Where is Your Umbrella?

When it comes to saving for a rainy day many people either don’t save or they don’t save enough. Do they think it will never rain on them? Perhaps some folks are in a long self-deception drought or just overly optimistic. They feel lucky to avoid catastrophe and believe that luck will hold indefinitely. Others are more candid with no hope, saying they simply cannot afford an umbrella for any rainy day.

There can be legitimate concerns to not save. The problem is no one has a crystal ball to determine when a rainy-day emergency will happen.

According to Statista, personal savings in the United States was valued at $686 billion dollars. This was the lowest number since 2009 excluding the pandemic related savings of nearly three trillion. The median household savings balance amounted to $4,500 in April 2022. More troubling the portion allocated for emergencies was generally lower. Although there was a slight uptick in the household saving rate from 4.40% in January 2023 to 4.60% in February 2023.

Let’s bring this conversation down to Earth and personal. It is vitally important that you be prepared for the unexpected as things do happen. By definition there usually are no warnings. For example, you can be on your way to work when your car’s radiator goes out. Then the following month your engine or transmission blows and so forth. For the sake of avoiding excessive pessimism, I will stop there. These are usually very costly repairs.

On a personal note, our air conditioning system went out last year after 20 years. The HVAC system died in the middle of the summer with 100-degree weather. I figured the cost would be around $5,000 or so. Given we have a dual HVAC system, one upstairs and another downstairs that’s about $10,000 out the door. Unfortunately, my guess was so off. We were hit with a $20,000 bill. Wow! and Ouch! My point is stuff like this happens to good people every day, due to no fault of their own.

An emergency fund is an integral part of a family’s budget. Okay, I used a very bad word, “budget”. If that word repulses you then call it something else. Regardless of any animosity to planning your finances, the storm is coming, and you’d better be prepared.

I recommend having at minimum three to six months saved for an emergency. Savings of $1,000 to $3,000 would be beneficial. Building up to one year would be even better. Okay, I suspect you might be saying this guy is out of his mind if he thinks I have that kind of money. Things made of fairy tales. Yes, saving for the unexpected will take time and will require sacrifice. To make this happen, perhaps certain luxuries may have to go. What x@#!?

Luxuries such as your streaming services or cable or both may have to be temporarily suspended. You may have to cancel that new cell phone or return those new designer jeans or purse etc. I can imagine the responses to this new religion I am pushing on you. “I already cut the fat and some bone”, you may say. All the meat may have to go for while if need be. I learned to love vegetable bone soup. Talking tough for sure.

In writing this article, I reflected on my previous financial dilemmas and experiences when things seemed impossible to overcome. I speak of life when I had no financial safety net, falling quickly to the Earth. What did I do? Well, I did some of the things previously mentioned and, on an occasion, or two, I got a second job. This enabled me to pay down debt and expenses as result of emergencies that threatened to take me down.

The only things that remained in my life were the absolute true necessities of life. Meaning, food, transportation, mortgage, clothes, school expenses for the children. No more special brewed coffee, huge sugary muffins and fancy meals. That’s right, eating out for lunch or dinner was all gone. Christmas and birthday gifts got a lot humbler as well as sources of entertainment or travel. Apologetically declining invitations from friends and family to socialize became routine as the lack of money was an embarrassing issue. Fun was limited to free board or card games and sports activities at the park. The art of conversation meetups not centered around expensive drinks or food became the new norm, 19th century style. That is no wallet, purse, gadgets, gizmos or the like were included.

The sacrifices indeed hurt. In my very challenged mind, thoughts of failure inflowed and outflowed constantly like an untamed river waiting to drown me in despair and emotional suffering. It seemed life as I knew it was gone. In a way that was true. My life was changed. I felt a failure. I became a different person as my whole life was turned upside down being born into a new me. But guess what? That experience was only a temporary defeat or situation. I didn’t lose the war as I still had several things going for me that left me blessed. I still had a primary job that sustained us. My health was good. My life was not the worst as others suffered far worst fates. My life was a new modified level of existence. At some point, I said enough is enough for the self-pity. That glass is half full and not empty. I was alive to fight another day.

You will face setbacks. You may fall down. The answer is to get back up and up again no matter the number of times life hits you with a surprise punch to the gut. Those dark times taught me the real meaning of the differences between wants versus needs. I originally thought I actually needed cable, or I needed those daily muffins, and thought I needed a certain fancy suit or expensive shoes or flashy watch.

I realize cutting back is easier said than done. You are not alone as many people face tough times. You have the inner strength to not only survive but to thrive. Yes, it will require much effort and willpower. However, you must continue to look at life in the Longterm, a long-distance race. I know the COVID Pandemic did not help for sure. Life got much worse for many people. Nevertheless, dismiss short-term thinking. The ancient battle between the hare and tortoise comes to mind. Avoid getting caught off-guard when the unexpectant happens. You don’t have the money. I get it. You can only start where you can start. Cut out the meat and fat off those bones as best you can. You may want to consider a side job for extra income. At least until you have an adequate emergency fund. Do what you can do and keep going until you have arrived at your destination.

The bottom line is you can do what you put your mind and spirit. I wish you the best.

Happy Saving!