How many times have we heard about the need to create and maintain an airbag. It is she who will help us in case of loss of work, support us in difficult times. A psychologist and a financial consultant are ready to argue with the «unbreakable» rules, who proposes to master a new way of thinking.
At first glance, it sounds tempting, but what is the alternative savings system, why do we no longer need to save money for a «rainy day»?
A new approach to budget planning
The first thing we can do for ourselves is to think about our dreams, the feelings that are associated with their realization and a future comfortable life. Can the mythical «rainy day» inspire us to austerity, to save substantial sums? Of course not. And the very expression «rainy day» is similar to a «black hole» that can suck in a large amount of money. That is why the idea of stoic procrastination is becoming obsolete. So let’s get rid of it first.
The next important step is to look at all our money as current and future expenses. Distribute them targetedly, taking into account your dreams, the implementation of which will require investments in the future. All this money will have a clear purpose. They will begin to work proactively and become a much more reliable airbag.
For example, instead of the mythical «rainy day», you can take into account several items of future expenses
These can be medical services, a trip to the North Pole, setting up a photo studio or a country house, celebrating an anniversary, training and retraining.
For each of us, these expense items will be so individual that it will not be possible to use a universal scheme. Moreover, money for future expenses can change its purpose. Over time, new articles will appear, and some will no longer be relevant. Why is this happening? The fact is that we all have different dreams about the future life. And by creating not a mythical airbag, but quite real items of expenditure, we are taking the first step towards their implementation.
Spending from the future
What about «emergency situations»? If we do everything right, control the «arrival-expenditure», then «emergency situations» will occur much less frequently. Some of them we can even plan in advance.
For example, we can clearly identify and allocate the costs that await us in the event of a job loss. Take into account daily, monthly and irregular expenses. And here there is an important rule: paint the money for the following months as soon as you receive it.
This money will replace your income in the future — and you will never spend it on impulse purchases. With pre-planned expenses, losing a job will not seem like a crisis to you.
How it works
If you dream of opening your own cafe or searching for artifacts in Indonesia, then you are unlikely to spontaneously spend the money reserved for such important goals for you. The important purpose of the money earned, in contrast to the usual savings for a «rainy day», protects them from rash spending. The money that we plan to spend on the most important things usually remains untouchable because it is set aside for a specific purpose. While it is easy for us to spend money from the reserve for a «rainy day»: we do not know exactly what we are saving it for.
How to fix the result
Let’s make a small but effective cheat sheet that will help you consolidate the result and not stop there. Here are the rules from a financial expert, a psychologist that will help you make your dreams come true and no longer wait for a «rainy day» in the future.
1. Find a use for every ruble. Play ahead of the curve, otherwise current spending will simply eat up your money. Prioritize your priorities, taking into account goals from the future, and allocate your own funds. Review your spending, focusing on new priorities.
2. Determine your real costs. Look ahead by taking appropriate action here and now. And it doesn’t matter what kind of expenses it will be: regular (purchase of groceries), unpredictable (car repair) or those that exist only in your dreams (wedding, travel). Treat them like a monthly expense and you’ll be ready to meet them in the future.
3. Keep hitting. This rule helps to adapt to any turn of events. Your budget is a plan. But plans can change. This means that the budget will also change. If you had to visit the dentist, then spend the money planned for non-essential expenses. And later return the same amount. Flexibility is the art of successful planning.
Source: Jesse Micum. “You need a budget: 4 rules for managing personal finance, or more money than you think” (Olimp-Business, 2018).