() — These are old questions: How much do you need to feel financially secure? And how much would you need to feel rich?
More than 2,500 American adults said they would need to earn, on average, $233,000 a year to feel financially secure and $483,000 a year to feel wealthy or achieve financial freedom, according to a new Bankrate survey.
For comparison, the median income for a full-time worker for the entire year in 2021 was $56,473, according to the US Census Bureau.
Of course, there is no objective or “correct” answer to these questions. What it takes for a person to be financially comfortable can depend a lot on their early childhood experiences with money, how much they perceive others around them to have, their current financial situation, the cost of living in their area and, if they have thought about it, what is most important to them in life.
In addition, a high income does not necessarily guarantee financial security if you live hand-to-hand, do not save much, and carry significant debt.
The same is true if you feel insecure about your financial prospects.
In the Bankrate survey, 72% said they don’t feel financially secure right now, although 46% said they hoped to feel that way one day.
Among the reasons cited for not feeling secure today are high inflation (63%), the economic environment (48%), insufficient savings for emergencies (42%), insufficient savings for retirement, rising interest rates (36%), low wages or low professional mobility (33%), high indebtedness (26%) and housing affordability (25%).
Strengthen financial security
Whatever your financial situation is right now, there are many ways to improve it if you focus on what is in your control. These are some of them:
Make it as easy as possible to pay off your credit card debt: Look for a balance transfer card that offers you a 0% introductory rate for up to 21 months, then make a plan to pay off most or all of what you owe in that period of time before it’s due. a high rate is applied again.
Make the most of the advantages that your company offers you: Combined, they can save you a lot of money (for example, tuition reimbursement, student loan help, plus grants or discounts for everything from legal aid and financial counseling and therapy to gym fees, trips, commuting, and free flu shots). ).
However, one of the most valuable benefits is probably the matching contribution your company can make to your 401(k) plan. So try to save at least enough to get your full contribution. And if you’re age 50 or older, you can also take advantage of catch-up contributions you can make each year, which can not only reduce your current year tax bill, but can provide you with an even larger matching contribution from your company.
And one way to boost your own retirement savings is to increase your contribution rate when you get a raise.
When you’re between a rock and a hard place, classify your bills: If you can’t pay all your bills one month, there are ways to minimize the negative consequences. Start by clearly communicating your situation to creditors as soon as possible.
Look for a better paying job if you are not happy in the one you have: Do your research to make sure you are receiving a competitive salary for the position you want. That means first figuring out what your current compensation package is (including the value of health insurance benefits, 401(k) contributions, stock options, paid time off, etc.). This way you can better compare it with what an organization that wants to hire you could offer you.
Also take advantage of new wage transparency laws in many places. Employers are increasingly required to include a salary band in their job advertisements.
Those ranges, while not the final word on what you can be paid, will at least give you a clearer idea of what is considered a competitive salary for the type of position you are seeking, and at least establish the minimum you should expect to be paid. they pay you
Then, be prepared to negotiate on your own when you receive a job offer. Among the best tips for negotiators: First, understand the other party’s motivations and limitations, and keep your emotions in check at all times.
Spend money on what matters most to you: If you’re clear about what matters most to you, you’ll find it easier to cut back on things that don’t really matter to you but have become a habit.
