As a former federal government employee who lived through the longest government shutdown before the current shutdown, I have great sympathy for the government workers who have been furloughed, for others, like contractors and suppliers, who have been financially affected, and for Americans who have had important services suspended because of the current shutdown.
Many of the furloughed employees admit they are among the 78 percent of American workers who say they’re living paycheck to paycheck, according to a 2017 report by CareerBuilder.com, including nearly 10 percent of Americans with salaries of $100,000 or more.
You often hear financial experts say that you should have between three and nine months of expenses saved in an emergency fund for things like a job loss. I personally don’t know if that is the right number for everyone, but doesn’t this shutdown coverage make it clear that we all should be saving more?
After interviewing thousands of individual debtors from every demographic for 20 years in bankruptcy court, and doing financial literacy in rural, urban and suburban schools for over 21 years, I know that is not always easy for many Americans to save. However, the shutdown clearly shows that every day bad things happen to good people, and your financial plan cannot be to hope for the best and plan for the best. That doesn’t work in today’s world. Financially, you really need to plan for the worst, and have savings for true emergencies, and for those anticipated expenses that you can see coming.
The good news is that there are plenty of stories of people who thought that they couldn’t save, but they committed themselves, took some simple steps, and found that they could save. Then, once they built the saving habit, they wanted to save even more.
Here are some ideas to consider. First, assuming that you really can’t increase your income, honestly review all of your fixed and discretionary expenses. Are there things that you can eliminate, at least until you achieve your savings goals? Then, ask yourself, are you really doing everything you can to otherwise save money? Consider shopping at discount stores, less eating out, re-quoting insurances, looking at different cable and phone options, and making your travel coffee at home. The list is infinite, but that’s what it takes to meet your savings goals.
If you have high interest rate debt to pay down in addition to inadequate savings, I like the idea of allocating something to both goals. That way you can get incentivizing reinforcement on both fronts. Take some stress out of your life. Have adequate savings.
John Ninfo, a retired federal bankruptcy judge, is founder of the national Credit Abuse Resistance Education program.
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