If you’re feeling stressed about money thanks to the Coronavirus pandemic and shutdown, you’re not alone.
72% of Americans report feeling stressed about money within the last month, according to a new survey by the American Psychological Association. It doesn’t help that 35% of Americans can’t last even one month on their savings, according to the July 2020 Retirement Confidence Index.
So how did we get here… and what can you do about it?
Among the many bits of wealth-killing conventional financial “wisdom” is the recommendation that you have an emergency fund equal to 3 to 6 months of your household expenses.
Almost every financial “expert” parrots this advice, even though millions of Americans were out of work for more than a year in the last major recession!
So here’s a 3-step plan to move towards a financially stress-free life…
Step #1: Start Working Towards a Safe and Liquid Emergency Fund Equal to Two Years of Your Household Expenses
If there’s one thing you can count on in life, it’s that the unexpected will happen. And those curveballs have a perverse way of coming at the most inconvenient times.
Having a sizable safe and liquid rainy-day fund gives you many options and advantages, including:
- A cushion if you lose your job or take a pay cut
- You can avoid high-interest finance charges by not having to put unexpected expenses on a charge card
- You have a sense of control – even if your worst fears never materialize, the feeling of being in control is priceless
- You also have the ability to take advantage of opportunities – just as emergency expenses come up when we least expect them, so do opportunities
Step 2: Build Your Emergency Savings in a Financial Vehicle that Provides Flexibility and Guaranteed Competitive Growth
Yeah, I get it – savings and money market accounts and CDs pay so little interest you practically need a magnifying glass to see it, so it’s not very motivating to stash a lot of cash there.
However, your money has to “reside” someplace – a bank or investment account, in currencies or commodities, or under your mattress.
Here’s why a Bank On Yourself-type high cash-value, dividend-paying whole life policy is the very best place for your money to reside:
- Competitive, guaranteed growth every year – even when the markets are tanking
- You can take a loan against your cash value any time and for any reason – no questions asked! (Read our Consumer’s Guide to Policy Loans)
- You don’t have the restrictions or hoops you’d have to jump through to take a 401(k) loan – which is typically a 13-step process, even though it’s supposedly your money!
- You aren’t required to pay back your loans… but if you do, you’ll have more money you can access – with no taxes due on it – during your retirement
- You can use the equity in your policy as you choose, and the policy can continue growing as though you hadn’t touched it – if your policy is from one of a handful of companies that offer this feature. (A Bank On Yourself Professional knows which companies are the financially strongest and offer policies with all the required features to maximize the value of this concept)
- Your safe and liquid emergency fund doubles as a retirement savings vehicle – and you get the peace of mind of knowing that this strategy has never had a losing year in its 160-year-plus history and is backed by a multi-layer safety net
Key Concept: Having a sizable stash of money that’s safe, liquid, and available to you doesn’t take away any of your options – it only gives you more options.
Step 3: The Best Time to Build Up Your Safe and Liquid Savings is Today – Even if You Can’t See How to Make It Happen
Every crisis presents us with opportunities. The pandemic has resulted in a jump in the savings rate, most of which is in accounts earning little to nothing.
And the shutdown made many of us realize that we can get by just fine without some of the things we once viewed as “necessities.”
Right now – before we lose the lessons of the pandemic – is the time to double down and take the steps needed to gain control of your finances and set yourself up for a financially stress-free future.
It’s Easier to Get Started with Bank On Yourself than You Might Think
Request a free, no-obligation Analysis if you haven’t already. You’ll get a referral to a Bank On Yourself Professional with advanced training on this concept who can answer all of your questions and help you restructure your finances to free up more money to start a custom-tailored program that will help you reach your financial goals without taking any unnecessary risks.
Please don’t put it off! Do it today, while you’re thinking of it: