Why you should have A Substantial Savings Plan
Can we just all admit right now that it's fun to buy new things or go on fancy excursions? I have no problems admitting to this. But I am also very familiar with the saying parents love to say to their children: "Money doesn't grow on trees, you know."
In light of the recent government shutdown, which temporarily laid off countless government employees and required countless more to work without a pay check for the time being, I thought now is a great time to talk about budgeting. You see, only a few years ago, I worked for the federal government as an air traffic controller. I made a generous chunk of change. I had great benefits. I had a retirement plan. It all seemed so easy when I raked in a large paycheck. And while I left this career by personal choice and have no regrets doing so, I look back and realize that it all could've been taken away in an instant.
This post is not a political post. It's just to show you that no job - not even government jobs - have 100% security. Life happens. Jobs are lost or put on hold. Funds are gone or withheld in an instant. Whether you hold a government job, run your own business, or work for a corporate office, what you make is not what is important. It's what you do with it. Because any job can be gone in the blink of an eye. And with that job goes your paycheck.
This is why having a budget and saving your money is so important. Here are three reasons why budgeting and saving should be a priority.
1. Protect your family in case of medical emergency
Emergencies will always put stress on your family. Whether it be an unexpected illness a car accident resulting in intensive medical care, numerous stresses are involved. Money is almost always one of the reasons for the stress. From personal experience, I know that the financial side of emergencies always rears its head no matter how much you have in your savings account or how well you budget. But the type of stress it triggers can be completely different depending on your finances.
Do you want it to be from the cringing of taking a withdrawal out of the savings account you've cushioned with 3-6 months worth of savings? Or do you want it to be the scrambling to pull out a loan, set up a payment plan, or ask other friends and family for money?
When an emergency within your family ensues, you don't want your initial thoughts to be about money. They need to be focused on your family and what you can do to overcome the trial. Having healthy savings and a solid budget will make it easier to focus on the emergency itself.
2. Handle unexpected maintenance and property damage
It doesn't take an emergency situation to trigger financial stress. Unexpected expenses can pop up from anywhere. Flooding damages your home. Your car breaks down and requires several new parts and hours of paid labor to fix the issue. Maybe your washer or dryer break down. These might not always be considered emergencies, but they do have a tendency to happen at the most inconvenient times.
Don't let an empty bank account be the reason these unexpected expenses add stress to your life. Have enough saved that you can take the expense in stride and pay the upfront cost instead of using a loan or credit card and having to pay additional interest later on.
3. Live without pay in the event of job loss
Any job can be lost in an instant. The company you work for could downsize or go out of business. The government can shut down. Medical conditions can make you lose your career. No one is above losing their job. Sometimes events outside of our control decide the fate of our careers and our paydays. That's simply life. But what you do have control of is how you handle the money you make before these events have the chance to occur.
Ideally, you should have enough money in the bank to cover at least three months worth of expenses. This gives you time to find a stable new job or survive a furlough and make ends meet until your bringing in a paycheck again. Having up to six months worth of expenses gives you even more cushion because think about those unexpected maintenance expenses...they always happen at the most inconvenient times, including when you're out of a paycheck.
I encourage you to come up with a budget and a savings plan today. Don't wait until next month or next year. We can never predict every event and trial in our life. But we can take actions now to help equip ourselves with the funds and resources to tackle what comes our way.
If you need some tips on how to get started with saving money and sticking to a budget check out my post with tips for staying on budget.
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