You just keep hearing that having a monthly budget is important. It’s important to save money, budget and pay your taxes. But, have you ever stopped to think WHY budgeting is so important? Do you understand the importance of saving money? And, we all know why we have to pay our taxes, so we don’t go to jail, so I won’t even talk about that.
I have been hearing a lot lately that most people don’t even have a savings. I also read recently that over half of Americans don’t have $1000 combined in their savings or checking. They also mentioned that the middle class was, basically, non-existent. (Article via Salon.)
I then read an article from Forbes that went on to say that wasn’t true. He says that people don’t need to have a savings or enough money in their bank account because most of those people have access to credit and can just as easily get a loan. I do agree with him that the middle class is still there, simply because these people who are living paycheck to paycheck could EASILY change their ways and be very comfortable in that classification. But, I don’t agree that people should just fall back on getting a line of credit in emergencies.
Typically, I try to see the other side of people’s opinions and come to a mutual agreement with them. In this case, I happen to think it’s sad that this is what people think, they can just get a line of credit for emergencies and not worry about the consequences.
Do you know what those consequences even are?
Do you know what your financial ability can to turn to if you are living paycheck to paycheck?
If you’re living paycheck to paycheck and tend to agree with just getting a line of credit in emergencies, then you will almost always live paycheck to paycheck. If you like that kind of stress in your life (I know that I definitely don’t need any more added stress in mine!) then that could be a good solution for you instead of some simple planning.
I’m not here to tell you that you are doing things all wrong, and that if you agree with Forbes that you’re going to financial hell, I am just here to give you a few situations on why you need to plan, have a savings and stop falling back on that line of credit.
Have you ever thought what you’d do if you or your spouse had lost your job? Would you be financially prepared to have no income for at least one month?
What if your child had to go to the hospital resulting in a $500 medical bill? Would you easily be able to pay that and not stress that you don’t have anymore money for the month?
There’s the typical, “That won’t happen to me.” But, it always happens to those who aren’t expecting and to those who aren’t prepared.
Just a year ago the price of oil had dramatically dropped, resulting in thousands and thousands of job losses. These things happen and are very real.
My point is, think about these emergencies and know that they can quite possibly happen to you and your family. You may agree that you’ll just swipe that credit card if anything like that happens. Which results in more debt for you to start paying. Sending you through the never-ending cycle of living paycheck to paycheck.
Debt is not how you gain financial freedom. It’s not that hard to save $1000. All it takes is a little planning (with the help of your monthly budget) and a little commitment.
The first thing I think of when it comes to a monthly budget is retirement. You can simply not rely solely on social security to be enough for you and your spouse.
There is a family I know who will be working long past their retirement age. Simply because they have no savings, no retirement and can not live just on social security. Him and his wife both work more than one job and have a few kids. By the time they do retire they will still be living paycheck to paycheck and not be able to do all those things they dreamed about for “When they retire.”
I see so many people who work too hard and have it amount to nothing. Blaming the world for their money problems is typically what they tend to do. When in reality, it was their financial neglect. As I’ve mentioned in other posts, only 20% of handling money is knowledge. The other 80% relies solely on your behavior of how you act when you have, or don’t have, money.
If you want this to be your scenario then continue to not plan a monthly budget. Yes, it is easier to not worry about your future right now. But, it will catch up to you when it’s the most important.
Hopefully you see the importance of having a savings. Whether it be for emergencies or whether it be for retirement. No one should have to live paycheck to paycheck. If you are, then you can absolutely get out of the slump and on your way to financial freedom.
Also, I feel like this post was a little bit harsh. But I want you to know that you don’t have to live paycheck to paycheck. You CAN be financially free. You may be saying that it will never happen to you, but it is a very real possibility. I want you to succeed and feel comfortable about where you and your family are financially.
Stop the unnecessary stressing and start the necessary planning. You’ll thank me later. 🙂
If you’re serious about starting a monthly budget but don’t know where to actually start check out my post on how to budget your money for beginners.
What are you doing to plan for life’s unexpected financial emergencies?
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