Finer Finance Fridays #5
I learned the concept of "saving for a rainy day" from my Grandma. My Grandma was the ultimate financial manager. She paid for everything in cash, I never took out credit. In that time, credit/ debit cards were not prevalent like they are now, and she didn't have a need for any of that. To this very day, everything she has, she owns it outright and doesn't owe anyone anything. I still admire that about her. She used to save loose change in a re-purposed Folgers Coffee can. When I was a little girl, I would ask how she filled up the can with all that money, lol. I can still hear her saying "Missy, put your money away, and make sure you save some for a rainy day".
Saving for a rainy day isn't rocket science, and as much as I'd like to give her credit, my grandma didn't come up with that idea. It's a common concept which most people understand, although a lot of people don't do it. Later, as an adult, around 2009, I was introduced to the concept again, in a different way. My husband, Chip, and I took Dave Ramsey's Financial Peace University courses, which teaches financial concepts using biblical foundation for everyday life application. One of Dave Ramsey's famous quotes is "If you live like no one else, later you can live like no one else." The idea here is pretty simple, if you live in a challenging way, right now, by sacrificing to save, you’ll be able to enjoy incredible opportunities and advantages later.
Saving requires sacrifice on some level, saving on this level definitely requires sacrifice. In Financial Peace University, the emergency fund is Baby Step #3 on the road to financial freedom. The objective is to build an emergency fund, by saving 3-6 months worth the cost of your monthly expenses. For most people that amount is somewhere between $10,000 to $15,000. This level of saving will help protect yourself from life's complications. It should be maintained in a separate account that is easy to liquidate, if you needed to, but not so accessible that you can dip into it anytime. So, if something unfortunate does happen like a loss of employment, unexpected medical expenses, or the sudden need to make an expensive car or home repair, you will not be caught off guard, and you can pay outright without increasing your personal debt.
Here are a few ways my family has sacrificed so that later we can live like no one else:
Paid off and cut up all our credit cards
Reduced cable TV (we have a fire stick)
Driving our cars until the wheels fall off :)
There are just some of things that we have done over the years, and we still haven't saved up to 6 months of our emergency fund, but we are working on it, and we will. You can too! This level of saving takes time, it could take years, but financial security is worth it!
If you are in the Hampton Roads area, I'll be facilitating Financial Peace University later in July. More details on that to come, but please let me know if you are interested! Drop a line in the comments or send me a direct message through my website, Facebook, Instagram, or Twitter.
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