In the annual survey of American’s savings rates, an alarming trend is emerging. Reports show that 60 percent of American households could not cover a $500 car repair from savings. This, reportedly, would force them to increase their credit card balance, borrow from family and friends, not pay one of their other bills, or do without a necessity in their monthly expenses.
I have been more impoverished than most people, and I’m grateful to say today I enjoy a level of wealth that exceeds all but a handful of my readers. This gives me a perspective that many people don’t have.
In the process of going from overwhelming debt to building significant assets and security, there are a number of meaningful milestones. I remember paying off all of my credit card debt and committing to never carrying a balance again. I remember buying a used car and, eventually, a new car and paying cash for them. I remember paying off the mortgage on my home, and I remember writing the biggest check I have ever written in my life and giving it to charity. All of these milestones are significant to me as I look at my financial life, but they pale in comparison to the feeling of having a fully-funded rainy-day or emergency account.
It is frightening to comprehend that the majority of Americans would be thrown into financial turmoil over a $500 car repair. Most of these individuals are not poor people, they are poor managers. Prudence dictates that we have insurance to cover medical emergencies or damage to our home or car, but we must also have funds to handle or self-insure the ongoing expenses of life.
If you’ve owned and operated an automobile for any length of time, you realize it’s not a question of if but when you will be forced to deal with a car repair. Five-hundred-dollar car repairs are not unusual. In fact, they are inevitable.
Our busy lives are filled with unanticipated expenses whether it’s uninsured medical and dental procedures, appliances that need to be replaced or repaired, costs surrounding kids and school fees, or any number of financial bumps in the road, being able to cover these costs from a pre-established rainy-day or emergency fund is one of the greatest feelings you will ever enjoy. If you want to improve your financial life as well as your mental health and family dynamic, stop playing financial Russian roulette with expenses that you know are eventually headed your way.
As you go through your day today, establish a rainy-day fund that will keep you and your family safe and dry.
Today’s the day!
This and other motivational pieces by bestselling author Jim Stovall can be found in his Wisdom for Winners series, each title in which is an official publication of the Napoleon Hill Foundation. Listen to these inspirational collections of Stovall’s writings now on Audible: Wisdom for Winners: A Millionaire Mindset, Wisdom for Winners Volume 2, and Wisdom for Winners Volume 3.