When I was a teenager and a young adult, I set my financial goal pretty low, or so I thought. My goal as an adult was to have enough money so that I could do small things each month without worrying about running out of money. Not extravagant things – I honestly have never had extravagant tastes. Just things like going out for a movie once a month or so, going out to eat once a week or less, the occasional bottle of Bath and Body Works lotion.
This isn’t a post about frittering, although it could be. My material desires were really not that huge. What this is about is setting goals and expectations for yourself in a vacuum.
For although I had small goals I thought were totally reasonable, I had no plan at all how to reach them, or even the tools to understand how. My spouse and I make a decent living – we are not by any means wealthy, in fact we hover right around the border of the 15% and 25% tax bracket – but it should be enough for us to live comfortably enough. But we were constantly derailed in our struggle to more than get by, and honestly it felt like there was nothing we could do about it.
Our derailment was in unexpected emergency expenses. We didn’t plan for emergencies, and so when they happened (which they seem to with an annoying frequency) we had to pull money from wherever we could find it and use it for the emergency. Usually our checking account, and sometimes some money from our son’s college fund (that we ourselves had established). Then we’d be behind, because we needed to repay the college account. And once we did that, it seemed something else would come up. It was a vicious cycle, and although the solution was rather simple, I honestly had no idea what it was.
We focused on reducing our outflow. Not completely (we had two kids along the way) but we focused on trying to reduce our credit card so we’d have one less bill. We looked forward to each raise my spouse received, but it seemed spent before we even got it. We counted the years until we’d have the student loans paid off.
What we didn’t do was establish an emergency savings fund.
We were like a lot of people. We thought that “If we could just make more money, things would be easier.” And maybe they would be. But if we established an emergency fund, we would have money for those unexpected emergencies, and that coupled with a true and honest budget have really turned things around for us.
No, we still don’t have enough money to go out to eat and buy little treats. But the difference now is – we know that someday in the near future – we will.
Note: The whole family is suffering under the stomach flu now, so Tell All Tuesday may become Tell All Thursday this week. I’ve got fun news though so check back for it!