by Jim Stovall
We have all heard and read a lot recently about the financial crisis or monetary emergency that we are facing. These reports, most often, define the looming disaster in terms of billions or even trillions of dollars. While we are certainly facing some difficult economic times around the world, the most critical financial emergency we are facing, individually and collectively, is represented by $1,000.
A recent survey showed the staggering reality that 64% of Americans don’t have $1,000 set aside as an emergency fund. This is an alarming statistic because, with the cost of all the complex devices that make our world possible, a non-functioning refrigerator, broken transmission, or even a leaky roof can use up a $1,000 emergency fund and more.
It’s not a matter of if you’re going to have a $1,000 emergency. It’s a matter of when.
These 64% of respondents to the survey were asked what they would do if they had an emergency since they don’t even have $1,000 set aside.
- 9% of them said they would take out a loan;
- 17% declared they would borrow from friends or family;
- 9% replied they would get a cash advance on a credit card;
- 17% replied they would simply disregard other monthly expenses to cover the cost of the emergency; and
- 12% actually said they would have to sell or pawn some of their personal possessions.
In my latest book, The Ultimate Financial Plan, my co-author Tim Maurer and I explore every aspect of the financial decisions that are faced by you and your family; but it all starts with an emergency fund.
There is a tremendous benefit to having an emergency fund that goes far beyond covering the cost of an emergency. It could commonly be defined as a good night’s sleep. If you are one of the majority of Americans that don’t have even a minimal $1,000 emergency fund, you need to declare your own emergency now, and begin compiling reserve funds for that next inevitable bump in the road. You can turn a broken air conditioner, a visit to the minor emergency medical center, or an unanticipated tax bill into an annoyance instead of living with these realities as a looming emergency.
The number one cause of divorce, depression, and dissatisfaction in our society is reported to be worry over money matters. I’ve got to believe that the majority of the worry is not about retirement, college education, or paying off the house. Most worries are about those routine, daily matters that come to us unexpectedly and can only be resolved with money. Money is far from the most important thing in life; however, with respect to the problems that money solves, there is simply no substitute.
As you go through your day today, realize that relaxation and peace of mind may be only $1,000 away.
Today’s the day!