What is Economic Security?

Economic Security is the feeling of stability and safety when it comes to our finances. It is knowing that we can pay for essentials like food, clothing, housing, healthcare, utilities, hygiene, and education – today and in the future.

Think of economic security as the foundation that lets us build a good life for ourselves and our families – a decent standard of living.

Without such security, we may experience the opposite of economic security: economic insecurity and resulting economic anxiety.

The International Committee of the Red Cross (ICRC) has the following definition of the term:

“The ICRC defines economic security as the ability of individuals, households, or communities to cover their essential needs sustainably and with dignity. This can vary according to an individual’s physical needs, the environment, and prevailing cultural standards.”

“Food, basic shelter, clothing, and hygiene qualify as essential needs, as does the related expenditure; the essential assets needed to earn a living, and the costs associated with health care and education also qualify.”

Why Does Economic Security Matter?

Without economic security, we face a lot of stress and uncertainty. We might struggle to make ends meet or worry about becoming unemployed. This strain can impact every aspect of life, including our:

  • Physical Health

Financial worries often lead to increased stress, which can put us at a higher risk of problems like heart disease, hypertension (high blood pressure), diabetes type 2, digestive issues, and chronic pain conditions.

  • Mental Health

Money troubles can heighten anxiety, deepen depression, disturb sleep, and increase the likelihood of substance abuse.

  • Family and Relationships

Financial stress can make it harder to maintain healthy relationships.

  • Overall Well-being

Economic security lets us focus on our overall quality of life, not just on day-to-day survival.

A row of people, a piggy bank, home, shopping bag with groceries, and a definition of ECONOMIC SECURITY.
Image created by Market Business News.

How to Achieve Economic Security

There is no silver bullet or magic formula, but here are some key steps we can take toward building economic security:

  • Income

A reliable source of income is crucial. This could be from a job, pension, investment, state aid, remittances from relatives abroad, or other sources.

  • Savings

Having a small emergency fund “for a rainy day” protects us from financial shock. Putting aside money regularly builds security over time.

Knowing how to budget helps us make smart choices and control our finances. People with heightened financial intelligence tend to enjoy better economic security.

High debt can be a major drain. We should prioritize paying off debts with high interest rates.

  • Job Skills

Continuous learning and updating our skills improve our earning potential, job security, and career prospects.

It’s not just about the individual

Governments and employers also play a vital role in creating an environment where we can all enjoy a decent standard of living. This includes the following measures:

  • Fair Wages

Everybody deserves a “living wage,” that is, one that provides a decent standard of living.

  • Social Safety Nets

Programs like unemployment insurance, disability benefits, social security, food assistance programs, and subsidized housing provide essential support for individuals facing temporary hardships as well as those with long-term needs.

  • Access to Education and Training

This helps people acquire the skills they need to achieve economic security.

Final Thoughts

Economic security is not about being rich. It is about having what we need to live with dignity and reach our goals.

It’s a shared responsibility for governments, employers, individuals, and communities to work together to ensure a decent standard of living for all.