Let It Rain

Audio By Carbonatix

For those of you who are not familiar with the idea of a Rainy Day Fund, it’s simply a financial way of saying that you’ve saved up a little money to help you cover expenses that arise unexpectedly. With all of the great teaching from people like Dave Ramsey, most people have access to the knowledge of how to put a budget together, but that doesn’t mean they do it. Therefore, when a surprise expense rains down on their lives, they find themselves drowning in debt and stressing out. That’s why it’s important for me to encourage you to start a savings account if you don’t have one. Try setting some money aside every month, even if it’s only $10, in order to be prepared for the unexpected events of life. It’s really not a matter of if some unfortunate situation will occur in life, but when.

It comes down to discipline. It’s easy for all of us to justify whatever purchase we make when it’s something we really want. For example, maybe your car is getting a little older. Recently you had to put new brakes on it and then maybe a few months after that, it needed a new muffler. As you drive around in your used car, you can’t help but notice all the people driving in their shiny, new vehicles. Well, at least newer than yours. A desire starts to build inside of you. It gets you thinking that maybe you are putting too much money into repairing your old vehicle and that perhaps it would be more cost effective to buy a new car. When you work it out on paper, however, the repairs only come to $1,000 for the whole year, while one car payment would equal that amount for just one month. Still, the desire for something new is often stronger than the wisdom of that calculation. You continue to justify it in other ways like thinking that the resale value of your car will be greater now than it will be if you wait another year. But, when it comes down to it, the best financial decision is to keep the car you have and just make the repairs. Then you can put any extra money (the amount you are saving by not having a car payment) into your Rainy Day Fund.

We need to teach this principle to our children at a young age. Teach them to put aside a few dollars each month or each week, either out of a paycheck or out of their allowance, in order to pay for that item. Make sure they understand why this concept is a good idea. At the same time, teach them the risk of developing a “buy now, pay later” mentality. This lesson will come in handy when they are adults and need to manage multiple bills like a house payments, electric and gas bills, and other necessities like purchasing groceries, clothes, and vehicles. You will have helped them build a system that prepares them for the realities of life.