Practice What You Preach

drjand — Mon, 03 Aug 2009 23:41:41 +0000

For as long as I can remember, personal-finance writers, teachers, and counselors have recommended we prepare for times of financial difficulty, especially periods of unemployment, by setting aside emergency savings equivalent to at least three months of take-home pay. (This is a minimum and it is highly suggested that the fund be much larger, able to cover expenses for 9-12 months.) Through the years I also have given this same advise to my students and wokshop participants.

Never did I think that I would ever really need to use my emergency savings for an actual emergency. That is, not until a month ago when the last paycheck was deposited into our account. It was then that the reality of my job loss really sunk in: ”I was unemployed with no immediate prospects!”

It was time to put those Financial First Aid skills to work. The first thing was to examine current expenses and create a “bare-bones budget” based on the assumption that I might be unemployed for quite some time. Comparing the new budget with our emergency savings revealed that we can continue to meet essential expenses (and still have a little fun) for nine months. We are fortunate. And, hopefully, we won’t have to use up all of our savings.

Some may say that they can not save, especially during these economically-distressed times. My personal experiences and professional observations are that everyone can and should save something. It may not be the recommended 3-12 months of take-home pay, but it can be something. And as I always say, ”something is always better than nothing.” Additionally, the savings don’t have to all be in the form of money. For example, maintaining a well-stocked food pantry may, in some instances, prove to be more valuable than money in the bank.

Regardless of your financial situation, please join me in practicing the habit of saving a portion of everything we receive. Those who like or need a tangible committment may want to complete the Saver’s Pledge (suggestion: print on light-green paper).

Hard Times

drjand — Fri, 10 Jul 2009 15:20:33 +0000

My wife and son needed some change for a small purchase that required cash so I began the process of robbing the piggy bank that sits on my desk. After a few minutes of shaking and sorting I retrieved quite the assortment of coins. Quarters were what I was after but there were a few of those pesky dollar coins, the ones that look like quarters and also those imitation gold ones. I decided to “go for the gold” and assembled a small stack for my wife. She quickly responded that she didn’t want to spend them, that she was saving those coins for “the hard times.” I replied that “it already is the hard times.”

She took the quarters instead, but left me with “hard times” bouncing around my head. Was it hard times? Isn’t it always hard times for someone somewhere? What are the distinguishing characteristics of a person experiencing hard times? All that deep contemplation wasn’t making any sense (or cents), and I suddenly remembered what my older brother used to say: “Don’t think too hard it will ruin your brain.” (I think that was his way of trying to gain and maintain intellectual superiority.)

I was ready for a little Financial First Aid. And somewhere in those brain-rattling moments I also recalled fragments of a song that I had heard sung in church a few times: “count your blessings.”

Hmm . . . I still had a closet full of wearable clothes and a fairly well-stocked pantry. The bathroom scale provided further evidence that I wasn’t suffering from any degree of starvation. There wasn’t any imminent danger of foreclosure on the house and no creditors were calling. No one in the family was sick and . . .

Heck, the fact that I even had a piggy bank to rob was enough to convince me that our hard times hadn’t yet arrived!