#FinancialEmergency #savings #spending
Fewer than 38 percent of Americans have at least $1,000 in savings.
Say what?
Peter Dunn quotes that statistic in a column he wrote for USA Today, published Jan. 26, 2016.
A car repair, a refrigerator breakdown etc., can drain that $1,000 just like that. When you need a car to get to work, or a refrigerator to keep your food from spoiling, one, more or less, has to find the money to take care of these.
Dunn suggests making a plan. First, determine whether immediate spending changes or income changes will take care of your financial emergency. Second, grab the money from savings, if available. Third, borrow the money for the emergency, while concurrently creating a plan t pay off the debt in a specific period. Fourth, pay off the debt in that time.
“If you don’t leverage your emergency to create stability, you’re going to find yourself in deeper and deeper trouble,” Dunn writes.
Let’s get to basics. If you really only have $1,000 in savings, there are much bigger issues here, especially if you are older than, say, 18. You have to start planning not just for emergencies, but for your retirement years.
You don’t make that much money, you say? Well, then, start with looking at what you are spending, and whether your spending is necessary. Buying a cup of coffee on your way to work? Buying lunch at work? It might be better to make your own coffee and buy an insulated container to take it to work. It might be better to make your lunch at home and bring it to work.
You don’t have the extra time in your day to do that, you say? Then, look at how you spend your time. Perhaps getting up 15 minutes earlier in the morning to make your coffee, or making your lunch the night before as you sit in front of the TV may leverage your time better.
Look at other spending habits. For example, how much do you spend on “entertainment?” That can include dining out, movies, even digital services. As a start, look at your cell phone, television and Internet packages. Are there ways to trim back those costs in a way you can live with? Maybe get rid of your premium TV package.
Want a pet? Remember, pets are expensive. They need food, perhaps medicine, as well as your time and attention. Time is money. Are you prepared for that?
You should be able to save a portion of every paycheck, no matter how small. Regular savings, multiplied by time, augmented by wise investment, equals financial security in your later years. If you start saving $5 every week at age 20, and never touch that money, it will amaze you how much you would have at age 40. Then, at 40, check out the amount you’ve saved and continue not to touch it until, say, age 60, all the while continuing to put a regular amount from every paycheck into that fund.
Of course, getting back to Dunn’s point, you also need money for financial emergencies. Remember, if you are young, that you can’t lean on your parents or other family members forever.
Perhaps you might look at ways to earn extra income in a way that doesn’t interfere with what you are doing now. There are many such vehicles out there. For one of the best, visit www.bign.com/pbilodeau. You may get a two-fer: a lesson on saving money and a way to earn more money.
Most of all, you need to make saving an absolute priority. What you sacrifice today will pay off tomorrow. One never knows what tomorrow brings. One never knows when you might be forced to retire, or forced to look elsewhere for a job. What you save today may save your life later.
Peter