Financial Planning

Financial Responsibility: Do You Have It?

Take charge with your financial situation through your personal self-control and awareness. 

What does it mean to be financially responsible? It’s a complex question with a complex answer, but at its core is a simple truth: To be financially responsible, you need to live within your means. And to live within your means, you must spend less than you make.

Credit Cards and Debt

If you’re really looking to be financially responsible, just being able to make your minimum monthly credit card payment doesn’t cut it. In fact, the fact that you aren’t able to pay your balance in full shows that you already spend more than you earn. Responsible use of credit means paying the balance on your account in full each month.

Consider the Interest

The same logic applies to all recurring payments that involve paying interest. Think about it: Paying interest on anything means that you are spending more on that item than the purchase price. Does that sound like the most responsible choice or just the most convenient?


When the interest payments are factored into the purchase price, you are spending more to obtain the item than even the item’s manufacturer thought it was worth. As such, avoiding paying interest on anything should be a major objective.

Acting in Your Own Best Interest

For many people, cutting down on interest and borrowing is easier said than done, but in practice, it really comes down to knowing the difference between necessities and luxuries. For example, you might need a car, but you don’t need a top-of-the-line model and, unless you can afford to pay for it in cash, you shouldn’t be driving one.

Paying Yourself First—Saving

Spending every dime that you earn is simply irresponsible unless you have a massive trust fund that is so flush with cash that you will never outlive the earnings. For most people, especially those of us hoping to retire someday, saving is an activity that must be taken seriously. A great way to do this is when you get your paycheck – and before you pay your bills – pay yourself first. A good goal to save is 10%.

Emergency Fund

Financial responsibility means being prepared for the unexpected. Most experts agree that you need to be able to support yourself financially for at least six months without an income. If you are married and used to living on dual paychecks, this means being able to pay the necessary bills such as the mortgage, food and utilities on one income – or even neither income. If a missed paycheck would ruin you financially, it’s time to create a financial escape hatch to prevent this.

Don’t Keep Up with the Joneses

Financial responsibly means doing what you have to do to take care of your needs and the needs of your family. To make this happen, your focus should be internal. The neighbors aren’t paying your bills, so their spending habits shouldn’t dictate yours or set the bar for your standard of living.

Arriving at “Responsible”

Ultimately, financial responsibility means living within your means, regardless of the level of those means. So, take a close look at your financial situation, evaluate your earning and spending habits, and make the necessary adjustments to put yourself on responsible financial footing.


  1., August 2021.

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 Investment Advisory Services offered through Trek Financial LLC., an (SEC) Registered Investment Advisor.
Information presented is for educational purposes only. It should not be considered specific investment advice, does not take into consideration your specific situation, and does not intend to make an offer or solicitation for the sale or purchase of any securities or investment strategies. Investments involve risk and are not guaranteed, and past performance is no guarantee of future results. For specific tax advice on any strategy, consult with a qualified tax professional before implementing any strategy discussed herein.
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