The month of June signals the start of a new school year. Students have to wake up early again for the next ten months just to attend class. The month of June is also the start of the rainy season, although as of this writing, the effect of summer is still felt. Parents have to prepare for the miscellaneous cost after tuition fee like transportation, food, allowances etc. It is a big drain to their pockets. A lot of parents go out of their way just to send their children to good schools, hoping that after they finish school, they land a good job and earn good income. Parents need to plan ahead of time so that they can cope with the rising cost of education. Aside from that, they also have to plan ahead for the challenges brought about by the rainy season during the school days.
Every family should be prepared in the event of severe weather conditions. They should prepare a family disaster supply kit which includes essential items such as food, water, and sturdy clothing, to sustain a family for up to three days should there be electric power, gas and water services that may be interrupted.
We have to prepare for another rainy day, life’s rainy day. Life is not a fairy tale. In fact, life has its ups and downs. Just like what Han, the protagonist in the movie ’Enter the Dragon’ said: “It is the defeat that we have to be prepared for”. It pays to be prepared to avoid certain defeat in life. Just look at the ways of the ants. During summer, you will see them gather food. Even without someone monitoring them, it is automatic for them to look for food that they can store up so that when the summer season ends. They have enough food to keep them alive during the winter or rainy season.
The Chinese has this to say. “The best time to prepare for a calamity is when there is none”. Majority of the people always enjoy life as if there is no tomorrow and when emergency strikes, the most logical thing for them to do is to borrow money at a high interest. That single decision can wreck one’s financial life similar to a captain who made a wrong decision and caused his ship to sink into the ocean.
How can we prepare for life’s rainy days? Below are some basic steps:
- Save up 20% of your income. We can see that this principle is similar to that of the story of Joseph the Dreamer. In the story, God instructed Joseph (as Egypt’s Governor) to save up one fifth of the harvest during the seven years of abundance. This is to prepare them for the coming seven years of famine. In our present day, the harvest can be represented by our income. Financial planners recommend saving the same percentage off the monthly income to build contingency fund as a cushion to minimize the impact of a sudden emergency. The fund can be equivalent to six month worth of salary. The problem with most people is that they often have emergencies but no fund.
- Get insured. In life, the worst form of a rainy day is the sudden demise of the breadwinner. Most of the time, when a breadwinner suddenly dies, the family is left with no money saved. What is worse is the family is even left with tons of debt that has still to be paid. The only antidote to this scenario is insurance. This is the only instrument that can lift the family out of a financial mess as a result of the untimely death of a provider. A lot of people see insurance as an expense but what they do not realize is that insurance is indeed an expense that buys him his peace of mind. By buying insurance, the person is transferring the risk of the sudden loss of income (from his untimely death) to the insurance company. It can also become a wealth transfer instrument for the insured who has no money who wants to transfer a big amount to his family upon his death. Since we are all mortals who are destined to die one day, then there is no one who does not need insurance.
- Get a health card. Human beings are prone to sickness and just like death, we do not know when it will strike. The cost of getting sick is so high that there is a possibility for a person to lose his savings due to illness. By getting health coverage, an individual can save his family from financial trouble and charge all expenses to the issuer of the health card. Nowadays, providers have become creative in their products where premiums are very affordable.
- With the passage of time, we grow old. We cannot prevent time from moving forward. If we do not plan ahead, the worst thing that can happen is to retire broke. A lot of people mistakenly look to their children as their retirement fund. This will contribute to the worsening case of the sandwich generation which will be passed on from one generation to another. By investing at a young age, we can make ourselves financially free upon retirement so that we need not depend on anyone. As the saying goes, the best person who will take care of you in your golden years is the younger you.
Preparing for life’s rainy day is not that hard. Always keep in mind to think far ahead into the future and have your vision. Whatever you will be in the future is a direct result of the decision you make today. Although it is not always possible to meet the saving goals above, the best way to start is to start saving a little at a time. Once you create a budget within which you can live comfortably, you might want to look at ways of cutting back on other expenses or creating more income.