Do you have a financial emergency plan? Many people have an emergency fund – but do you have a plan for how you’d handle your money in a financial emergency, like a sudden job loss, were to hit you?
Category: Prepare Your Finances
The US is in desperate need of a little Lifestyle Deflation. A recent financial study found that 74% of Americans felt ‘at least okay’ about their finances. That’s not too bad! But this is the exact same study that also found nearly half of all American’s couldn’t afford to cover a $400 emergency.
How can the majority of people in the US feel good about their finances, but nearly half couldn’t cover an unexpected $400 expense?
Penny wise and pound foolish examples are everywhere. The term comes from an old English proverb that is sometimes used in the United States & Canada as well. Penny and pound refer to English currency. Those that are penny wise and pound foolish make decisions that appear to be financially beneficial, but actually cost you more money in the long run.
If they pay a penie or two pence more for the reddinesse of them .. let them looke to that, a foole and his money is soone parted. – ye olde English proverb
If you’re on a personal finance journey right now then you most likely know all about the ‘big stuff’ – spending less than you earn, investing, avoiding debt, not paying for coffee at Starbucks. 🙂
But after you’ve picked all the “low hanging fruit” from your budget then your next steps are to look for other ways to be efficient in your life. This is where penny wise & pound foolish can come into play, because you might actually think you’re making the right move, when in fact you’re putting roadblocks on your own path. That’s no good.
Do you remember what it felt like cashing that first paycheck from your first job? What did you spend it on?
Most likely, you were a teenager who wasn’t used to having money in your own name. You might have blown it on clothes, video games or something else spur of the moment. Be honest — I know I wasn’t the only one spending my hard-earned cash on impulse purchases!
As a teenager, it’s chalked up to being irresponsible and naive. As an adult, this kind of spending is more often than not a result of lifestyle inflation.
I love the Boy Scout motto: Be Prepared. I also love that the Boy Scouts have a personal finance merit badge.
The official Boy Scout motto traces back to a book published in 1908 titled Scouting for Boys. The author was Baden Powell, who also founded the Boy Scouts Association in England that same year. A short two years later the Boy Scouts of America were established and quickly grew to become the largest youth organization in America.
When Powell was later asked exactly what one should “Be Prepared” for, his answer was ‘Why, for any old thing.‘ He wasn’t kidding.