We all know that it is a good idea to prioritize our savings accounts. Yet, more than 7 out of 10 Americans live paycheck-to-paycheck (in this article, it was almost 8 out of 10!) and would experience major financial complications from one missed paycheck.
I used to live this way. In addition to the expected financial challenges, my poor money management skills carried stress into every facet of my life. If I had known all of the non-financial benefits of prioritizing the establishment of financial margin, I’m convinced I would have avoided a lot of unnecessary stress. Perhaps by sharing these benefits in this series of posts, I can help give someone the final nudge needed to begin to prioritize saving money.
Benefit #1 MARGIN = SPACE
When you have a healthy savings account, it allows you to accommodate “life happens” events without having your entire financial world being thrown into chaos. In the I Was Broke. Now I’m Not. Ladder (free download here), we recommend starting with a goal to build your savings up to equal one month of expenses (Rung #2) and then, after completing a few other financial steps, build on up to a minimum of three months of expenses (Rung #5).
You know what I mean about “life happens” events, right? These are things that are going to happen regardless of whether or not you have money saved for them. Here is a list of several common “life happens” events:
- Appliance failure (dryer, washing machine, hot water heater, air conditioner, furnace, dishwasher, etc.)
- Car repair (water pump, battery, failed bearing, gasket leak, etc.)
- Home repairs (leaky roof, mold, plumbing leak, driveway wash-out, etc.)
- Emergency trip out of town
- Sickness or injury
- Job layoff or reduction in hours
When you have prioritized and built financial margin, you can accommodate these expenses without them having an immediate and direct affect on your ability to prosper.
It all adds up to less stress and better sleep. Isn’t that worth any sacrifice that is necessary to achieve margin?
Ready to take your finances to the next level? Get your copy of I Was Broke. Now I’m Not. and get started on your path to a fully funded life!