Given a Choice, What Will You Do? Life is a bunch of choices or is it? Smart choices depend on savings. People without savings or access to money do not have choices. Just in case it is not you, I am talking about the people who are at their credit card limit, live paycheck to paycheck, no savings, up to their eyeballs in debt and a lousy job that they hate. Is that bleak enough?
Who are they?
Before you think it is always someone else, think about it? Do you love what you do? Is your job stable? Do you have at least six (6) months expenses in a rewarding fixed rate ISA? If you answer no to all these questions, you could be just days/week/months away from having no choices. Do you think the people who bought houses before the real estate bubble burst thought a disaster was about to happen?
Sometimes things just happen! Do you have the savings or a Plan B to handle it? My recent injury makes me think of how things just happen! I never saw it coming and I did not do anything to cause it. How do you prepare for these kinds of things? Thankfully I have really good medical insurance and money in my Flexible Spending Account (FSA). What would my Plan B be if I did not have these benefits? I have other resources besides savings since my wife is an RN. In other words, I have access to information.
I know people who know people. Rich people always have resources beyond money. I do not consider myself rich, but certainly comfortable. I always surrounded myself with other successful people and that is a great safety net. What would you do? Belts and suspenders are a term in finance that I embraced over the years. It is a backup if something fails. Savings is a backup, if you need it. Many people who find themselves in these situations, say they have no savings because they are making minimum payments on debt and have nothing left for savings.
My first decision and priority is always savings! It is the first thing I set up as a payroll deduction. I adjust everything else to make that happen. You can start small and build from there. My first savings account started with $2.00 per week. Start with your daily/weekly/monthly expenses and find one to give up or change. Something as simple as giving up going out for lunch one day a week will yield $10 or more per week. If you give up dining out once a week or change how you spend your money can help you achieve your savings goal. What are you going to do?
Savings provide choices. Savings is not just for retirement. Save for a down payment for a house, car, vacation, or education is just a few of the things that give you a better life. The earlier you start, the more money you will have. What else can you do to save or save more? Take the next salary increase or promotion and put it in savings. Another is redirect your payments after you pay off debt to savings. Time is on your side and it will grow over time tax deferred in a retirement account or in a brokerage account subject to capital gains tax rates.
Savings provide choices! Saving for retirement means you can chose to retire or continue working because you enjoy working. Having savings for emergencies means you are not paying high interest credit card debt or other loan interest. Saving for a down payment means you will pay a lower interest rate and have a lower monthly payment. Savings provide a lot of choices, but it is up to you. Given a Choice, What Will You Do?
Photo by: Mile Licht
Yakezie Carnival at Financial Success for Young Adults
Carnival of Financial Camaraderie at Thirty Six Months
Canadian Finance Carnival at Canadian Finance Blog
Carnival of Financial Planning at Aaron Hung
Carnival of Retirement at My Personal Finance Journey
Given a Choice, What Will You Do?