It’d be like scaling Mount Rainier and not taking your jacket. Driving a car with no brake pedal. Betting the title to your home in a card game.
In all of these scenarios you take the chance that nothing will go wrong. But when it does, you’re gonna freeze to death, crash your car, and be sleeping in a cardboard box.
The same is true when people our age do not stash any cash for those unexpected times when we need money the most.
Bottom line, the vast majority of 20-somethings don’t save enough to cover an emergency. You suddenly want to change jobs, get sick for a while, are laid off, fired, or break some bones in a car accident. By not having a cash cushion with a few months income socked away, a lot of us roll the dice that the above will never happen.
"Most people procrastinate when it comes to financial planning for unexpected events," says Tony Busch, CUSO (credit union service organization) vice president at Community First Credit Union in Appleton, Wis.
Learn from Sam and Dede. All it takes is a little planning to give you the cash cushion you need...
sam saved; dede didn’t
Sam was a web analyst in California. Dede was a computer technician in Maryland. Each had adequate income to cover monthly expenses, with $300 left over per month.
Sam set up an automatic savings plan at his credit union, and socked away the full $300 each month. After a year, he had an emergency cash cushion of $3600 plus about $260 in interest earned, totaling $3,860. Unlike Sam, Dede blew her $300 each month, flew to Oahu, barhopped along the southern coast. You get the idea.
Sam and Dede each had a close relative become deathly ill, forcing each to quit working and care for their family member. Sam flew to Seattle to tend to his brother, missing 2 months of work. Sam had saved though, and had nothing to worry about. He never missed a rent payment, nor a car payment. He was even able to pay for the plane tickets back and forth from Seattle.