As mentioned in my previous blog article, most people plan and save for their travels more than for an emergency.
To most working adults, there are always credit cards for their “extra” spending if the need arises. And to most business owners especially the Small and Medium-Sized Enterprises (SMEs), there is always a bank loan, credit facility, or parents for them to get the money they need.
Therefore, they see no need to plan and save for any emergency. Cash is just a few clicks or phone calls away. Be happy. Be merry. Keep drinking. Keep spending. YOLO……
They are wrong.
Not Every day is a Sun Day
As of this writing, the whole world is still struggling economically to cope with the COVID-19 outbreak. Many governments are digging into their country reserves to help save their economy from collapse. Fiscal and monetary policies that cost governments billions and trillions of dollars will be spent.
We are dealing with a very expensive virus.
All good governments know that not every day is a sunny day. There will be days of rain and thunderstorm from time to time. As such, they are always prepared ahead of these emergencies. Singapore is one such good government.
What about you? Do you have enough emergency funds set aside to tide you and your loved ones through this COVID-19 virus crisis?
As the saying goes, “No one plans to fail, but many fail to plan.” Where are you in this?
We Don’t Learn from the Past
In an economic crisis, CASH IS KING, not toilet paper. Whether you like it or not. This fact changes not.
If you have gone through some recessions as I have, you will agree with me on that. But sadly, after those recessions, we forget them. Then we repeat them, and the cycle goes on and on. Repeating itself. When will we ever learn?
You don’t have to wait for a recession to hit you in the face to learn the importance of emergency funds. You don’t even have to personally experience it to feel the pain of it.
All you need is a keen eye and ear on the ground.
I am sure you have heard of or read about someone who has worked in a company for 20 years and only to go broke after 2 months into retrenchment. Be wise and learn from the mistakes of others.
Without an Emergency Fund
Without an emergency fund set aside for a rainy day, you cannot go far in life even in the absence of a recession or crisis.
If you are up to your eyeball in your credit card debt, car loan, business loan, housing loan, and study loan, etc. you have a big problem at hand. You may not be able to fulfill your monthly financial obligations for long in a recession or crisis situation.
Frankly, you don’t need a recession or crisis to wipe you out. A retrenchment will do very well. Getting a job in today’s economy takes an average of 18 months. Can your lenders wait 18 months? This is how risky you are financially without an emergency fund. You and your loved ones are walking on quicksand. Period.
Cannot Save? No Opportunity?
Singapore is one of the most expensive countries in the world. And most people have used that as an excuse for NOT saving or not saving enough. This is a myth in my opinion.
You can always save regardless of where you are on the planet or your current income level. It is about your discipline, commitment, and choices. Do you want a greater financial life than you have now?
For a fact, no one needs to drive a car to work. No one needs to drink the 8 dollars coffee to perk up. No one needs to dine at expensive restaurants. Most people spend money to impress people they don’t like. They are digging their financial graves.
Also, there is no such thing as a lack of opportunity but rather a lack of imagination and creativity in money-making. I have always believed it is easier to make money NOW than ever before. You just need to open your eyes and ears and sit down and think.
But the problem is what William James once said, “Men simply don’t think.” This is the reason why the rich and wealthy are always the minority. But you can be one of them too if you start saving today and stop all your excuses now.
By the way, you don’t only want to save for an emergency. You also want to save for the better things in life like travels, investments, retirement, education, charities, etc. You want to put your savings into different buckets and when each bucket is full, you know you can safely use the money in it happily without incurring debt. If you use the bucket method as I have, you know you are very much covered financially in those important areas of your life.
Thank you for reading this article. I wish you well financially.
CEO & Founder, ALGOINSIGHTS PTE LTD