Wrap Yourself in a Bubble and Weather the Storm
September 19th, 2011
Hurricanes like Irene make us all stop and take stock: do we have some water stored? Do we need a generator? Do we have our important documents (or copies of them) stored away from the path of destruction?
Those are important questions, but one of the most important things we can do to weather any storm – whether it is a hurricane, a bubble bursting in the housing market, or a recession that causes the unemployment rate to double – is a protective cushion of savings.
The American economy has seen more prosperous times. Now, businesses are closing, credit is failing, and people are losing jobs. With the future uncertain, many people are scared about what will happen when or if they lose their jobs.
What will happen if they are laid off? What will happen if they get sick and have to go on half pay disability? How will they pay their mortgage? How will they pay their medical bills? How will they feed their families?
These are all relevant questions, and the answer is the same across the board – start saving now.
Admittedly, it’s easier said than done. Even when you do have extra money when the bills are all paid, it seems like there is always something unplanned – car repairs, school supplies, a trip to the dentist – that make it more difficult, but surviving the chaos of life is a lot easier to do when you have some financial cushion to absorb the impact.
There are many things you can do to stretch your dollars further canceling unnecessary subscriptions and reducing monthly payments on luxuries. Even cooking at home instead of eating out a couple times a week can make an enormous difference in the health of your bank account. Every little bit helps. Even if you only put $25 every week, you’ll start building a buffer between you and the next hurricane, recession, or catastrophe.
At Ovation, we recommend that you create a buffer of at least six weeks to three months. That means that you save up enough money so when problems arise you can at least pay a month or two of bills. It may seem like a hardship to save up that much money, but imagine how much harder it will be if you cannot pay your bills! The sense of relief you feel from having that buffer, knowing that if you lose your job or if you get sick, you have money saved that will keep you afloat until you can stand on solid ground again, is worth sacrificing pizza night now and then.
