Murphy’s Law says that anything that can go wrong will go wrong. The saying definitely rang true for me back in my younger days. Rent was due, my car inevitably needed a repair, or an unexpected medical bill popped up. And it often seemed that as far as expenses were concerned, when it rained, it poured. In my twenties, I almost always turned to a credit card to get me out of whatever financial jam I found myself in.
Dave Ramsey promotes his use of the seven baby steps to financial freedom. Step one is saving $1000. It sounds incredibly simple, and almost counterintuitive at first. Why am I setting aside money when I’ve got a small mountain of debt? Shouldn’t I use that money to pay off my bills? Ramsey calls this initial emergency fund “Murphy Repellent.” He argues that just by having a little bit of money set aside, it helps keep all of those little emergency bills that pop up from completely derailing you. In other words, an umbrella for those days when it’s raining and pouring.
So I played along and saved my $1000. Know what? It worked. All of those bills that just kept popping up starting showing up less and less. And more than that, it just felt good to know my bank account balance wasn’t zero.
Today, I read a stat that says 39% of Americans have no money saved. I’ll admit, it caught me off guard. I don’t presume to know other people’s circumstances and I’m sure there are millions of reasons why people don’t have money saved. But it scares me for the future of our country and its families. We live in a time where a single major car repair or medical event could completely jeopardize a family’s situation.
Something I haven’t touched on yet in this series about money and budgeting is the tendency for Americans to buy stuff and lots of it. I’m the first to admit I’m not immune to the shopping bug. I’ve also noticed in the last six months or so how many advertisements surround me every day. Between my email, Facebook, Instagram, and so on, I see ads for clothing stores and others on an almost daily basis. It’s no wonder why we keep spending more than we save.
Now I know that many families truly don’t earn enough to adequately provide for their families and that’s an issue that needs to be addressed. But there are many families, my own included, that spend more than they make not out of necessity. Admittedly, it’s hard to say no when we are tempted to buy the next best thing. For me right now, I’m really tempted to plan a trip for spring break in April (or earlier – this winter is no joke!). But I’m trying to stay focused on my money goals. Maybe I’ll reward myself with a trip once I accomplish my goals, but for now, I’m staying on the debt payoff train.
But back to this idea of saving. I’m in a better position now than I ever have been before. Full disclosure: I didn’t exactly follow the baby steps in order. After saving the initial $1000 (baby step 1), Ramsey recommends paying off all debt except your mortgage if you have one (baby step 2). After the debt is gone, then he recommends saving an emergency fund that would cover your expenses for 3-6 months (baby step 3). However, because of some potential changes in my personal and professional lives in the near future, I chose to do step 3 before step 2. The result is a safety net that allows me to rest easy even though much of the road ahead is unknown.
Like I said, I know every family is different, but I would challenge you to get $1000 in the bank in 2019 if you don’t already have it. Sell some stuff, find a side job, spend less, or whatever works for you. If you start now, you would need to put away about $90 a month from now until December to get there. Or about $22 per week. If you’ve never had anything saved, it could really change your life and your outlook on money. You’ll be ready to kick Murphy to the curb and stay nice and dry when it rains and pours.