From the book, PSST! Wanna Know a Secret?
“Rule 5) Keep at least three months’ salary in reserve just in case you do lose your job. This is a good rule, if you can follow it. At the beginning of your working life, it might be hard to do, but after becoming established, keeping this much in a reserve fund might be just the ticket you need for finding another job or another income-producing project.”
This is a good rule to follow, but as pointed out, it could be difficult to execute when and if needed. You should try to have access to a “chunk of money” for emergencies. If you only have one source of income and you lose that income, it could become rough rather quickly. Having enough cash to get by for a month or two, or three, is a very good thing.
If you have some cash at hand, you can use it to get through a dry patch of a period of no paychecks. Or, if you have something else in mind, such as starting your own company, it might be the ticket to make that happen. Regardless, you are going to have to pay bills during that time your paychecks have dried up and the only way to do that is to have saved enough for that eventuality.
As mentioned, if you have income coming in from all different directions, saving might be a little easier. As mentioned within the rule above, when you first start working, saving might be a little difficult. Somehow, you are going to have to figure out a way to live on 90 percent of your take home pay; that other 10 percent needs to go to you – in the form of a savings account.
You have to discipline yourself to maintain the schedule of deposits into your savings. In other words, come up with a plan that is easy enough to follow and then follow through with it no matter what. You will be surprised at how quickly your savings will accrue.
If you can stick with it, what you will gain from you savings program is peace of mind. You will not have worries over what to do if or when the bottom falls out. The bottom line is to always have a plan, maintain a position of action so that when something happens, you are ready to execute. It becomes easy after that; might be scary at first, but it will eventually work out.
If you have not seen the movie, The Best Exotic Marigold Hotel, I highly recommend the movie. It depicts one of the best lessons about life – having an excellent attitude. The main character, Sonny Kapoor played by Dev Patel, made an excellent point. A couple of times through the movie, he would tell his clients, “Everything will be alright in the end. And if it’s not alright, then trust me, it’s not yet the end.”
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