Weathering the Storm

Best laid plans, right? These days it seems like a storm is always on the horizon.

No matter what your lived experience is, you’ve had to pivot due to an unpredictable life circumstance before. We just experienced that in our household. I won’t go into specifics, but safe to say we lost almost a week of our household plans in an instant.

When life throws your day to day into chaos and causes your attention to shift elsewhere you’ll want your financial life to stay put together. The main way that a financial planner will tell you to achieve this is a combination of cushions and automation. A lot of financial households run on attention – manually transferring funds, paying bills, and dealing with life one day at a time. All of this can work out, but works less well when something unexpected happens.

The Framework

What does the alternative look like? It’s easy. Let’s follow three principals to create it:

1) Have more in your accounts than needed on a monthly basis.

2) Automate transfers to keep it that way.

3) Save a reserve so you can replenish your funds if something goes awry.

When I say have more in your accounts than needed, have as much as you typically need in a month flow into the account and leave a few hundred dollars in there. This will help account for bill fluctuations, like utilities and subscriptions increasing in price. Thanks Netflix!

Use your bank’s automated transfer system well. I have my whole paycheck flow into my personal spending account. Then, an automated transfer moves money from there to the household’s joint account to cover bills. Another automated transfer moves money into savings each month. I also automatically pay off my cards each month. This allows me to spend whatever’s left without feeling like I’m not making enough progress!

Lastly, that savings account. You have likely heard before that you should have a reserve so that you can handle emergencies. While this is no new information, it’s an important piece of this simple puzzle. Sometimes you will have to put a big expense on your card – a home repair, a vacation, or something else outside of your monthly regimen. Whenever that happens, you’ll want to make sure you have a little extra in savings to keep balances off of the credit card.

Conclusion

If you utilize this framework well it will help you through not only big life changes, but your own forgetfulness as a human being. It can help in the days where you’re overwhelmed with basic life stuff. It’s just better to have this stuff happen on purpose and intentionally, not by accident. Then you can update it when your financial situation changes.

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