Remember when you were little and one of the first things you were taught about money was how you should save for a rainy day. It’s such a cliche statement, everyone knows what it means and nobody really has a good argument against this philosophy.
The sad part is, most of us don’t really follow this philosophy even though we agree with it. Again, life gets in the way! What if you have a mentally tough year such as a breakup with a partner or perhaps you were injured at work and you need a holiday right now?
For the sake of your sanity, you will take the financial hit and just get on a plane to fly away. In your day to day life, where could this statement come true?
A big hit
Recession, it comes around every 10-15 years. The vast majority of people have absolutely no clue at all when this is going to happen. Even the ‘experts’ get it wrong all the time.
The thing is, recession affects every single thing. Every aspect of your financial lifestyle is turned upside down. The price for filling up your car with gas, shopping for groceries, train tickets, clothes and pretty much everything else suddenly skyrockets.
Now your money is worth less than it was yesterday and you need more of it to get the essentials and luxuries alike. So this is when you need to have a cash reserve that will help you live a normal life for at least 6 months during a recession.
It gives you enough time to adjust to the economic climate and bare the brunt of increased prices.
When the law knocks
We all hope that no one we know and care about gets in trouble with the law. However, hoping doesn’t really affect much and sometimes you really do need to step in for that person.
Most of the time, the initial requirement for cash is when the person that has been arrested and charged needs bail. Bail Bonds are able to be used for multiple different scenarios.
It could be for a nationwide offense, making an appearance, surety and or appeal. They will offer you the money for the bond but it’s good to have a cash reserve so you can immediately pay off the bond without interest payments accumulating too high.
A prosperous chance
Millions of people around the country are constantly in search of another job. Sometimes they are passively searching, just making their professional online presence known that they are indeed seeking a new prosperous career.
If a job is offered to you but it’s in another city, you need to get up and go before time runs out and they hire another person. You might not have time to sell your own house or condo, which is why a cash ISA is such a useful tool. The money you save here will gain large amounts of interest but you can take the money out whenever you wish.
A rainy day does not come announced. You never know when something might fall in your lap when you do need to just have a large pile of cash ready to be used to resolve a situation.
What are you doing to save for a rainy day?