The only certainty in life is that it is unpredictable. So it is crucial to have some money behind you when the unexpected happens. Note that I said ‘when’ not ’if’.
It is a mistake to assume that life will always go on as it has in the past. At some point, life will serve up lemons instead of lemonade. The older we become, the more we realise that it can all change in an instant. So saving money for a cash buffer sooner rather than later is essential.
Have you ever reflected back on life and wondered where all the money went? In the majority of cases, the answer is largely towards managing a mortgage and providing for children and family.
This is not wasteful or frivolous spending. These years are truly the most expensive of your life. So if you are not careful with money, it is so easy to arrive at middle age with nothing to show for what seems like decades of hard work and sacrifice.
Lack of money at any stage of life is quite common. When you have no savings, it only takes a serving of lemons in the form of a health crisis, a job loss, business failure or a relationship breakdown to put you in the worst financial position of your life. This could happen at any time and a personal debt burden will only make it worse.
These are the circumstances where life really starts to go downhill; where desperation starts to override common sense and derail money decisions. Your home might even be under threat at times like this, so borrowing more money, spending on credit, or even gambling might seem necessary just to survive. Sadly, it only makes it worse.
You may not be able to stop the lemons in life but having savings behind you will always help. So learning the discipline of ‘saving no matter what’ and squirreling money away during the good times (instead of spending it) are two very good money habits to get into early. Oh, and rethink credit cards. They can be as deadly as cigarettes.