If we’re supposed to have 6 months savings in an account in case of getting laid off…do you know what that amount should be for *you*?
Financial guru, Dave Ramsey, recommends people have 3 to 6 months of savings in an account in case of unemployment, which means that if you didn’t have income coming in, would you have the savings available to pay your bills, your essentials – the essentials are 4 categories: your home, food/clothing, utilities and transportation.
How much do you spend on your home each month – rent or mortgage?
How much do you need to feed and clothe you and your family for a month? If you don’t know the number, find out the number. You can start today. Start logging what it takes to feed and clothe your family for one month. Write it down each night. At the end of the month, you’ll be able to confidently answer this important question.
How much is water, trash disposal and electricity/gas for your home?
How much gas do you need each month to drive where you need to go (or car payments if you have those or public transportation)?
Now multiply that by 3 if you’re a double income household or by 6 if you’re a single income household to come up with how much should be in that savings account in case a lay off happens.
We guess at numbers or we sit down and get overwhelmed by numbers and, as Brene Brown says, next we have a banana nut muffin and a beer and ignore them, but knowing the numbers, wrangling with them, and figuring out what’s actually needed to live is freeing. Cut the waste away. I couldn’t believe one time when I looked through the apps we had accrued, how many were ones we’d signed up for to use for a month – with the first month being free – and we’d forgotten to cancel after that first month!
You can do this! Keep your eye on the goal – financial freedom so you can live as you wish, spending money on what you prioritize as most important, not falling into the traps of “I want, I want, I want” – first comes the denial, then comes the life you’ve always wanted, the legacy you always wished to leave for your children, the growing old with dignity and the comfort of self-provision as you age. Start today!
“Tell your money where to go rather than asking where it went.” DR