Save More Than You Spend

I have worn my adult  children out, telling them this story about Amy Dacyczyn, my frugal mentor that I have written about  earlier.  I want them to learn from her free spending  20’s:

Amy moved to Boston in her early 20’s with a graphic design degree. She said she worked for ten years and enjoyed eating out, and spending freely. When she turned 30 and got married, she suddenly realized she wanted a house. She looked back on the last ten years and realized she had nothing to show for ten years of work. Nothing, zip– ZERO! It was a shock to her system and she made a huge shift mentally about saving. Because she wanted children and got pregnant right away, she saved her income for 9 months–$25,000.00, while they carefully  lived on her husband’s income.  It took her another seven years of painstaking, careful frugality to save another $25,000.00 so they could put a downpayment on a house. They wanted a large down payment in order to not pay mortgage insurance that is tacked on to every mortgage payment if you have a low down payment.  What if she had saved just ten percent of her income in those care-free single days? They could have bought a house seven years earlier. What if she had saved twenty percent? Again, she would have been much further ahead. She used that lesson of unconscious spending and tried to educate the readers of her newsletter, which turned into her  books, on how to spend very consciously and save very deliberately.

Thousands of dollars go through our bank accounts each year, and how much do we actually keep? How much do we manage to hang on to so we can have more control over our lives?

Have a Large Emergency Fund

I made this a separate principle from “Save More Than You Can Spend”, because saving is the first part, but having an emergency fund where it actually saves us from the disasters that hit all of us, is a critical second part. Having an emergency fund is more than just saving. This important, going-against-what-the-rest-of-America-is-doing  ensures that fear and worry will recede from our lives. On it shares this startling statistic:

“Nearly three in 10 (28 percent) U.S. adults have no emergency savings, according to Bankrate’s latest Financial Security Index. One in four have a rainy day fund, but not enough money to cover three months’ worth of living expenses.”

Dave Ramsey  says  to start with a $1000.00 emergency fund until your debt is paid off. After all your debt is  all gone and you just have your house to pay off,   you can save 3-6 months of income for a super emergency fund that will take you through most emergencies–job loss, house disaster, or a wrecked car. 

This is a personal math problem. We need to think about what we could get by with  if we lost our jobs unexpectedly. What would we need to get through three months of no income for food, housing, utilities and transportation?

I am a member of the Church of Jesus Christ of Latter-day Saints. Here is a link to their providential living website. We are counseled as church members to have a 3 month supply of  food for  emergencies– of basics like oatmeal, flour, sugar and beans. Again, no one saw Covid 19 coming and having more than  a week’s worth of food in our homes is another way to add to our peace and comfort.

Our  emergency fund saved us in 2020, when my self-employed husband’s consulting business disappeared overnight. It took 9 months for it to start up again. I can’t even tell you how amazing the peace was that we would be okay.   An emergency fund is  a liquid asset that we can get to  in an emergency. That means cash, set aside in an account. These are not retirement accounts because we need those for retirement and there is usually a hefty fee to pay when money is withdrawn early.

Having savings and extra food stored at my house is a game changer and it helps our children learn as we talk about how to feel tranquil when things–inflation, supply chains disrupted, and job loss– feel out of control.

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