We all suffer from some level of financial insecurity because society can be cruel. The future is always unknown, as the global pandemic has shown us!
Financial insecurity is the reason why we tend to stay in cash long after the signs of a recession are over. Financial insecurity is the reason why we work long after we need to because we fear some financial disaster might wipe out all our wealth.
During the height of the global pandemic, financial insecurity caused me to wake up at 3 am sometimes! If I had properly forecasted my passive income and wealth, I wouldn’t have had to worry so much.
Financial insecurity is why we buy insurance! I hope everybody with kids or debt has gotten at least a basic term-life insurance policy. Tomorrow is not guaranteed.
In a positive light, being financially insecure helps us become more financially secure because we take action to get rid of such an uncomfortable feeling. But after a certain point, financial insecurity may become debilitating – ruining relationships, limiting potential, and creating a sea of regret.
Here are some signs you might be overly insecure about your finances:
* You constantly tell others how much you make for the purpose of making yourself feel better.
* You crave constant adoration or at least reaffirmation that you aren’t one of your insecurities e.g. weight, education, product.
* You enjoy constantly checking yourself out in the mirror, taking selfies, and posting pics of yourself for all to see. There’s a correlation between physical fitness and financial health.
* You sometimes lie awake at night, unable to sleep because you’re worrying about your liabilities or potential liabilities.
* You buy nice cars, fancy clothes, expensive jewelry, and nice watches to show off your wealth or make up for shortcomings.
* You have multiple-years of living expenses saved away, but still work at a job you hate in order to save more money you don’t need.
* You feel your friends are all more successful than you, despite having an income or net worth well within in the top 25% for your age.
Let’s see if we can provide some help to a reader who writes in about his financial insecurity!
Overcoming Financial Insecurity
A reader writes in,
I’m going through a rut. Actually, I think both my wife and I both suffer from financial insecurity. We’re both 30 years old, and make roughly $200,000 combined. Around $170,000 of that comes from my wife, and $30,000 comes from me.
You see, I’m basically unemployed after moving to a new state. There are some odd jobs here and there that I can do, but nothing steady. I never wanted to leave my job, but my wife’s business started taking off so she told me not to worry about money. Good thing her business is my business too, by default!
I love my wife to death, but she’s driving me nuts. She has constant insecurity issues because she was a little out of shape growing up. She always asks me whether her outfits make her look fat. Every time I tell her she looks beautiful, but she doesn’t believe me and can’t get enough praise. She was never the cool girl in school, nor was I, so she especially has this “I’ll show them” type mentality that has helped her become successful.
Unfortunately, her success is getting to her head! She’s constantly telling her friends how much money she makes in the exact opposite way you recommend in your Stealth Wealth post. Her friends, our friends, are teachers or have regular jobs making $30,000 – $65,000 a year. But she goes and tells them she’s going to easily make over $200,000 a year if our business momentum continues! I’m so embarrassed!
Meanwhile, all my friends are digging at me because I have a sugar mama. They say stuff like, “How’s the good life there?” and “Are you ever going to get a job again?” and “How does it feel to be a kept man?” It’s getting me depressed and it doesn’t help that we moved to a new town in the middle of nowhere where I have no other friends. Jobs in my old industry are few and far between.
Sorry for the long e-mail. I’m hoping you can share your thoughts. Maybe the FS community can provide some ideas as well!
Discussing The Financial Issues
1) One spouse makes way more than the other spouse.
No matter how much you love someone, it’s hard to feel equal if your incomes are so different as DINKS (dual income no kids). Unfortunately, money is an easy barometer to measure. Most men I know have this inherent need to make enough to provide for a family. Men can get very insecure if women make more because society has brought us up to provide.
Solution: A good idea is to simply join the business as a partner. One can be the CEO, and the other can be the CFO. In business, there is an endless amount of things to do if her business is making $200,000+ a year. Just doing the bookkeeping alone is a full-time job!
2) 30 years old. Moved to a random new town. Not sure what to do with their lives. It sounds like they are going through an early mid-life crisis.
The year before turning 30, I felt depressed because I started thinking about all the people who died before 60. But, I snapped out of it a week after I turned 30 and decided to look forward to the future. 30 is an important age for most ambitious guys because that’s the year where we decide whether we will have made it, or know we will have made it. Time will heal this disconcerting feeling of turning a new decade.
Solution To Financial Insecurity
Will and his wife need to realize that they will probably have at least 45 years of life ahead of them. Less than 10% of American households have an income over $200,000 a year. They are way ahead of the game and should be appreciative of their good fortune. Use the excess money to donate to charities. Will can spend more time volunteering at local organizations. There’s nothing more rewarding than giving back if you’re feeling unsettled.
3) Will’s wife feels insecure due to her upbringing, and is now trying to make up for her insufficiency by making as much money as possible and telling everyone. Will’s wife is embarrassing Will with her constant bragging. Will doesn’t like the new version of the wife he first married.
We know there is an inverse correlation between how much people brag about their wealth (income, assets, cars, housing, clothes, etc) and their self-esteem. Everybody knows someone like this, and it’s annoying. But, it’s important for all of us not to fall into this trap of trying to keep up with the Joneses.
Solution: Will needs to have an open conversation with his wife to tell her how her income transparency with friends who are poorer is making him feel. Will should remind her wife why he married her in the first place, and explain how he doesn’t want money to come between them. Once you reveal how someone’s actions make you feel, it’s much easier to come to a compromise.
Any suggestions for Will and his wife?
Steps To Solve Financial Insecurity
Having more money doesn’t necessarily solve financial insecurity. You may become even more insecure as a rich person because you’ll start wondering whether other people like you for your money or yourself. You may even start stressing about whether you might one day lose it all. If you’ve got no money, there’s only upside!
I’ve found that by doing the following things, I’ve felt much more financially secure:
1) Make financial goals and take action towards reaching those goals. Share your goals with friends or loved ones to help build a support network. No matter how little the progress, you will feel happier with each step.
2) Create multiple passive income streams. If one engine goes down, you’ve got another engine propelling you along. You can develop financial buffers by completely harnessing all your abilities.
4) Track your net worth and create a budget. A simple analogy is writing out a list of things to buy at the grocery store, instead of trying to memorize everything. You’ll feel much more secure and much more relaxed knowing that you’ll get everything with a list. The more you know where your money is going, the better.
5) Accumulate real assets. The people who often feel the most insecure are those who make a lot of money and have nothing to show for their income. They wonder, “where did it all go?” Buying real assets allows you to actually see where your hard work is going.
6) Get professional help. The people who are the most financially insecure tend to have the most to gain by talking to a financial advisor. Here are some questions to ask a financial advisor before taking him or her on. You can also reach out to personal finance bloggers, participate in financial discussions online, and read plenty of finance literature to give you more confidence.
7) Get life insurance. If you have a mortgage and/or kids, you must get term life insurance. Term life insurance will cover your debt and other expenses in case of an early death. The goal is to get enough term life insurance to cover all liabilities and until your kids become adults. The best place to get life insurance is through PolicyGenius. PolicyGenius makes comparing custom quotes a breeze. And, it’s free.
You Can Overcome Financial Insecurity
After writing about how to achieve financial independence on Financial Samurai since 2009, I strongly believe you will eventually overcome financial insecurity. The more financial knowledge you have, the more financially secure you will also feel.
Please continue to build more passive income to cover your desired living expenses. Once you can, you will have the most financial security in the world.