GETTING AHEAD

There is no getting around the fact that we are going to incur costs in our daily living. Sometimes those costs are not planned for. For example, a lady who attends the church where I pastor had her transmission go out on her. Anyone that has had a transmission worked on knows how expensive this is to repair. It is an unexpected expense. It is not something that you can plan specifically for because we obviously do not know the future.

Sometimes it seems hard to get ahead when our costs rise to repair broken items. It seems that something is always breaking down. Break downs are inevitable. What we have to realize is that we are on this earth temporarily. This is not a permanent stay and nothing lasts forever here. Thus, we should anticipate that we are going to have repairs and have to replace worn out items. We should expect it rather than be surprised by it.

The key to getting ahead despite these unforeseen expenses is to establish an emergency fund. Emergency funds also cover the inevitability of job losses. Most people do not have a job that they keep for thirty years, retire and get their gold watch. In our day and age, this rarely happens. Competition is such that industries are changing. What looked as though it would be a going concern for years and years suddenly disappears and people are having to look for work. Also, government intervention into the market assures that people will lose their jobs.

It is hard to get ahead with a job loss. Most financial planners recommend keeping 6 months of monthly expenses in an emergency fund. This will give you a cushion until another job can be found. One financial planner recommends putting 60% in savings, 20% in an emergency fund, and the other 20% in a discretionary spending account of money that is being budgeted for savings. The only way to establish an emergency fund is to spend less than you earn.

By systematically adding to your emergency fund on a monthly basis, any unforseen event will not be a stressful one. When people do not prepare for the future and its inevitable unexpected expenses, they are put into a stressful situation of not knowing what to do and will go to the government to seek assistance. They become a charity case. It used to be a shame to be on assistance, but not anymore. Lack of preparation for the future is the norm, not the exception.

The frugal realize that unforseen expenses are going to happen and they are prepared for them when they occur. They do not get stressed out because they know that they should have adequate funds to cover these costs because they have been preparing for it. The key to all financial planning is foresight. Looking ahead to the future and preparing for it puts the frugal in the upper class. Those who do not prepare for it will find themselves having to beg.