Today I want to talk about saving. Specifically how having savings saved my butt. Saving for an emergency is for everyone. I hate to be the person reiterating the age old line, “Saving is for everyone.” But just do it.
Sometimes it feels like there isn’t a reason to save. Sometimes you feel that unfortunate thing that happens to other people will never happen to you. Or maybe you don’t know anyone who’s ever actually had THE emergency everyone’s been telling you to save for. Trust me, you are not the exception. The other people you know aren’t an exception.
2.6 million people lost their jobs in the 2008 financial crisis. You can take a look at this report by the Bureau of Labor Statistics, it shows job loss occurred across the board. If you think your industry is flourishing and will always be that way, just take a look at history.
And saving isn’t just for emergencies! If you want to build wealth, the first step is saving. Check out some of the accounts below that are offering the highest return rates. That’s free money. They are PAYING you not to spend your money:
- Barclays – 1.2% APY ($10,000 = $10,120 after 1 year)
- GS Bank – 1.2% APY ($10,000 = $10,120 after 1 year)
- Ally Bank – 1.15% APY ($10,000 = $10,150 after 1 year)
Why Should I Save?!
If you still don’t believe me, take a lesson from me. I’m college educated, get good feedback at work, am in relatively good health, am not a risk taking dare devil, etc. Why would anything bad ever happen to me? I’ve only been out of college for 5 years, and I’ve already had some huge life events that required savings to carry me through them.
An Emergency Dental Procedure
I had a root canal done on my top left molar in high school. 10 years later, that tooth started bothering me again. I kept getting a weird taste in my mouth from the site of the tooth.
When I went to my general dentist, she referred me to an Endodontist who specializes in root canals after an x-ray. The Endodontist took one look at it and said I needed to consult an oral surgeon. Then when I went to the oral surgeon, he said the original tooth definitely had to be removed. But because the x-ray wasn’t clear, he would only be able to tell if the tooth next to it needed to be removed once he was in there.
After I was put under, it turned out I did have to get 2 teeth removed. They also needed to add bone filling to the gum line since it was such an extreme removal.
So within the span of 2 weeks, I was looking at a $900 charge after the procedure. Then a few weeks later, I got a bill for $200 for the biopsy of my tooth. Then another bill for $700 my insurance apparently hadn’t covered! That was almost $2000!
My monthly paycheck was $2800. I usually spent $1000 a month for day to day living costs and $950 for rent. If I were living paycheck to paycheck, the $850 clearly wouldn’t have covered the $2000 bill. But I didn’t sweat it because I had my emergency savings in my savings account ready and waiting.
Getting Laid Off
Does anyone remember this article, “J.Crew Just Laid Off 10 Percent of Its Staff“? Well I was one of that 10%. Thankfully, I was already planning on quitting in 2 months anyways. I had been accepted into Hack Reactor, and I planned on joining the August cohort. I was laid off in June.
Even so, this wasn’t part of my plan. I thought I’d be earning a salary for 2 extra months. I still needed to pay rent. I still needed to pay for my living expenses. Thankfully I had $10k in my savings account.
Going Back To School
In August 2015, I moved my life from New York to San Francisco to attend a coding bootcamp called Hack Reactor. The tuition cost a pretty penny. I was lucky I didn’t have to save another year and a half for the tuition thanks to Hack Reactor’s tuition deferral and my parents help. Even so, I still needed to pay for housing in the Bay Area, security deposits, commuting fees, and living expenses like groceries.
The cheapest housing I could find without actually being in the Bay Area was a shared room in Oakland for $900. The commute from Oakland into SF by BART was $7.20 a day, and my program was 6 days a week. Just with those two things, I was paying about $1100 a month. I cooked most meals when I could and would go out occasionally with my cohort mates for food. I was able to live comfortably and without worry during this time because I had savings.
So share this with your naysayer friends who hate on emergency savings or any kind of savings. They should think twice. Saving is for everyone!
Let me know a time you were in a serious pinch and whether you had your savings to fall back on! Was there ever a time when you were in trouble and you didn’t have any savings? What was that like?