I had my dream job! After several years of hard work and sacrifice, including moving for new opportunities, I’d made it to my career goal. I was happy and passionate about my work, and the people and organization I worked for. Unfortunately it didn’t last long.
Unexpected leadership changes happened, and that was when my nightmare began. My intuition kicked in immediately, I sensed that things were going to go badly, so I started making financial preparations. The new boss created such a terrible work culture and atmosphere that going to work was a misery. I never knew when the evil eye would turn my way, and the pain and suffering would return. Through it all, I continued to work my financial plan. Eventually, the situation started to affect my health. I had stomach pains, insomnia, and heart palpitations.
The difference between my story and that of other people in similar situations is that, over time, I deliberately put myself in a position where I had a choice. I was able to leave my nightmare job when I chose because I had taken the time to plan, and to build a solid financial foundation. I had no debt except my mortgage and a years’ worth of living expenses in the bank.
In turbulent times like these, an unexpected job loss, or miserable job situation can happen to anyone. Being financially prepared removes a huge amount of fear and stress so that you can concentrate on finding your next dream job or career.
So how do you plan for the unexpected?
1. Develop your intuition and situational awareness.
If your Spidey sense tells you that a job situation is not going to turn out well, or that the company isn’t doing well financially, take note and take action. Don’t just hope things will turn out, and do nothing until it’s too late. Because I recognized the developing problem early, I was able to redirect my spending to savings and had time to build up as big a buffer as possible.
2. Examine your mindset about money and success.
Can you live below your means without feeling deprived? There is so much emotion, and there are so many mental scripts around money, that it is hard to create a solid financial foundation without addressing them. Do you have an abundance or a scarcity mindset? Does success mean having to have the biggest, best, and most expensive of everything? How was money viewed in your family growing up? How did your parents handle money? Are you prepared to sacrifice now, in order to be free in the future?
3. Create a new financial spending plan (aka budget) each month.
This is a plan you control, not a straight jacket. Make a plan each month, before the month begins, so that you know what you are spending your money on. Save at least 10% of your income for an emergency fund. More if you are in a dangerous situation like mine. You should have at least 6 months’ worth of expenses in a savings account if your job is stable, and at least a years’ worth if it isn’t.
Examine what value you are getting from the services and things that you buy, decide what to keep or cancel, and redirect the savings to get out of debt, or build an emergency fund. For instance, we realized that we didn’t watch cable TV anymore, just Netflix, so we cut the cable and redirected the savings to the emergency fund. I saved my bonus every year, so one of the rooms in our house stayed without furniture. Over time, these sacrifices gave us enough savings for me to leave my job when I needed to.
4. Prioritize getting out of debt.
If you have no debt you can live on less, and your emergency fund goes further. Simple. It is so much easier to leave a bad situation when you don’t have to worry about making payments.
To get out of debt fast you may have to use short-term sacrifices such as, not eating out, saving a bonus, extra check, or tax refund instead of spending it, take an extra job, or sell something. The key is to remember that it is temporary. It’s a short term, hard push, to scrape together as much money as you can, as fast as you can, to get rid of the debt for good.
Once the debt is gone, your income is yours! Look at how much of your income goes out in debt payments every month and imagine what it would feel like, not to have those payments hanging over you (and how much more money you could save).
5. Consider what you might need to let go of.
What do you need to let go of in your life in order to have less stress, and more financial margin in your life? Would moving to a smaller house and buying a less expensive car now, give you the financial breathing space you need to thrive financially, and be better prepared for the unexpected?
Getting financially prepared for the unexpected now, will give you the freedom to make choices in turbulent times. Start planning now!