privacy policy complies with federal laws and regulations.

To provide our financial education and credit counseling services, we collect nonpublic personal information about you as follows: 1) Information we receive from you, 2) Information about your transactions with us or others, and 3) Information we receive from your creditors or a consumer reporting agency. We do not share this information with outside parties.

We use non-identifying and aggregate information to better design our website and services, but we do not disclose anything that could be used to identify you as an individual.

You hereby authorize DRS, when necessary, to share your nonpublic personal, financial, credit, and any information that you provided (including any computations and assessments produced) with the following entities in order to help DRS provide you with appropriate counseling or guide you to appropriate services: third parties such as government agencies, your lender(s), your creditor(s), and nonprofit housing-related and other financial agencies as permitted by law, including the U.S. Department of Housing and Urban Development.

To prevent unauthorized access, maintain data accuracy, and ensure the correct use of information, we have put in place appropriate physical, electronic, and managerial procedures to safeguard and secure the information we collect online. We limit access to your nonpublic personal information to our employees, contractors and agents who need such access to provide products or services to you or for other legitimate business purposes.

Debt Reduction Services, Inc. complies with the privacy requirements set forth in the HUD housing counseling agency handbook 7610.1 (05/2010), including the sections 2-2 Mc, 3-1 H(2), 3-3, 5-3 F, and Attachment A.5. At all times, we will comply with all additional laws and regulations to which we are subject regarding the collection, use, and disclosure of individually identifiable information.

  1. Services: DRS provides the following housing-related services: counseling that includes Homeless Assistance, Rental Topics, Pre-purchase/Homebuying, and Home Maintenance and Financial Management for Homeowners (Non-Delinquency Post-Purchase); Education courses that include Financial literacy (including home affordability, budgeting, and understanding use of credit), Predatory lending, loan scam or other fraud prevention, Fair housing, Rental topics, Pre-purchase homebuyer education, Non-delinquency post-purchase workshop (including home maintenance and/or financial management for homeowners), and other workshops not listed above.

Please refer to DebtReductionServices.org for details of our services.

  1. Limits: Our services are limited to our normal weekday business hours. We do not provide individual counseling or education services after hours or on weekends, although our education courses are available 24/7.
  2. Fees: We do not charge fees for our financial management counseling and education. However, if you use them, you may have to pay for our Debt Management Program, Student Loan Counseling, Bankruptcy Certificate Services or certain financial education courses (homebuyer education, rental topics, fair housing, predatory lending, and post-purchase-non-delinquency including home maintenance and/or financial management for homeowners).
  3. Records: We maintain records of the services you receive, including notes about your progress or other relevant information to your work with us. You have the right to access and view your records by making a request to your counselor.
  4. Confidentiality: We respect your privacy and offer our services in confidence with the understanding that we may share such information with auditors and government regulators. Certain laws or situations may also lead to disclosing confidential issues, such as those involving potential child abuse or neglect, threats to harm self or others, or court subpoenas.
  5. Refusal of Services: You have the right to refuse services without any penalty or loss.
  6. Disclosure of Policies and Practices: You will be provided our agency disclosure statement.
  7. Sharing of Information: Sometimes we will need to contact other agencies or we may need to share your information, including your records, with other agencies or with regulators. We will do this only if you sign this form that gives us permission except for limited reasons; please see # 5 above for examples of such situations.
  8. Other: You have the right to be treated with respect by our staff, and we expect the same from you in return. We encourage you to always ask questions if something is not clear. We also encouraged you to express your thoughts and advocate throughout our services.

You acknowledge that this authorization will remain in effect for the duration of time that DRS serves as your housing counselor or financial education provider. You also acknowledge that should you wish to terminate this authorization, you will notify DRS in writing.

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Disclosure  Statement

NOTE: If you have an impairment, disability, language barrier, or otherwise require an alternative means of completing this form or accessing information about our counseling services, please communicate with your DRS representative about arranging alternative accommodations.

Program Disclosure Form

Disclosure to Client for HUD Housing Counseling Services

Debt Reduction Services, Inc. and its financial education arm, Money Fit by DRS, offer the following housing counseling and educational services related to housing, personal finance, and bankruptcy certificates to consumers:
  • Housing Education Courses: DRS offers many online self-guided education programs classified as Financial, Budgeting, and Credit Workshops (FBC), Fair Housing Pre-Purchase Education Workshops (FHW), Homelessness Prevention Workshops (HMW), Non-Delinquency Post Purchase Workshops (NDW), Predatory Lending Education Workshops (PLW), Pre-purchase Homebuyer Education Workshops (PPW), and Rental Housing Workshops (RHW). These courses help participants increase their knowledge of and skills in personal finance, including home affordability, budgeting, and understanding the use of credit, as well as predatory lending, loan scams, and other fraud prevention topics, fair housing, rental topics, pre-purchase homebuyer education, non-delinquency post-purchase topics including home maintenance and/or financial management for homeowners, homeless prevention workshop, and other workshops not listed above relating to personal finance and housing. Course details are found below under “Housing Workshops.”
  • Home Equity Conversation Mortgage (HECM) Counseling (RMC): Via telephone and virtual platforms, we offer the required HECM counseling nationwide in addition to in-person counseling in Boise, Idaho. We also offer in-home counseling options in thirty counties across southern Idaho for an additional fee to cover our travel and additional staff time costs.
  • Home Maintenance and Financial Management for Homeowners (Non-Delinquency Post-Purchase) (FBC): Clients receive counseling and materials on the proper maintenance of their home and mortgage refinancing. Clients can find help and resources by phone, in our Boise office, or virtually on all topics related to stabilizing their long-term homeownership.
  • Services for Homeless Counseling (HMC): Clients receive phone, virtual, or in-person (Boise) counseling to evaluate their current housing needs, identify barriers to and goals for housing stability, establish a path to self-sufficiency, and connect with emergency shelters, income-appropriate housing, and/or other community resources (e.g. mental healthcare, job training, transportation, etc.).
  • Pre-Purchase Counseling (PPC): Clients receive counseling through the entire homebuying process. Assistance may involve creating a sustainable household budget, understanding mortgage options, building their credit rating, and putting together a realistic action plan to set and achieve homeownership goals.  Additionally, clients will receive materials and resources about home inspections and other homeownership topics relevant to successfully maintaining a home.
  • Rental Housing Counseling (RHC): Via phone, in-person appointments (Boise, ID), or virtual platforms, clients receive housing counseling relevant to renting, including rent subsidies from HUD or other government and assistance programs. Topics can also address issues and concerns having to do with fair housing, landlord and tenant laws, lease terms, rent delinquency, household budgeting, and finding alternate housing.
DRS also offers the following services:
  • A Debt Management Program (DMP) for consumers struggling to pay their credit cards, collections, medical debts, personal loans, old utility bills, and past-due cell phone accounts;
  • The Budget Briefing and Debtor Education Certificates that are required during the Bankruptcy filing process;
  • A Student Loan Repayment Plan Counseling and application service.

Relationships with Industry Partners

Through such services, DRS has established financial relationships with hundreds of banks, credit unions, and creditors such as American Express, Bank of America, Barclays, Capital One, Chase, Citibank, Credit One, Discover, Synchrony, US Bank, USAA, Wells Fargo, and others.

No Client Obligation

The client is not obligated to receive, purchase or utilize any other services offered by DRS or its exclusive partners to receive financial education or housing counseling services. Alternatives: As a condition of our counseling services, in alignment with meeting our client services goals, and in compliance with HUD’s Housing Counseling Program requirements, we may provide information on alternative services, programs, and products available to you, if applicable and known by our staff. Alternative DMP services include negotiating better repayment terms directly with your individual creditors, paying your debts as agreed, or, in extreme cases, filing for personal bankruptcy. Alternative credit and education services can be found through MyMoney.gov or the Jump$tart Clearinghouse of online financial education resources. Housing counseling alternatives can be found through HUD at www.hud.gov/findacounselor.
Finally, you understand that you may revoke consent to these disclosures by notifying DRS in writing.
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Housing Counseling and Education Fee Schedule

 

Online Education Program Fees*

Homebuyer Education Course: $59 per participant

  • Self-paced course available here, our online housing counseling and education center. Certificates will be automatically generated upon completion of the course (approximately 6-8 hours)

Rental, Fair Housing, Predatory Lending / HOEPA, Post-Purchase (Non-delinquency post-purchase workshop, including home maintenance and/or financial management for homeowners) Online Workshops: $49 per participant

  • Approximately 1 hour each

Other Self-Guided Financial Literacy Webinars (e.g. credit, budgeting, homeless prevention, debt prevention): $0

One-on-one Counseling Fees*

Pre-purchase Homebuying Counseling, Rental Counseling, Post-purchase Ownership Maintenance and Financial Management: $75

  • Session by the hour

Reverse Mortgage/HECM Counseling with Required Certificate:

  • $200†

Credit Report Fee: Paid Directly by Client

*Fees for all but our online education courses and workshops can be paid online by debit card, credit card, or PayPal or in person by cash, check or money order to: “Debt Reduction Services, Inc.” Registration fees are non-refundable 24 hours or less before the start of an in-person course or workshop. Certificates are non-transferable

*Fees may be waived for households with income of 150% or less of that identified on the US Department of Health and Human Services Poverty Guidelines Page

†Home visit counseling is available in 30 southern Idaho counties for potential HECM borrowers at additional costs to cover our travel (IRS reimbursement rates apply) and staff time ($50 per hour or fraction there).

Close

Housing Counseling and Education Fee Schedule

 

Online Education Program Fees*

Homebuyer Education Course: $59 per participant

  • Self-paced course available here, our online housing counseling and education center. Certificates will be automatically generated upon completion of the course (approximately 6-8 hours)

Rental, Fair Housing, Predatory Lending / HOEPA, Post-Purchase (Non-delinquency post-purchase workshop, including home maintenance and/or financial management for homeowners) Online Workshops: $49 per participant

  • Approximately 1 hour each

Other Self-Guided Financial Literacy Webinars (e.g. credit, budgeting, homeless prevention, debt prevention): $0

One-on-one Counseling Fees*

Pre-purchase Homebuying Counseling, Rental Counseling, Post-purchase Ownership Maintenance and Financial Management: $75

  • Session by the hour

Reverse Mortgage/HECM Counseling with Required Certificate:

  • $200†

Credit Report Fee: Paid Directly by Client

*Fees for all but our online education courses and workshops can be paid online by debit card, credit card, or PayPal or in person by cash, check or money order to: “Debt Reduction Services, Inc.” Registration fees are non-refundable 24 hours or less before the start of an in-person course or workshop. Certificates are non-transferable

*Fees may be waived for households with income of 150% or less of that identified on the US Department of Health and Human Services Poverty Guidelines Page

†Home visit counseling is available in 30 southern Idaho counties for potential HECM borrowers at additional costs to cover our travel (IRS reimbursement rates apply) and staff time ($50 per hour or fraction there).